All of the following articles have been taken directly from various media sources and have not been editorialized by The Balifornian Group.
The sourced articles answer the following questions…
- Why Indonesia?
- Why Bali?
- Why Ketewel/Keramas?
- What can I expect from an investment in Bali?
- Why is this in such high demand?
- Why Invest in Land Development?
The Wall Street Journal
ASIA NEWS JANUARY 18, 2012
Indonesia Gets Ratings Boost From Moody's
BY ERIC BELLMAN AND NATASHA BRERETON-FUKUI
JAKARTA—Indonesia's rise as one of the most important emerging markets for investors got another boost Wednesday as Moody's Investors Service lifted its credit rating to investment grade for the first time in more than a decade, a move that is expected to send new, much-needed funds to the giant Southeast Asian nation.
The decision by Moody's, which has rated Indonesia's sovereign debt at junk levels since 1997, followed a similar rerating by Fitch Ratings last month, and helps bolster Indonesia's claim that investors should consider it in the same category as the so-called "Brics" economies—Brazil, Russia, India, China and South Africa. Standard & Poor's is expected to follow suit in the next couple of months, analysts said, after Moody's raised Indonesia's credit rating one notch to Baa3 with a stable outlook.
The country is already seeing some of the dividends of its improving global reputation as international investors have started flocking to its bonds. Last week, Indonesia achieved a record-low yield on the largest-ever long-dated bond sold in Asia, when it sold 30-year bonds at a yield of 5.375%. That's less than some European countries have to pay to raise money. Italian 30-year debt yields, for example, are around 7% and Spain's around 6%.
The ratings moves also cap an extraordinary run of triumphs for Indonesia, which has nursed itself back to financial health following the Asian financial crisis in the late 1990s, when it became a poster child for emerging economies run amok with a massive debt load and unstable leadership. More recently it has benefited from several years of political stability under President Susilo Bambang Yudhoyono, conservative fiscal management and deep reserves of natural resources such as coal and natural gas that have fueled strong economic growth, even in the worst days of the most recent global financial crisis.
... With a populace of around 240 million, Indonesia has the world's fourth-largest population after China, India and the U.S.
The upgrade "is a testament to Indonesia's economic fundamentals," said Rahmat Waluyanto, the director general of debt at Indonesia's Finance Ministry. "Demand for our bonds will increase and yields will continue trending lower."
Moody's said it expected Indonesia's fiscal profile to stay in line with peers in the same rating bracket, such as India, and highlighted the resilience of its economy and banking system and the presence of tools to address financial vulnerabilities.
"Indonesia's fiscal ratios now surpass many of its higher-rated peers, providing more fiscal headroom to respond to economic shocks," Moody's said.
Following the Moody's announcement Wednesday, Indonesia's currency strengthened, as did its bonds. The dollar fell to 9,120 rupiah from 9,180 rupiah late Tuesday, while the yield on 10-year government bonds shed 0.24 percentage point to a fresh record low of 5.83%.
Indonesia has expanded 5% or more for seven out of the last eight years thanks to rising domestic demand from its growing middle class and surging prices of the commodities it exports to China and India such as coal and palm oil.
The higher ratings will also help spur foreign direct investment in Indonesia. The country has been attracting records amount of cash from overseas to build factories to make everything from motorcycles to mobile phones. Net foreign investment into Indonesia more than tripled in the last two years to more than $15 billion last year, analysts estimate.
"Fundamentally, the key thing is that [the Moody's upgrade] will spur more FDI, which is a long-term fundamental support for the rupiah," said OCBC economist Gundy Cahyadi.
—I Made Sentana and Andreas Ismar contributed to this article.
Brands Bet Indonesia Is Next Big Market
Source: The Wall Street Journal
by Patrick Barta
SAMARINDA, Indonesia—International companies are betting Indonesia will become Asia's next big consumer market after China and India—in part because of booming jungle outposts like this one.
Here in Samarinda, a coal-mining center on the far eastern edge of Borneo, the population has more than tripled since 2000, and incomes are rising rapidly. Ford Motor Co. has added its first dealership and Honda motorcycle salesmen say they can't get motorbikes fast enough to keep up with demand.
