Cost of building a villa in Amed
Bali is currently experiencing a property boom and investors are looking at the cost to build a villa in Amed as a great way to generate consistent portfolio returns.
The trend of holiday makers to rent family villas instead of staying in hotel resorts is booming. The supply of affordable, modern and conveniently located rental villas can not keep up with the surge in demand.
This creates an opportunity for property investors build their own villa in order to capitalize from a booming villa rental market. On top of high rental occupancy rates, property investors can benefit from the long-term price appreciation of land and property values.
Land prices in Amed are still relatively low compared to other resorts in Bali. However, land prices are continuing to increase as tourists begin to recognized Amed as a holiday destination.
How much does it cost to build a villa in Amed?
The cost of a western style, 3-bed/3-bathroom pool villa in Amed can be built for around US$ 175,000. However prices can vary depending on the land location and on the size of the property.
The cost of acquiring land can also vary depending on the land ownership title you choose to build on. The quality of materials, fixtures and fitting will also have an effect on the cost to build a villa in Amed.
Building your luxury villa in Amed
The cost of building materials have increased significantly since 2020. The total cost to build a luxury villa in Amed has therefore increased during the same time. To build a western style, 3-bed/3-bathroom pool villa, you would expect to pay somewhere in the region of US$100,000.
Whilst this price does not include the actual cost of land, the estimated cost to build a villa in Amed includes;
- Architect fees
- Legal fees
- Building materials
- Fixtures and fittings
- Labour
Buying land in Amed
Land prices in the southern part of Bali have exploded since the island opened it’s doors after the Covid-19 pandemic. Land and area sized villas in Indonesia are quoted in ‘are’, with one are measuring approximately 100 square meters.
Foreigners are not permitted to acquire freehold land. Land and property ownership for foreigners is based on a leasehold concept. Thankfully, the property laws of Indonesia provide foreigners with a lot of security on land and property ownership.
Land purchase agreements can extend up to 80 years of ownership. Under certain land titles (Hak Pakai and Hak Bangunan – as discussed below), land and property can be sold by the foreigner without any issues. Under these titles, land and property can also be passed on as an inheritance asset.
Land purchase agreements are typically structured over a period of 25 year to 30 year period. The option to extended and renew the agreement can take the total term up to 80 years.
Cost of land in Amed
Buying land in Amed is based on a price per-year per-are. For example, land priced at 3 Juta (3 million Indonesian Rupiah) per are, is based on the price for one year.
A 6 are plot of land, costing 3 Juta per are, over a 25 year period can be calculated as;
- 6 x 3,000,000 x 25 = 450,000,000 Rupiah
- In US Dollar terms the same calculation looks like this;
- 6 x $200 x 25 = US $30,000
In this example, the cost of land to include into the overall cost to build a villa in Amed is US $30,000.
Cost of land in Bali
Finding the ideal location to build you house in Bali will have a big effect on the final cost. Land prices vary dramatically depending on the location of the land. The chart below compares the cost of leasehold land in different regions of Bali. Each estimate is based on land that is not beach front but is centrally located to all amenities.
As can be seen, the cost of buying land in Amed much cheaper to acquire than comparable land in Canggu. It is because of this large price difference that many property investors are choosing Amed to build villas.
Value proposition of land in Amed
The cost to enter the property market in places like Kuta, Ubud and Canggu is now too high for many investors. Rental prices for holiday villas in these areas are also becoming too expensive. Many tourists are therefore looking to capture more value in emerging locations such as Amed.
Amed provides early investors with a value proposition to capitalize on explosive growth. As the charming town becomes recognized as a tourist destination, the demand for places to stay increases. The demand for modern, 3-bedroom pool villas is outpacing supply. This provides property investors with an opportunity to profit for a growing rental market.
Can foreigners buy land in Amed?
Getting to grips with how the land ownership laws of Indonesia work can be a little complicated. Thankfully, the laws are clearly laid out and allow foreigners to legally acquire and secure land for up to 80 years.
Below are the property ownership titles available to foreigners;
- Hak Milik – Right To Own
- Hak Guna Bangunan (HGB) Right to Build
- Hak Pakai (HP) Right to Use
- Hak Sewa – Right to Lease
Understanding how foreigners can legally buy land in Bali is discussed in more detail in this article.
