LOVE it or hate it, Australians are buying land in Bali and other far-flung Indonesian islands to build villas and resorts – but it’s not a venture for the faint-hearted. Take Alan Sinclair.
The Queensland project manager reckons the value of land in Nusa Lembongan, 30 minutes by speedboat off Bali’s east coast, has risen 800 per cent in a decade.
Even though the island had no power, sewage or running water, Sinclair took the unprecedented step of developing a luxury villa resort in 2004 – Nusa Lembongan’s first and still one of its most luxurious.
“People thought we were stupid, but we were the pioneers of Lembongan,” says Sinclair. “We were only ever going to build two villas, but now we have 23 villas and our own four-bed villa.”
Australians continue to buy land on Nusa Lembongan, which has an estimated population of 5000 – and in recent years have picked up coastal sites for a song because the locals believe the poor live on the waterfront. They are happy to sell their coastal land to foreigners and move inland.
Sinclair says Flores, in the Lesser Sunda Islands, is the next place for development, including land banking (where investors amass sites in the hope of selling them at huge profits years down the track), in the Indonesian archipelago to take off. Closer to Bali, the island of Sumba also appeals to Australian land bankers but the Indonesian government is discouraging the practice and will soon mandate land buyers must start building within a specified period.
On remote Sumba Island, beachfront land sells for about $US3 per square metre. On Flores near Labuan Bajo, land costs $US30 to $US60 per square metre.
Now that Nusa Lembongan has rudimentary infrastructure, including power, it is attracting more millionaire buyers as well as the Perth families who have been building holiday villas on the island for years.
“Nusa Lembongan has the feel about it of (Queensland’s) Stradbroke Island or (Western Australia’s) Rottnest Island, and it attracts a lot of empty nesters,” says Georgeson.
“The first wave of investors wanted somewhere to escape from Bali. The next wave of investors are people who like it over and above the hustle and bustle of Bali.”
For Ingram, Nusa Lembongan has really taken off. She has just sold a luxury villa to a German couple and there’s a few Singaporeans wanting to do a boutique hotel. There’s also rumours Indonesia’s wealthy Bakrie family have bought one of the island’s older coastal resorts to rebuild into an up-market resort.
“When I first came here two years ago there was no power on the island. It’s completely changed; instead of people coming for the day they now come for two to three days. Give it another couple of years, there will be a desalination plant on Nusa Lembongan. (But) roads have got an awful lot worse because of the trucks from the construction (of villas and resorts).”
“With a couple of partners we sub-divided and created seven blocks and they were sold off. I retained some land and built a villa for rental and personal use.”
Garland rents it out for up to $US1200 a night, typical of what Nusa Lembongan’s more up-market villas fetch.
“The price growth has been extraordinary over seven years, waterfront and cliff-front land has shot up five times in value in the past year and it’s becoming scarce; there’s a limited number of blocks.”
These days waterfront land would cost $US450-$US500 per square metre.
Garland reckons developing a cliff-front premium villa would cost $US1 million to $US1.5m, plus the land cost, probably $US700,000.
“But you can step back from the coast, go up the hill and prices come right down,” he says.
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