Variations of that pattern are being repeated across this vast archipelago nation. With sales of cars and motorbikes set to rise 15% or more this year, Ford dealers are adding a new showroom nearly every six weeks. In January, European private equity group CVC Partners agreed to pay more than $770 million for a controlling stake in one of country's largest retailers, PT Matahari Department Store, which plans to add 150 new outlets, including one just opened in Samarinda.
H.J. Heinz Co. said in February that Indonesia played a major role in pushing Asia sales, including chili sauces, up 41% last year. It also recently predicted a 23.1% increase in packaged food spending in Indonesia between 2009 and 2011—a faster rate of growth than India and China, which were expected to grow 20.0% and 14.3%, respectively.
With 240 million people, the world's fourth-largest population behind China, India and the U.S., Indonesia has long promised to be one of the world's biggest consumer markets. But it has lagged behind other developing nations because of political instability and disappointing growth after the Asian financial crisis of 1997-98.
That has started to change in the past several years, as Indonesia stabilizes, with a democratically elected government and surging sales of commodities such as coal, natural gas and palm oil to China.
Last year, Indonesia posted the second-highest personal spending growth in Asia, behind China but ahead of India. Private consumption climbed 5.1% compared with 0.4% growth in Asia excluding China. On Wednesday, Jakarta's stock market hit an all-time high, supported by confidence in the economy.
Unilever's Indonesian arm, which sells soaps, ice cream and other consumer goods, said in March that 2009 sales shot up 17%—well above previous years and among the fastest rates in the world for Unilever. Maurits Lalisang, president director of PT Unilever Indonesia, says he is adding new distribution depots and plans to double his business in the next four years.
"Indonesia is going to get richer," he says, and "if people get richer, I have a lot of opportunity."
Indonesia's resurgence as a consumer market is the latest evidence that developing Asia, which for years relied primarily on exports for growth, is becoming more self-reliant as it develops a bigger middle class and its own domestic demand.
Maybe its Bali’s beauty, maybe the friendly people, or maybe even the influence from spirits that certainly abides in this place.
Lying just 8o south of the Equator, Bali can boast a tropical climate with just two seasons a year and an average temperature of around 28o Celsius. It has a whole range of different environments and activities for the tourist,
Economically and culturally, Bali is one of the most important islands of Indonesia. Rice is grown on irrigated, terraced hillsides; other crops include sugar cane, coffee, copra, tobacco, fruits and vegetables. Cattle and hogs are also raised. The Balinese are skilled artisans, particularly in woodcarving and in fashioning objects of tortoiseshell and of gold, silver and other metals. The Balinese are noted for their traditional dance, the distinctive music of the gamelan and for their skills in weaving cloth of gold and silver threads, Songket, as well as for embroidering silk and cotton clothing.
A wide range of attractions combined with good infrastructure and convenient airline connections have made this beautiful island extremely popular as a tourist destination and the choice for many investors.
Annual Reader Surveys by major travel magazines continually confirm the perception of Bali as the most enchanting travel destination in the world. Because of the friendly people, the physical beauty of the island and its wide variety of attractions, many experienced travelers see Bali as The Ultimate Island.
Because of this, and the still reasonable prices, property investment on the island has been generating high regular returns, and property values have continued to appreciate even during difficult times.
Bali’s strong tourism inflows with more then 1,000,000 tourist per year means that investing in a high quality managed property in Bali delivers a high yield from having it rented all year around, including in our investment plan.
It is quite normal for well-managed villas and apartments to return double-digit returns net of all costs.
Ketewel is a peaceful village located just a few kilometers up the coastline from Sanur. It is essentially a rural area known for its fertile volcanic soil and rice terraces that grow by the sea.
Until 2004, the only route to the east was via a congested, winding highway that passed directly through the town-centres of Gianyar and Klungkung. The construction of the Sunrise Road, however, meant that the windswept black sand beaches and traditional fishing villages within the regency suddenly became accessible to the rest of the island. The bypass – financed by the World Bank to alleviate traffic problems – opened up virgin beachfront land, which in turn has become a significant new area for the development of holiday rental villas. Bounded by the River Wos, terraced rice fields, tobacco plantations, papaya and banana groves, the area is blessed with spellbinding views extending across the ocean towards the beaches of Sanur and Nusa Dua, the islands of Lembongan, Ceningan and Penida, and the mountains of East Bali.
