There are not many alternatives yet in Bali but in Jakarta, serviced apartments are booming. A lot of hotels now do what they call a mixed-use concept where they have rooms and serviced apartments. We do know that a lot of the developers here now are looking at that as the next trend for Bali too. People can rent a serviced apartment if they’re living here for a year rather than a villa which takes up a lot more staff and maintenance and so on.
It’s a big trend. There’s been serviced apartments in Jakarta for about 20 years but the last couple of years it’s really speeded up. I think the financials of it is one reason. More and more investors and developers are waking up to that being a good concept. With deregulation now happening in Indonesia it is step-by-step becoming easier for foreigners to invest too. There are quite a few developers and the big management companies have managed serviced apartments and they see it as a big market where people would invest.
Jakarta is an easier entry point, there’s a lot more people, but the second place to go is then Bali. There’s quite a few developers looking to do projects in Bali. They’re mostly Indonesians but also because of the deregulation, more foreign developers are looking at it. Quite a few projects will have a mixture, maybe an Indonesian lead investor and then a few partners that would be mainly Chinese, Taiwanese. That’s another trend that we are seeing in the international market, more investors are coming into Indonesia in the real estate sector.
The Chinese investors are still in the early stage but the Chinese tourist market just recently overtook the Australian tourist market in size. We see a lot of requests in particular for Chinese commercial investors. There’s been 16 to 18 percent growth in tourist numbers into Bali this year.
Indonesia has declared ten areas that they want to focus on and they’re starting to do some sort of infrastructure and investment development. The first one to come is Lombok. Just a few days ago the government has committed to building at least 1500 rooms over the next few years. That’s a big move and a big project that is probably going to trigger other players to look at Lombok too. There’s still a huge pipeline of resorts coming, in particular in Bali.
I think it will slow down a little bit because it’s been bigger than the inflow of tourists. There’s probably 20 or 30 projects happening in Bali and more on the upper scale too. It’s good for Bali to lift the scale of the offering. There’s a lot more interest in the upper part of the market and so far that part of the market is very healthy.
