Image from byrdyak user from the website freepik.com
Together with experts, we tell you how accessible real estate is to Russians on the islands that are popular with tourists.
Bali and Indonesia
Novostroy talked with Olga Gorhiyan, head of the Indonesian division of the Floors real estate network and founder of Global Investment Property (GIP), about investments in Bali and Indonesia in general, the province of which this island is the same name. According to the expert, 90% of GIP's clients buy real estate in Indonesia for investment.
"Such requests are divided into two strategies – short and long, resale or rental business. As a rule, they assume that the investor will spend several months a year in his real estate, for example, in Bali. Therefore, management companies that are engaged in extracting returns for investors allow investors to move in and quietly settle down in purchased housing, apartments, villas or townhouses. The only condition is to warn the Criminal Code 60-90 days in advance," says Olga Gorkhiyan.
According to the expert, 90% of housing in Indonesia is sold under the leasehold scheme. This is a long-term lease, when the buyer becomes not the owner of the property, but a long-term tenant. As a rule, we are talking about a lease for 30 years, and it can be extended for the same period.
Those who want to buy property and make it a family nest in order to pass it on should choose Hak Guna Bangunan(HGB). "This is already a form of ownership, but there are a minority of such properties in Bali and Indonesia. It's about the politics of the country: This is done to ensure that property remains in the hands of citizens," explains Olga Gorkhiyan.
As for prices, according to the expert, you can buy a good two-bedroom villa with a private pool in Bali for 15-20 million rubles. "The average cost in Indonesia is 2-3 times lower," the realtor emphasizes.
Continuing the topic, Olga Gorkhiyan spoke about the climatic conditions and peculiarities of Bali and Indonesia.:
The islands are located on both sides of the equator, but most of them are located in the southern hemisphere, and therefore there is no pronounced seasonal change in Indonesia. It is always summer in the country and the weather is very comfortable. In the winter months, it is wetter and it rains more often. In the summer months, it is less humid, drier and cooler. In the evening, the temperature can reach 23-24°C. During the day it is comfortable – about 28-30 °C.
As for locations, the most popular in Bali right now are Ubud, Changu, Bukit, and Sanur. In addition, people who want more privacy and immersion in a local lifestyle choose the northern and eastern regions, such as Amed, Lovina, Bedugul.
At the same time, expats (an abbreviation of the word "expatriate", which refers to a person who does not live in his native country – ed.) who choose Bali for relocation, mainly focus on either Ubud or Bukit. The latter is now most in demand both in terms of investment, expat accommodation, and development interest. For this reason, the cost of land is now rising and many construction projects are being implemented at the same time.
Olga Gorkhiyan also answered the question, why Indonesia? It follows from her words:
Property buyers choose the Indonesian destination for a number of reasons. For example, one of the factors is the specifics of other areas. It is winter in Turkey, and there is also an unstable economic and political situation. Dubai is characterized by dry air, hot summers, windy winters and a stressful environment, more suitable for work and business, but not for living.
Thailand is similar to Bali, but it has a pronounced rainy season. In addition, Indonesia has much stricter legislation, despite the fact that it has its own nuances. And, accordingly, in Thailand, one can more often encounter controversial issues related to development projects (unfinished construction, developers' avoidance of responsibility).
Bali is a good place for both tourism and living, so this destination is also chosen for relocation. People are looking for new things there: spiritual practices, authentic audiences, interesting celebrations and ceremonies, waterfalls, temples, and much more that both nature and man have created.
"Such requests are divided into two strategies – short and long, resale or rental business. As a rule, they assume that the investor will spend several months a year in his real estate, for example, in Bali. Therefore, management companies that are engaged in extracting returns for investors allow investors to move in and quietly settle down in purchased housing, apartments, villas or townhouses. The only condition is to warn the Criminal Code 60-90 days in advance," says Olga Gorkhiyan.
According to the expert, 90% of housing in Indonesia is sold under the leasehold scheme. This is a long-term lease, when the buyer becomes not the owner of the property, but a long-term tenant. As a rule, we are talking about a lease for 30 years, and it can be extended for the same period.
Those who want to buy property and make it a family nest in order to pass it on should choose Hak Guna Bangunan(HGB). "This is already a form of ownership, but there are a minority of such properties in Bali and Indonesia. It's about the politics of the country: This is done to ensure that property remains in the hands of citizens," explains Olga Gorkhiyan.
As for prices, according to the expert, you can buy a good two-bedroom villa with a private pool in Bali for 15-20 million rubles. "The average cost in Indonesia is 2-3 times lower," the realtor emphasizes.
Continuing the topic, Olga Gorkhiyan spoke about the climatic conditions and peculiarities of Bali and Indonesia.:
The islands are located on both sides of the equator, but most of them are located in the southern hemisphere, and therefore there is no pronounced seasonal change in Indonesia. It is always summer in the country and the weather is very comfortable. In the winter months, it is wetter and it rains more often. In the summer months, it is less humid, drier and cooler. In the evening, the temperature can reach 23-24°C. During the day it is comfortable – about 28-30 °C.