Ketewel village itself is the origin of the celebrated Legong Bededari Dance, and the neighboring village of Saba produced the finest Legong dancers on the island. The nearby beach of Pabean was once a small port through which oriental traders brought their products; at low tide you can still see the structure of the old harbor, and a Chinese cemetery is located close by. Balinese Hindu purification ceremonies are held beside the ocean at the sacred Pura Segara sea temple, and the offshore reef is renowned for its surf breaks. There are no Western-style restaurants in this area, but there are local warungs (eateries), while international restaurants galore can be found just 13km away in Sanur.
From Surfline -- by Jon Huberman
Once an ultra-secret hideaway of tightlipped Sanur expats, in the past few years, no other spot has received more media attention than Keramas. Whether it's Andy Irons dropping in out of a Helicopter, or any of dozens of international professional surfers adding a section to the latest surf movie, Keramas is no secret anymore. The good news is that Keramas does live up to its' hype. It's an excellent reef break in a classic black sand beach and rice field setting, and.. In a land of perfect lefts, it's one of a few perfect rights.
Keramas is a fun right-hander for hot dog surfing when it is smaller. In the past few years, surfers have been pushing the limits of what is considered too big to surf at Keramas. Even on the biggest days of the year, some local and international chargers have been paddling out there, returning with stories, film, and photos of glory.
Despite boasting one of the best surf spots in the entire country, there are remarkably few places to stay in Ketewel. Surfers must stay miles away and travel to this incredible break everyday. Other than surfers more and more tourists are coming to the area for its shear beauty, great views, strong traditional culture and more, but finding very few accommodations.
~Location to maximize your capital growth. For example, a new villa on the outskirts of Seminyak area bought for $400 000 may grow at 15 per cent per annum, whereas a well-located property in an up-and-coming area such as Ketewel, bought at the same price, could grow at 20-25% per cent per annum.
How can we offer high ROI with low risk to our investors?
Steady Increase in Capital Value. (10 / 20% per annual)
High yield on investment by rentals through our smart marketing and management
Guaranteed and excellent exit strategy at all times
Custom and professional focus on every investment to achieve the best results
What can I expect from an investment in Bali?
- Last 5-7 years the property market has shown a 20-25% appreciation on land per year in average.
- You can also expect 6-12% yield on investment per year on rental income, supporting your existing income. This trend is not likely to fall as villa demand from tourist markets continue to grow. And the general growth of the Indonesian economy and Bali will continue to be positive also in 2012 ensuring a further positive appreciation value.
~Property in Bali is heavily undervalued, as a comparison 40% less than Thailand.
~Location to maximize your capital growth. For example, a new villa on the outskirts of Seminyak area bought for $400 000 may grow at 15 per cent per annum, whereas a well-located property in an up-and-coming area such as Ketewel, bought at the same price, could grow at 20-25% per cent per annum.
Rental income~ One of the benefits of owning investment property is that you start receiving an income almost straightaway. Some properties in Bali runs at 70-80% occupancy, and the key to this is location, design, as well as a good management company, with a clear rental structure.
Any legitimate expense incurred in running your investment property should also be tax deductible. For example, if you travel to the property to collect the rent, you can claim a deduction. Alternatively, money paid to a property manager to manage your property is tax deductible.
Depreciation of the building may also be claimed as a tax deduction.
Why is this in such high demand?
Indonesia Targets 7 Million Tourist Arrivals in 2010, up 8%-10% compared to 2009
Source: Tuti Sunario for Indonesia Digest
In 2010 Indonesia targets a total of 7 million international visitors spending on average US$ 1,000 per stay, thus contributing some US$ 7 billion to Indonesia’s economy, said Coordinating Minister for the Economy, Hatta Rajasa. This is an increase of between 8%-10% growth compared to 2009 which is above the expected 2010 economic growth of 5.5%-6%.
While earnings from domestic tourism is expected to surpass Rp. 120 trillion, which means that tourism will be an important sector in boosting the economy, said Minister Hatta Rajasa.
