Terje Nilsen, Director of Ray White Paradise Property Bali

Can you tell us a bit about Ray White as a business? Is Ray White Paradise a franchise?

Ray White Paradise is a real estate brokerage business; we market and sell properties such as villas, land, commercial buildings and projects to a domestic and international market. It is a franchise originally from Australia, however our franchise agreement is with Ray White Indonesia.

When did you open your business and how has it been performing since then?

We have been doing business in Bali for more than 10 years now and joined the Ray White network in May 2010. Since then we have seen a massive growth, partly due to the growth of the market in Bali, partly due to the business module Ray White provides us with.

How many staff members do you have and how is the business structured?

We have about 50 brokers whom we refer to as partners not employees, and around 25 admin people spread around our different offices. Each office focuses on each of their respective areas, with our partners who then source actively for listings, properties to market, as well as buyers and clients. Our main office in Seminyak focuses on general marketing and branding for us as a group. Once a sale is completed, there is a formula of how the commission is shared between office and partners, depending on targets reached.

Tell us about the property market in Bali. Prices have increased exponentially over the last few years. Do you see a burst in the bubble coming up anytime soon?

The market in terms of size keeps growing, and will do so for the foreseeable future, in good and bad, with many challenges, as Bali’s economy relies over 80% on tourism. The main change we have seen in the market over the last few years is the domestic market growing massively. This has to do with the generally very strong Indonesian economy. The second largest market will be Australians as they are about 30% of the foreign arrivals to Bali. The third largest market is Asians and expats living and working in the Asian area.

I don’t see a burst in the market in general for many reasons. Indonesia’s economy is very strong and also a dominant force in tourism to Bali, actually 65%. A generally strong Asian economy. The market is still mainly cash driven, even though we see a growth in mortgage-based purchases, but the ratio of the amount of these loans also on projects is still very low and a lot lower than national average for Indonesia. Also more and more institutional funds are entering the Bali market. Resorts and villas have seen a drop in 1% average per year over the last two years. However, growth in room rates more than covers up for that. With the growth of this year of about 17% overall, Bali needs about 9,000 new rooms every year! There are some issues in the low-end market, especially condotels; they sell rooms for 30 USD and cannot sustain financially, nor manage to pay ROI as promised to buyers of units. Many of these hotels are built in less favourable locations – bad build, bad design, not the best management – so of course they enter into a ‘price war’. Certain areas such as Sunset road and parts of Seminyak may start to reach a peak in land prices as with the restrictions in heights of buildings in Bali, any business concept will struggle to make sense. Other than that the market will continue to grow all over Bali.

Are there any laws in place in Bali to curb property development?

Yes and no. From time to time the Indonesian provincial and central government issues different regulations to control the growth. To curb it is impossible, simply because the economical interest is too big, as well as legally difficult to enforce. One also has to realize that the growth of the Balinese economy is less than national average and has nothing else but tourism and property. The last couple of years we have seen a shift in mindset from the government, away from curbing and more towards very strong zoning regulations, size of land needed for resorts and commercial concepts, and in general towards where the market is taken. There are massive challenges, in particular infrastructure, water, electricity and other essential items. But I do believe Bali will find its way through this.

In many foreign countries, land or property can be purchased by tourists/expatriates. Do you think that expatriates or overseas customers will ever be able to legally own property here in Indonesia? How do your non-Indonesian customers purchase properties now?

Foreigners can also legally own property in Indonesia under a set structure. What they cannot own is only freehold. First thing is to evaluate for what purpose the property is purchased as this will affect the structure. Secondly, it’s important to understand that these regulations are very safe and there are no restrictions on resale of property to anyone, even back to an Indonesian for a freehold title. Also, Indonesia does not exercise restrictions for resale via tax regulations as many other countries do. The issue for foreigners looking at buying properties in Indonesia is more the perception of the legal system. This has taken off to a very wrong path and ‘custom’ in Bali that is not done in Jakarta and Surabaya or any other area and has more to do with less responsible legal advice.

We hear the new government wants to change the regulations, and actually they have done this before by increasing the first term of Hak Pakai, and HGB titles. This is most likely to be what they aim to do. But this will also probably need some revisions of the Indonesian Constitution, as it is here these changes have failed to pass before. In general, as any country moves towards a more open market, these regulations will become easier and more and more in favour of expatriates.

What’s the most expensive property you’ve ever sold? How much did it go for?

We have done a few deals over 10 million USD in the Seminyak area with resorts. This record I think will not stand long as there is an increasing interest from high-end investors and institutional funds looking towards Bali. We also now list more and more resorts as part of our business stream.

Do you plan to expand to areas outside of Bali?

We have spelled out that we want to be a resort and tourism-based real estate company. We plan to open a few more offices in upcoming areas of Bali, as well as Lombok and Flores. We are also considering an office in Jakarta to be able to better follow up with clients in the capital. We may also do some cross-marketing of Australian and New Zealand properties into the Indonesian market.

Have you noticed any trends in the development of, and interest in sustainable housing, like houses made of bamboo, or houses with solar panels and rain water systems already in place?

Yes, this is more and more a trend we see on a daily basis, with construction concepts ranging from recycled products to bamboo and steel. Several businesses focus on this as their core business now. Being also cost effective, it’s only a matter that these products become more prominent in the market. Water is the main issue and there are many systems on the market. Hopefully the government issues regulations and tax benefits to enhance the usage of these systems, as suggested by the tourism minister recently.

What do you think the future has in store for the property industry in Bali?

I predict it will continue to grow strong and spread out over larger areas of Bali. It will continue to move more upmarket, and towards more eco-friendly developments. It’s a path we all have seen in other countries. There are some serious challenges within infrastructure developments, but I am optimistic the government will soon be up to speed. The main challenge for Bali is to preserve its culture and people, as without it we are lost; it is the main attraction of Bali.

What is it about the property industry that you love so much?

It’s more a love for Bali. To sell property in Bali feels good, as you know buyers will benefit with capital gains, ROI, and lifestyle if bought under the right structure and right price; something we guarantee will be the case.

Thanks, Terje. To get in touch, email: terje@raywhiteparadise.com

Comments

comments



Angela is a freelance journalist and founder of Clean Up Jakarta Day. Outside the office she climbs mountains and dives oceans, all the while picking up litter.


Education Guide 2017

Please provide an email address where we should send the download link.