ROI Villa in Bali: Realistic or Dream ?

If you are an investor, there are several things you need to understand in order to get a high return to improve your cash flow, this article will explain several things you need to consider as a villa property investor.

Simulation

The following is a simulation of a villa investment worth IDR 3 billion in Bali (or other tourist areas), especially for rental purposes (villa rental) as a source of passive income and property value appreciation. with assumptions as below :

• Purchase & build price of villa = IDR 3,000,000,000

• Villa size 2–3 bedrooms + swimming pool

• Land size = 300–400 m²

• Location = Canggu or Ubud

• Price per night = IDR 2,500,000

• Occupancy rate = 60% ( 219 nights per year )

• Annual operating costs = ± 35% of rental income

Annual Cashflow Calculation

• Gross Income per Year:

  IDR 2,500,000 x 219 nights = IDR 547,500,000

• Operational Costs (35%):

  Including: staff salaries, electricity, maintenance, OTA fees, rental tax

  IDR 547,500,000 x 35% = IDR 191,625,000

• Net Income per Year (Net Profit):

  IDR 547,500,000 – IDR 191,625,000 = IDR 355,875,000

• Annual ROI and Payback Period:

  Annual ROI 355,875,000 / 3,000,000,000 = 11.86%

  Payback Period ±8.5 years to payback

  Property value increases ±5–8% per year (appreciation)
  

• Simulation After 10 Years (Conservative assumption):

  Total net income for 10 years: ± Rp 3.55 M

  Villa sale value (appreciation 6%/year): Rp 3 M → Rp 5.37 M

  Total potential wealth: Rp 3.55 M (income) + Rp 5.37 M (assets) = Rp 8.92 M

Factors

There are several main factors that affect ROI such as location, management, occupancy. This is something you need to pay attention to as an investor to be able to estimate the income of your villa investment.

Location

• Near the beach/popular tourist attractions (eg: Canggu, Seminyak, Uluwatu)

• Accessibility (easily accessible from the airport/main road)

• Surrounding environment (other villas, cafes, restaurants, yoga studios, coworking)

• Zoning: the location must be in a tourism/accommodation zone to meet SLF legality & business permits

Management

• Professional management team (check-in, service, cleanliness, guest communication)

• Listing and reviews on OTA (Airbnb, Booking.com)

• Photos and visual marketing

• Responsiveness to guests & complaints

• Dynamic pricing (price increases and decreases according to demand)

• Villas with quality management can maintain occupancy above 70% and get loyal guests.

Occupancy

• Tourist season (high vs low season)

• Number of competitors in the area

• Online reputation (5 star reviews are crucial)

• Rental price vs value offered

• Unique or not the villa design (Instagrammable is very important!)

• Naiknya okupansi dari 50% ke 70% bisa menaikkan ROI dari 8% ke >12% per tahun

Monthly Rental

• Monthly rate: Rp 30,000,000

• Rented for 12 full months = Rp 360,000,000 / year

• Biaya operasional jauh lebih kecil (±10%)
  ±Rp 36.000.000

• Pendapatan bersih: ± Rp 324.000.000

• ROI: Rp 324.000.000 / Rp 3 M = ±10.8% per tahun

Advantages

• Stable, predictable income

• Operations are much lighter (only major annual maintenance)

• Small risk of damage because guests stay longer

• Small risk of damage because guests stay longer

Disadvantages

• Total rental price is lower than daily

• Cannot optimize price during peak season

• Not flexible (cannot be used privately when rented)