In the new government of President Susilo Bambang Yudhoyono, Tourism has finally come under the coordination of the Minister for the Economy, away from the Coordinating Minister for Public Welfare under which it has resided for many years. The Cultural sector in the Ministry of Culture and Tourism, however, remains under the auspices of the Coordinating Minister for Public Welfare.
In 2009 Indonesia received 6.459 million visitors said Culture and Tourism Minister, Jero Wacik, or a growth of 0.4% compared to 2008. Although numbers - wise growth seems minimal, yet even this small growth actually meant that Indonesia has withstood the downturn in traveler arrivals during the global economic recession of 2009. Yet, spending wise, it is evident that tourists are indeed spending less, said Minister Wacik.
If in 2008 on average a visitor spent US$ 1,178 per stay, in 2009 average spending has gone down to US$966/visitor/stay. In 2010, however, it is expected that as the global economy picks up, tourists will again spend some US$1,000 per stay per visit in Indonesia.
For 2010 Indonesia will continue to carry the Visit Indonesia logo, while this year until 2014 the focus will be on promoting visits to the many Museums in Indonesia. So 2010 will carry the additional tag-line: Visit Museums 2010.
Meanwhile, Balidiscovery.com reported that according to the Head of Bali Tourism Authority, Bagus Kade Subhiksu, in 2009 Bali received a total 2,259,000 foreign visitors who, together are estimated to have contributed US$2.7 billion in foreign exchange to Bali's economy, or a figure equal to 42% of the total contribution made by the tourism sector to the national economy. On average tourists spent US$ 137.90 per day per person over the average 8.75 days length of stay in Bali. In 2010, Bali targets total international tourist arrivals to reach 2.3 million.
As reported in Indonesian Business, compared to the previous year, foreign exchange revenues generated by Bali's tourism sector declined 4%, despite the record number of visitors. In 2008, Bali’s foreign visitors produced an estimated US$2.8 billion in foreign exchange. Officials to a shortening in the average length-of-stay link this decrease and lower spending levels.
Bali's 4% decline in foreign exchange earnings compares favorably to nation-wide decrease of 11% decrease in foreign exchange earnings from tourism. —From baliinvestment.blogspot.com/
Bali Investment Opportunities- Written by: Terje H. Nilsen, Paradise Property Group
With recent further clarity in foreign ownership of Bali land and property, as well as how foreign investment can be done into Bali and Indonesia, a serious research and market studies has been done on behalf of larger investment groups seeing the opportunities now fast arising for Bali properties and property sale. Paradise Property Bali has also done studies together with larger Banks, and lawyer firm’s to ensure the best possible way of structuring foreign investment opportunities in Bali’s real estate market. This study shows a fully legal and 100% secure way of doing investments into Bali Proeprties, as well as unmatched tax advantages … Another inviting aspect of investments in Bali property is the fact that most investments and properties is still heavily undervalued compared to even the region around such as Thailand and Malaysia. The Bali investment and property market has seen continues growth of an average appreciation on investments at around 20-25% per year.
The fundamental reasons for choosing Bali are basically the same:
A wide range of attractions combined with good infrastructure and convenient airline connections have made this beautiful island extremely popular as a tourist destination and home of choice for many foreigners.
Because of this, and the still reasonable prices, property investment on the island has been generating high regular returns, and property values have continued to appreciate even during difficult times. Bali does not have the long rainy season or security problems you find in many other countries.
According to leading real estate publications, land values in Bali are forecast to grow at rates of 25 - 30% yearly. Limited land availability and increased security measures make Bali once again an attractive place to invest with steadily appreciating property prices.
“Bali today is more popular than ever” - Travel journals and visitors hail Bali as the Top Asian travel destiny. There is also a consistently increasing demand for Bali property by future retirees from many nations. Bali is making international headlines.
If the present trend of property value increases of 20% p.a. and above is going to continue, Bali may in a few years rival Hawaii and Tahiti in prices. By then investors better should have made their move.
Bali is going to remain attractive for investment, as long as Indonesia is continuing to develop in the present slow, but steady pace. The reason – General living cost are going to remain low, as the large Indonesian population dictates low levels of expenses for food and other basic items for living.
Given the attractive value increases of Bali property, combined with low building and maintenance cost, and considering that land for sale on the island is limited, which better investment can be found out there?
