Bisnis Bali, in a page-one article titled "Bali’s Property Market has Collapsed”, reports that tight money and government surveillance of property transactions are being blamed for the current weak property market in Bali.
The arrest by Indonesia’s anti-corruption agency (KPK) of property investors and subsequent charges of money laundering have tempered appetites for investment in the property sector.
The former chairman of the Bali chapter of Real Estate Indonesia (REI). I Dewa Putu Selawa, confirms that property investment in private residences, development sites and villas has been declined substantially over the past year. He said transactions in excess of Rp. 500 million (US$37,500) have become lethargic. Meanwhile, properties with price tags in excess of Rp. 1 billion (US$75,000) have become very difficult to sell.
Selawa, is a director of PT Sepa Karya Buana, a development firm, says the circulation of cash in Bali has declined dramatically since early 2015. This is evidenced by the arrest of high profile figures on charges of money laundering. The former REI official says Bali’s property market is now “stagnant” with only very large-scale projects able to weather the current decline. He said property companies are recording sales in 2015 that are only 25% of business levels experienced just one year before.
In addition to a smaller amount of money in circulations, new regulations requiring a down payment covering a minimum of 30% of the purchase price of a property and a general reluctance to invest in an uncertain property market have added to the current stagnation in Bali property sales.
Another developer, I Nengah Mertha, complained that since the end of 2014 it has been problematic to acquire land for development projects in strategic areas of Bali. Mertha told Bisnis Bali that he is currently without any ongoing projects.
The rapid rise in property prices has put land in strategic areas, such as Badung and Denpasar, out of the reach of developers. Land that once sold for Rp. 100 million (US$$7,500) per are (100 square meters) now sells for Rp. 400 million an are.
A weak property market and declining consumer demand has left Bali’s property market in the doldrums. Weak demand continues to fuel current uncertainty as potential future property owners are waiting in the wings for prices to fall before cosidering Bali property as a worthwhile investment.
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