Back in 2014, I wrote a blog about what I thought was wrong with real estate in Bali. It caused a bit of a stir at the time, but the bottom line was that nothing was wrong! Nothing at all!
I then updated it a couple of years later in 2016, which highlighted some interesting developments. Now it’s time for another update and this post looks at one of those areas of interest; Is there an accommodation oversupply?
Two years ago I would have said ‘Yes’ there is, but now I’m not so sure.
Most indicators are pointing the other way.
It’s true that 4 and 5-star hotels have seen an increase in both average room rates as well as occupancies, something both Colliers and JLL, among others, have reported on. There has even been a slight increase in the average stay per guest. This however, is sometimes described as dropping to around 3+ nights per guest.
However, this doesn’t reflect the length of time visitors actually stay in Bali, it just looks at how long they stay in one particular place.
I think there are two main reasons for this:
- The large number of domestic visitors from other parts of the country (something often overlooked)
- The fact people are moving around more, visiting and staying in more than one place.
Recently Airbnb announced Bali was the second most viable villa and house rental market in the world, second only to London, with some very impressive figures both on prices and occupancy.
And we all know Tripadvisor in 2017 had Bali as the best destination in the world!
At the same time, we shouldn’t ignore the wave of food and beverage developments happening right now making Bali a culinary destination in its own right.
The government has massive marketing budgets for tourism and they’ve been extremely successful with the Chinese market and now they’re focused on the Indians.
I know opinions are divided about these two markets but they are both considered to be the main outbound markets for the future.
Most other markets continue to grow steadily, including the traditionally loyal markets from Australia and Japan.
But the domestic market is where it’s at and we’ve noticed that more locals are making use of villa accommodations more than ever before. With the general uplift of Indonesia and its economy we predict this will continue to be strong.
