The current real-estate climate in Bali:
Almost all of the property currently for sale in Bali’s major
investment hot-spots is off-plan. Although it may be possible to
purchase property upon the completion of a development project, it
will almost certainly be priced substantially higher than off-plan
property. This is primarily because completed property must generate
a Return On Investment (ROI) for the original investor.
“By selling properties off-plan, we can offer high growth potential
investment opportunities at Below Market Value (BMV)”.
At present, buying off-plan in Bali allows investors to purchase
property that:
a) Will offer the greatest potential for capital appreciation on the
property
b) Is located in an area that appeals to the sophisticated traveller
Therefore it follows that investors who purchase property early
should see the greatest ROI, if their property is located in a
premium location in Bali.
Why is Property Cheaper if bought Off-Plan?
The developer of any real estate project is always exposed to risk.
They want to cap this risk as quickly as possible, as well as
limiting bank loans or incurring additional debts. To achieve this,
developers sell units off-plan at excellent prices. Prices are
discounted in order to negate the fact that buyers cannot see a
physical property at this stage. Buyers rely on the developer’s
reputation and the location of the real estate (as well as artist
impressions, diagrams and computer simulations) in order to gauge
the potential ROI.
In addition to profiting from cheaper property prices, the off-plan
investor also benefits from a viable finance structure. The investor
is usually only required to pay around 10 - 30% of the value of the
purchase in the form of an upfront deposit (percentages may vary
depending on the developer). The remaining payments are set out in
stages, which are directly related to the completion of the
development.
Once you have decided to invest in off-plan property, you need to
decide which strategy you will adopt in order to maximize your ROI.
Maximizing Profit From an Off-Plan Investment In Bali:
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1. |
Purchasing early
- Ensures you get property BMV
- Takes advantage of cheaper
prices offered by a developing market, before
it reaches saturation
- Increases the chances of yielding
greater profits
- Enables investors to purchase prime real estate before it gets
snapped up |
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2. |
Purchasing the best units
- They offer higher capital appreciation in the least amount
of time
- They demand greater rental income |
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3. |
Price increases as development matures
- Unit values rise as the development is completed
- Buyers are now taking less of a risk as they do not need to
rely 100% on plans |
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4. |
Price appreciates as more units sell
- Increased demand for units drives the price of the remaining
units up
- A successful development drives up prices in the surrounding
area,
helping to maximize ROI |
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