"Foreign investors have been snapping up property in Bali, raising concerns that the local infrastructure is struggling to cope.

Property prices in Bali have rocketed, with foreign buyers jumping on the bandwagon – but the local infrastructure is choking under the strain.

The Indonesian island is popular with tourists and also with expats looking to invest in luxury villas, and prices there shot up 20 per cent last year.

In a recent report, Bali-based property firm Elite Havens said buyers have been investing heavily in beachfront properties.

Now the land around beaches is beginning to increase in price, investors have been moving inland away from established tourist destinations.

However, with the flood of tourists, developers and heavy construction, Bali’s rural roads are beginning to become choked with traffic.

Fabrice de Barsy, a consultant at the Hospitality Institute of Asia, said: “Bali didn’t take care of its infrastructure and environment. Bali has now become dirty, the traffic terrible and the landscape is getting spoiled by ugly construction.

“The luxury market is not doing that well as hundreds of cheaper hotels and condo-hotels are being built. However, the country is doing well and a growing middle class can now afford Bali. Prices will keep going up, but on the very high end, a lot is for sale with nobody to buy.”

At the same time, investors are being warned to be wary of the length of leases when buying luxury villas. Most land on the island is offered on a leasehold basis.

Tony Eddy, property investment expert at Tony Eddy & Associates, said that many projects in Bali that are sold by developers with leases of just 20 to 30 years. He advised potential buyers to factor declining leasehold values in to their calculations when working out the rate of return of any Bali property investment.

The news comes as Asian investors have proved keen to invest their newfound wealth in Indonesia’s capital, Jakarta, as well as in Bali. According to Knight Frank, property prices in Jakarta shot up 38 percent last year, which was the highest rise in the world."

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