Bali Property Market Skyrocketing
Posted: Mon 11 Apr, 2011 6:00 am
Asia's popular tourism destination Bali is experiencing unparalleled growth in its real estate market.
Spending the last week on the island doing research we found that sales pace for 2010 and for the first quarter of 2011 remains high. One key segment is the condo hotel or commonly referred to Condotel segment with over 4,000 units in the market.
Indonesian buyers mostly from Jakarta are flocking to these both for investment and lifestyle/usage….
Unlike Phuket, which has limited traction from Thai buyers for resort grade real estate, Indonesian's remain keen on financial returns, capital appreciation and complimentary holidays.
From a cyclical standpoint demand is outpacing supply with re-sales on a market wide basis still the vast minority of transactions.
Clearly soaring tourism numbers and hospitality led residential products are filling a niche with average room rates that far exceed those in Phuket at the moment.
Sentiment remains positive and expectations are for double-digit growths are expected for the remainder of the year.
BALI'S PROPERTY MARKET 'INSULATED'
Thursday, 26 February 2009 00:00
Source: Business Spectator
Australian villa owners say Bali's property market is more resilient than that in their own country, as the global financial crisis worsens.
The island's villa market has experienced exponential growth in recent years amid record tourism numbers, with villas in prime locations going for up to $US3 million ($A4.62 million) off-the-plan.
Asia-based expatriates seeking a holiday home cum rental property have driven the buying. With foreigners banned from bank financing, they pay cash, giving Bali some insulation from the credit crunch hurting other markets, property agents said.
"We've got no debt and we're probably going to double our money here, so we can buy a property in Australia and still have enough money leftover to buy a bit of land here, and do it all again," said David, who runs a pearling operation in Bali.
He has built two villas that sold off the plan to expatriates in Dubai and Jakarta for $US1.2 million ($AU1.85 million) and $US1.5 million ($AU2.31 million). He recently raised the remaining two villas by $US100, 000 ($AU153, 964.59) each to reflect higher construction costs.
"I'm not at all concerned," said Morgan. "I think Bali's real estate market is holding up definitely better than Perth, particularly at the top-end. The average growth on land value in Seminyak is about 25 per cent a year."
Returns like that have attracted a stampede of foreign developers and investors over the last decade, …
"Just the price of our land has gone up threefold since 2005 when we bought it. Like any business decision, we've just got to be smart about it," he said.
"If you do it the correct way and you do all your due diligence on the property, your research into the nominee and put together all the appropriate paperwork, then I think it's a very secure investment."
Another sweetener is the attractive Indonesian tax system, which exempts foreign investors from paying land tax.
Why Invest in Land Development?
The 1st reason is because land development investment opportunities are considered to be among, if not the most profitable investments available to investors today. And, land development investment opportunities are expected to remain the most profitable far into the future.
On average, a professionally managed land development will realize a 300-500% increase in the value of the raw land being developed. Best of all, land development investors get to share in those profits!
We know that real estate investments have created more wealth than any other form of investment. We also know that land development is the most profitable form of real estate investment. i.e. The best of the best!
The 2nd reason you should consider land development investment opportunities is because these investments are typically secured by the value of the raw land that's being developed (i.e. They are asset-backed for the investor's security). This means that in the event of a major problem such as a land developer default (heaven forbid), the land can be sold and its investors can recoup all or part of their original investment. ** Compare that to stocks and most other investment vehicles where you literally have no security at all on your investment in the event of a market downturn or devaluation.
The 3rd reason to invest in land development investment opportunities is because land development is destined for exponential growth - particularly in Indonesia and especially in Bali and Lombok (see attached additional materials).
The 4th reason to put your money into land development investment opportunities is because according to the Indonesian Tourism Bureau projections, tourism is at an all time high and projected to grow even higher.
There's really no choice here, future tourism and population growth simply requires considerable new land development to construct new accommodations. Villas are predicted to increase in market share versus hotels.
SUMMARY: Land development investment opportunities are especially attractive because they can be very lucrative and secure in comparison to most all other investment vehicles such as stocks, bonds, mutual funds, etc. And, importantly, land development has an enormous amount of built-In demand and unparalleled growth for the next 25 years due to future population and tourism growth projections.
