Hello, this is Nomad Jung 👋

This week, I want to go a little more in-depth about “How to Buy Land in Bali, Indonesia.” If you've been considering investing in Indonesia or Bali, today’s post will be packed with the latest, hard-to-find local information. We're partnered with Jakarta/Bali law firms, so most of the information has gone through legal review. (Though, of course, we never know how things might change in the future.)

Table of Contents

• A Detailed Guide to Buying Land in Indonesia (Bali …

  • Introduction: Starting an Investment in Bali

  • Chapter 1: Land Search – Setting Your Goals

  • Chapter 2: Due Diligence – Inspect Carefully

  • Chapter 3: Legal Procedures – Transferring Ownersh …

• Want to Own a Piece of Gabbi Hotel?

A Detailed Guide to Buying Land in Indonesia (Bali):

Packed with information you won’t find online | Hard-earned lessons from two years of trial and error

Over the past month, I surveyed people interested in overseas real estate investment to find out which countries caught their eye.

Of the 120+ responses, nearly 50% were interested in Southeast Asia, and more than half of those were specifically looking at Indonesia (Bali). After Indonesia, Thailand and Malaysia were popular, and in Europe, it was Portugal, Spain, Greece, and Italy.

When I talk to people, many mention that they’re considering buying land in Bali, Indonesia. And then they ask: “Isn’t it illegal for foreigners to buy land in Indonesia?” “Is it even possible?”

These are valid questions. Even in Korea, buying land can be fraught with risks like scams, lawsuits, or debt. So naturally, purchasing land abroad seems even more complicated and daunting.

So, how hard is it to buy real estate overseas? Honestly, it was really tough... There were things I never would’ve imagined happening.

Introduction: Starting an Investment in Bali

Right now, we're making good progress with the Gabbi Hotel project in Medewi, Bali. Here’s the lowdown on our land details. If you want more information about the property, you can check it out here:

Last August, after visiting the land in person, we went through a one-month due diligence process with lawyers, visited the Ministry of Land, reviewed documents, verified family certificates, brought in a notary and lawyer, signed the contract, made the payment, changed the ownership name, applied for a new land license, and waited for someone from Jakarta to come inspect the land before finally receiving the license. All of this took nearly a year.

Although officially it took a year, we actually started looking for hotel land at the end of 2022. Including the deals that fell through, the entire process took two years. In the first year alone, two transactions collapsed at the final stage, and I personally bought land in Lombok but decided not to move forward with the project there.

I learned a lot from all this, and now I want to share the steps to buying land in Bali. The process follows the same laws throughout Bali and Indonesia, although local practices may vary slightly.

Chapter 1: Land Search – Setting Your Goals

Before purchasing land, you need to clarify what you want, which market you’re targeting, and what kind of property you want to develop. Also, decide which type of ownership (leasehold or freehold) you’re aiming for and what your investment goals are (short-term, long-term, cash flow, etc.). These criteria will guide your land search and selection.

One of the most important things to understand when setting investment goals is the type of land ownership available in Indonesia. When buying land in Bali, there are usually two main ownership types to consider:

Your strategy will depend on your investment goals:

• Long-Term Investment: If you have the time and resources for a long-term investment, purchasing freehold land in an area expected to appreciate over the next 5-20 years could be a smart move. This strategy focuses on significant value growth, requiring thorough market research and future value predictions.

• Short-Term Investment: If you’re looking for a quicker return, consider buying land in a currently popular area, developing it, and selling or renting within 2-5 years. This approach allows for faster capital recovery and profit.

• Cash Flow: If your goal is immediate cash flow, purchasing a villa or other property in an already popular area and offering rental services is a good option. This strategy generates income quickly and is relatively easy to manage.

A Realistic Timeline

Finding land in Bali might be the hardest part of the investment process. From speaking with real estate developers, I learned that it typically takes an average of 3-4 months just to find the right land. Bali doesn’t have a central government system where all land is registered, nor is there a single platform that consolidates all land information. Most properties aren’t even listed online. Prices aren’t recorded in land books either, so you could see price differences of two to three times for land right next to each other.

Additionally, much of Bali’s land is designated as green zones, which are protected areas where development is restricted. The best way to find land at local prices is to make friends with the locals and get introduced to land through village connections. But this requires having local friends and speaking Bahasa Indonesia – if you speak English, the price triples.

In my case, it took 3-4 months to find each of the two properties I bought. I also had three deals fall through at the final stage, which I’ll cover in the next chapter. Even with leasehold properties, which don’t require a separate license, it took an average of 4-6 months to complete transactions, including due diligence and transfer procedures. (If you’re experienced or have an existing network, it could go faster.)

So, how do you find land?

Honestly, the best way is through direct introductions to the landowner or the owner’s friends via locals. The prices are different. It’s not uncommon to see price differences of two to three times. Most of the good land in Bali is found this way, through word of mouth.

