Property Development

Foreigners typically find the leasehold system (Hak Pakai – right to use) more accessible and popular when investing in Bali’s property market. This ownership method, which essentially functions as prepaid rent, dominates approximately 70% of real estate transactions on the island.

When purchasing a leasehold property, buyers can register it under their own name or through a PT PMA (foreign-owned business), securing full usage rights for the duration of the lease—generally spanning 25-30 years.

The financial structure usually requires upfront payment for the entire lease term, with provisions often included for future extensions. This straightforward approach has become the standard pathway for international investors seeking to establish a property foothold in Bali.

A common misconception is that buying a leasehold property in a personal name is more advantageous than purchasing through a PT PMA. In reality, the difference in taxation can be substantial. Holding the property personally can have a major impact on your return on investment and how the income is taxed in your home country.

For example, non-resident income tax is generally 20%, whereas income through a PT PMA is typically taxed at 10%.

In Indonesia, freehold ownership (Hak Milik) is the strongest land title, granting full rights to the owner—including the ability to build. However, foreigners cannot directly own freehold land under current laws.

To legally secure freehold property, foreigners can set up a PT PMA (Foreign-Owned Company). While this structure involves more setup, higher costs, and ongoing compliance, it provides a legitimate path to long-term ownership and business operations.

If you’re considering this route, it’s essential to work with qualified legal and business professionals. Our Year in Bali partners with trusted agencies to guide you through the entire investment process with confidence.

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Securing professional legal oversight is essential when finalizing any property transaction in Bali, whether freehold or leasehold.

A qualified notary plays a critical role in conducting comprehensive due diligence, which should include thorough verification of the property title, confirmation of proper zoning classifications, identification of any unpaid tax liabilities, and validation of building permits.

For example, if you’re planning to list your Bali property on short-term rental platforms like Airbnb, it’s essential to verify that the property is located within a designated “Pink Zone.” This zoning designation specifically permits tourist accommodation and short-term rental activities.

This verification process is particularly important in Bali, where unique local conditions can significantly impact property value and usability. Land access represents one of the most crucial considerations—many properties may appear attractive but have complicated or restricted entry routes.

Prospective buyers should specifically investigate accessibility issues and ensure these rights are explicitly documented and negotiated as part of the purchase agreement. Overlooking these due diligence steps can lead to costly complications that might undermine your investment’s security and value.

Smarter Property Investment with REID

To make informed decisions in Bali’s evolving property market, we recommend using Real Estate Intelligence Data (REID). This platform offers valuable insights on property trends, rental yields, upcoming developments, and regional performance, helping investors identify the best opportunities and avoid potential risks like market oversupply.

REID also enables micro-location analysis, helping you understand how factors like amenities and proximity impact performance. While Bali’s data landscape is still growing, combining REID’s analytics with local insights can give you a strategic edge—especially in emerging areas.

Exclusive Offer: Our Year in Bali readers receive 20% off all REID Location reports with code OYIB2025.