Bali Tourism Statistics
Bali by The Numbers: Bali Sets to Close the Year with Record 2.75 million Visitors
(11/27/2011) Foreign tourist arrivals to Bali for October 2011 totaled 241,370 – increasing 7.93% over arrivals in October 2010 (223,643).
For the ten months January – October 2011 foreign arrivals hit 2.293 million, an improvement of 10.10% year-on-year for 2010.
Projected to the end of 2011 it now appears our projection of 2.75 million total foreign arrivals will be achieved.
Results by Major Markets
Australia – Continues to be Bali’s biggest source of foreign arrivals. October 2011 arrivals ex Australia (75,050) represents a 20.9% increase over the same month last year. Year-on-year Australian arrivals are 24.52% ahead of 2010. Australian visitors now constitute a 28.81% market share of all foreign arrivals.
Japan – Once the undisputed leading source of foreign visitors to Bali, Japan has now slipped to third place after Australia and the PRC. Japan’s decline continues with October arrivals (14,064) declining 20.5% as compared to October 2010. Year-on-year the decline in Japanese visitors stands at 26.71%.
People’s Republic of China – Now the second largest source of Bali visitors, the PRC arrivals for October 2011 (19,571) are 9.8% ahead of the same month a year before. Year-to-date Mainland Chinese visitors are up 13.76% through the end of October 2011. Look for Chinese arrivals to flatten as that country's export-oriented economy begins to feel the impact of the U.S.A. and Europe’s faltering economies.
Taiwan – After a period of stagnation, Taiwan is on the rebound with arrivals to Bali in October 2011 (11,486) improving 27.9% over October 2010. On a cumulative basis through the end of October, Taiwanese arrivals are up 21.37%.
Malaysia – Malaysian arrivals have hit a plateau. October 2011 arrivals (13,116) are virtually on a par with arrivals for October 2010 (13,023). Year-on-year through the end of October Malaysian arrivals are up 13.14% as compared to 2010.
South Korea – South Korean arrivals are on the decline. October 2011 South Korean visitors totaled 11,055 – a number down 6.3% from the totals in October 2010. Year-on-year South Korean visitors have declined 2.08% through the end of October 2011.
France – French arrivals in October 2010 are up 4.06% at 10.591 visitors. Year-on-year French visitors have increased 4.95% during the first ten months of 2011.
Russia – Russian arrivals remain bright. October arrivals totaled 5,202 an improvement of 7.8% over October 2010. Russian arrivals year-on-year are up 14.11%,
The Netherlands – Dutch arrivals to Bali are ailing. October 2011 arrivals standing at 6,000 is virtually the same as October 2010 (5,977). Year-on-year arrivals from Holland are down 8.61%.
U.S.A. – Economic uncertainty at home is not deterring Americans from packing their bags and coming to Bali. October 2011 arrivals (7,043) are 14.1% ahead of the same month one year before. Year-on-year the picture is even brighter with U.S. arrivals through the end of October 2011 up 20.83%. Next question: Will Bali arrivals from the U.S. improve even more due to the “Obama effect” of the just completed U.S. presidential visit?
Germany – The European economy is in recession, making “flat” results from Germany arguably more good news than bad. German arrival s in October 2011 (9,380) is almost even with arrivals for October 2010 (9.314). Similarly, German arrivals year-on-year are equally lackluster, down 0.39%.
The Ketewel/Keramas area has it all…
~Stunning windswept beaches,
~The traditional culture of “old Bali” that is now hard to find on the rest of the island,
~A friendly small town feel, free of the noise, crowds and pollution of established tourist spots,
~Breathtaking natural areas and rice fields with incredible views of the ocean, outer laying islands, mountains, etc.
The area has been largely cut off from the rest of the island, but now has a new modern main road allowing easy access to this little know part of Bali. Land prices are sky-rocketing, and people are coming to know this paradisiacal location. Most known tourist towns (Kuta, Sanur, Ubud, etc.) are becoming, or already are, overcrowded, noisy, and full of peddlers, taxis and tourists. But Ketewel remains, at least for now, a natural and culturally rich part of the island. We are ahead of the curve and all research points to this becoming the next hot spot in Bali and we are perfectly placed to take advantage of this unique opportunity.