My case: The neighbor who introduced me to the land for Gabbi Hotel (a friend of one of our co-founders)

For foreigners, though, this can be tough. So, working with real estate agencies is often the fastest and most efficient route. But I’ve seen it happen many times: as soon as you walk in as a foreigner who only speaks English, they show you ridiculously overpriced land.

Using Indonesian real estate websites is a bit better in terms of pricing, but as soon as a property is listed online, there’s already a huge markup compared to local prices.

Chapter 2: Due Diligence – Inspect Carefully

The due diligence process in Indonesia is crucial, and you might encounter unexpected issues. I had three deals fall through at the final stage.

In the first case, I waited three weeks for the land deed, only to find out it was in a green zone (protected land). In the second case, the seller refused to show the land deed until after I paid a deposit, dragging it out for weeks with unnecessary power plays. In the third case, I went to visit the land, only to have someone claiming to be the owner show up – but the shape of the land they were talking about didn’t match the deed. Sensing a potential family inheritance dispute, I canceled the deal.

Wait, before we go further, here’s something you should know:

Land zoning is critical when buying land in Indonesia. You can check zoning, land shape, and location on the government website here:
https://gistaru.atrbpn.go.id/rdtrinteraktif/

However, once you move a bit outside the city, most land isn't registered in the online system. In these cases, you’ll need to visit the local office to obtain the land deeds in paper form (which can take weeks). If you want faster service, it’s always helpful to have a little “gift” to speed up the process.

Even if a land deed looks perfect on paper, in a country like Indonesia, unpredictable things can happen. When we purchased land, we verified whether the notary was a real notary and if they had the proper license. To ensure a truly safe transaction, we had to check if the real estate agent was actually licensed (most aren’t), if the lawyer was legitimate (sometimes not), and if the landowner was really the landowner (many aren’t).

Common Legal Issues When Buying Land in Bali

• Document Authenticity: One of the most common problems in land transactions is that the actual landowner may differ from the person on the documents, or the documents could be forged. These discrepancies are often hard to catch on paper, which is why it helps to build relationships with locals and speak Bahasa Indonesia. One of the most frequent issues is when the seller’s claims don’t match the information in the documents. If they demand a deposit before showing the deed, it often suggests there’s a problem with the paperwork. In my case, I found that some land was designated as a green zone (protected land) or that the actual land shape didn’t match the documents during due diligence. These experiences caused multiple land deals to fall through at the final stage.

• Family Inheritance Disputes: This is another major issue when buying land in Bali. Families often divide land among their children, and sometimes, one child tries to sell the land without the knowledge of the others. This can lead to legal disputes, and occasionally, even after one relative sells the land, another sues, taking the matter to court.

• Double Booking: Another common issue is when a piece of land is sold to multiple buyers. This happens due to the time gap between the sale and the completion of the notary and registration process. Sometimes this can take weeks, during which the same land may be sold to multiple parties.

All these experiences have taught me one critical lesson: when buying land in Bali, you need to be extremely careful. Understanding and preparing for all legal procedures is crucial.

Chapter 3: Legal Procedures – Transferring Ownership

Once you’ve decided to purchase land, the next step is to select a local notary in charge of the area and, if necessary, bring along a lawyer to finalize the land contract.

There’s no standard contract for land purchases – most deals are highly individual. Usually, sellers prefer to receive the full payment in cash at once, but I’ve also seen contracts where payments were split into two or three installments. When negotiating, don’t back down...!

• Freehold: The taxes on freehold purchases are about 5% of the purchase price, typically split evenly between the buyer and seller.

• Notary Fee: Usually around 1%, though it can range from 0.5% to 3%, depending on the region or deal.

• Agent Fee: Often included in the land or property price.

Other costs, like license fees and due diligence fees, may also apply depending on the situation.

And for those wondering about loans – in Indonesia, it’s nearly impossible for foreigners or foreign companies to get a loan, no matter how much money you have. But the relatively low property prices still make it doable. Alternatively, you can share the investment with friends, pooling funds into a corporation to own the land or building.

Once you own the property, in Korea, this wouldn’t be classified as “overseas real estate investment” but rather “corporate investment.” Therefore, if you receive income as “dividends,” it’s treated as financial income rather than regular income, and up to about 20 million KRW annually would be taxed at a 15.5% rate – according to my tax advisor from two weeks ago. I’ll confirm this later and provide a more detailed explanation.

This might not be of interest to everyone, and I wonder if I’ve gone too far into the details. But if you ever decide to buy land in Indonesia, feel free to revisit this newsletter. It’s packed with everything I’ve learned over two years while studying, experiencing, and consulting with lawyers for the Gabbi Hotel project. I hope it’s helpful to those who need it.

If you’re looking for land in Bali or seeking any advice for investment, you can reach out here.

Want to Own a Piece of Gabbi Hotel?

3 of 8 units sold | last chance for discounts until September.