As for locations, the most popular in Bali right now are Ubud, Changu, Bukit, and Sanur. In addition, people who want more privacy and immersion in a local lifestyle choose the northern and eastern regions, such as Amed, Lovina, Bedugul.
At the same time, expats (an abbreviation of the word "expatriate", which refers to a person who does not live in his native country – ed.) who choose Bali for relocation, mainly focus on either Ubud or Bukit. The latter is now most in demand both in terms of investment, expat accommodation, and development interest. For this reason, the cost of land is now rising and many construction projects are being implemented at the same time.
Olga Gorkhiyan also answered the question, why Indonesia? It follows from her words:
Property buyers choose the Indonesian destination for a number of reasons. For example, one of the factors is the specifics of other areas. It is winter in Turkey, and there is also an unstable economic and political situation. Dubai is characterized by dry air, hot summers, windy winters and a stressful environment, more suitable for work and business, but not for living.
Thailand is similar to Bali, but it has a pronounced rainy season. In addition, Indonesia has much stricter legislation, despite the fact that it has its own nuances. And, accordingly, in Thailand, one can more often encounter controversial issues related to development projects (unfinished construction, developers' avoidance of responsibility).
Bali is a good place for both tourism and living, so this destination is also chosen for relocation. People are looking for new things there: spiritual practices, authentic audiences, interesting celebrations and ceremonies, waterfalls, temples, and much more that both nature and man have created.
Sri Lanka
Artem Kardash, General Director of the Baltic Construction Company and owner of Miles&Yards management company, told Novostroy about the specifics of investing in this island state.:
Sri Lanka is an island country in the Indian Ocean, and its area exceeds the size of such countries as Armenia, Georgia, Denmark, and the Netherlands. As in many Asian countries, Sri Lanka has a ban on foreigners buying 100% owned land. However, some exceptions and knowledge of local legislation allow you to make a purchase on much more favorable terms than in neighboring Thailand, Indonesia, and even more so Dubai.
In particular, one of the exceptions is the possibility for foreigners to purchase apartments in condominiums. The average cost per square meter of such apartments in Sri Lanka starts from 1.2 thousand dollars (108.2 thousand rubles at the exchange rate at the time of publication of the article – ed.). It makes sense to consider regions with a good tourist flow for purchase, which include Colombo, Galle and its surroundings. In such regions, due to the daily rental of real estate, it is possible to obtain 10-15% annual profitability, which significantly exceeds the rates in neighboring countries.
Local sellers also offer foreigners to invest in resort villas, however, as we mentioned above, the acquisition of land plots is prohibited by law for everyone except Sri Lankan citizens. To circumvent this ban, realtors suggest using the registration of ownership of the company together with a local partner, or using the lease hold scheme already known in Bali and Thailand, that is, a long-term lease. Such schemes, although they are quite legitimate, nevertheless constantly appear in unpleasant stories about failed investment projects with local residents.
In any case, no matter which option you choose for the purchase, checking the legal purity of the transaction is in the first place. This service will be offered to you by numerous law firms, which, together with transaction support, charge up to 2.5% of the real estate value for their services. By the way, the state fee for registering an object is also not small and amounts to 4% of the transaction amount.
The main problem of acquiring projects in Sri Lanka is the almost complete absence of management companies that would provide investment property management services. Perhaps, at the moment, this is the main deterrent factor stopping the influx of investments from Russia and other countries. However, it seems to be a matter of time.
In particular, one of the exceptions is the possibility for foreigners to purchase apartments in condominiums. The average cost per square meter of such apartments in Sri Lanka starts from 1.2 thousand dollars (108.2 thousand rubles at the exchange rate at the time of publication of the article – ed.). It makes sense to consider regions with a good tourist flow for purchase, which include Colombo, Galle and its surroundings. In such regions, due to the daily rental of real estate, it is possible to obtain 10-15% annual profitability, which significantly exceeds the rates in neighboring countries.
Local sellers also offer foreigners to invest in resort villas, however, as we mentioned above, the acquisition of land plots is prohibited by law for everyone except Sri Lankan citizens. To circumvent this ban, realtors suggest using the registration of ownership of the company together with a local partner, or using the lease hold scheme already known in Bali and Thailand, that is, a long-term lease. Such schemes, although they are quite legitimate, nevertheless constantly appear in unpleasant stories about failed investment projects with local residents.
In any case, no matter which option you choose for the purchase, checking the legal purity of the transaction is in the first place. This service will be offered to you by numerous law firms, which, together with transaction support, charge up to 2.5% of the real estate value for their services. By the way, the state fee for registering an object is also not small and amounts to 4% of the transaction amount.
The main problem of acquiring projects in Sri Lanka is the almost complete absence of management companies that would provide investment property management services. Perhaps, at the moment, this is the main deterrent factor stopping the influx of investments from Russia and other countries. However, it seems to be a matter of time.