Land for sale in Amed
Buying land in Amed can be a difficult and frustrating process. Finding prime, beach front locations or pieces of land centrally located to amenities requires patience. Making sure that land can be built on is part of the due diligence process described in the next section.
The Land Zoning regulations in Indonesia are split into three main categories;
- Green Zone
- Yellow Zone
- Purple Zone
Land designated as Green Zone can not be built on. Foreigners buying land in Bali should make sure that land is either Yellow Zone or Purple Zone. You can read more about the Zoning laws and the safest ways for foreigners to buy land in Amed here.
Building a house in Amed
Building a house in Amed is a multi-step process. Buying a piece of land, and calculating the construction costs are just some of factors you will need to consider. Below helps to outline the most important steps you will need to take to make sure the building project runs smoothly.
Due diligence on land
Before signing any documents or transferring any money check the status of the land through a reputable notaries. A legal notaries will typically check the following important details at the National Land Institution (BNP);
- Land zoning – Each zone dictates what can and can not be done with the land. This articles describes the zoning laws in more depth, however foreigners should look to acquire land in Yellow or Purple zones.
- Land ownership certificates – Making sure that the person selling the land is the landowner. Other family members should not be able to make a claim on the land at any stage of a lease term.
- Outstanding property taxes – Unpaid property tax will need to be cleared before land titles can legally be transferred.
Appropriate land title
Are you building a villa in Amed to rent or to live in as your permanent residence? Answering this question will help you to acquire land with the appropriate title. If you intend on renting the property or selling the property, then your category will be as a business. In this case you will need to establish a PT PMA company to acquire a Right to Build title.
Building a house in Amed for residential purposes will require land under the Hak Pakai (Right to Use) title. Foreigners must have a residence permit (KITAS/KITAP) in order to acquire Hak Pakai land.
Appoint an architect
Looking for a professional architect with a strong history of design success will cost upwards of US$10,000. The professional fees are definitely worth investing in as the design of your villa is in the architect’s hands. A qualified architect will provide the following services as part of their fee;
- MEP consultation for electrical mapping and installation
- Structural mapping of building design and concept drawings
- Quantity survey to check bill of quantities at market prices
An experienced architect will provide you with access to a reputable contractor who will oversee the villa construction. Working in tandem as architect and contractor will make sure that the building is a fair representation of the architect’s design.
License to build
Applying for an IMB building permit with the architect’s plans is required before any construction can begin. Applications are usually processed within 3-5 months. However building can begin once zoning approval has been given.
Appoint a contractor
A building contractor will act as or appoint a project manager to oversee the construction of your luxury villa in Amed. In line with the architect’s plans, negotiate a cost per square meter for the construction project. Depending on material quality and difficulty, costs can range between US$ 500 to US$ 1,500 per SQM.
Negotiate a payment plan with your contractor by paying monthly or at milestones stages. Expect to pay an initial lump sum for foundations work with regular payments expected after that. It is standard practice to get a payment schedule so you can budget your payments in a timely manner.
Summary of costs to build a villa in Amed
Deciding on the design and location of your property will have a significant effect on the final cost. The cost to build a villa in Amed will be much cheaper than building the same villa in other locations around the island.
With a solid plan you will be able to build a dream villa in Amed for around US$175,000. With this price and careful planning you can secure the land title for a period of up to 80 years.
Under the Hak Pakai land title, you essentially own the land as your name is printed on the title certificate. This provides the freedom to sell or transfer the property without any complications.
The potential to generate long-term gains in land value prices is high as current land prices can be acquired cheaply. As tourist demand increases and property developers begin to invest in Amed, the price of land, property and rents will increase.
Conclusion
Building a villa in Amed is not a straightforward process. You will have to consider local business practices that are very different from those in the West. A degree of patience will be required and the ability to adapt to the cultural norms in Bali will be essential.
However, carefully selecting a project manager to oversee the villa construction will make the project sun smoothly. Do not look to hire staff based on a low cost of professional fees. The cost of labour in Amed is low and quality professionals will make a better job of the job.
Contact us for further information on buying land in Amed. Our property specialists will be happy to answer any questions you may have on your Bali villa construction project.
