Bali attracts investors from all over the world. Some dream of an oceanfront villa they can rent out. Others seek the perfect place to live. Some simply want to preserve their capital. According to Legion Real Estate, these investors are making a smart choice—real estate is currently regarded as one of the most promising asset classes.
The largest real estate agency in Bali has been finding the best properties for its clients for years. The Legion Real Estate team helps buy and sell not just coveted square meters but also ready-made businesses. In short, they know all the pitfalls of the local market. They shared with our readers the five most common mistakes and gave advice on how to avoid them.
Legion Real Estate founder Aleksandr Guliaiev
How to Protect Your Money and Nerves: Analyzing the Main Risks with Legion Real Estate
The Balinese real estate market differs from those in Europe, Turkey, or Dubai. It has its own rules and nuances that must be understood in advance. Even one mistake can be very costly — both financially and otherwise. That’s why Legion Real Estate advises approaching purchases with a cool-headed strategy.
1. Unrealistic Expectations
In advertising brochures and presentations by developers, figures of 20-25% per annum, or even higher, may appear. Against the background of European 3-5%, it is tempting. ut this does not reflect reality. The actual return on investment in Bali real estate is about 10-15% per year. To earn so much, you need to choose the right object — in a promising neighborhood with good infrastructure.
INSHI Development and Legion Real Estate representatives
For example, a penthouse in the front row of the popular Dreamland Beach.
- Cost per square meter: $4,500/m².
- Expected income — from $47,500 to $245,400 per year depending on the type of penthouse (Sea view, Sea line or Panoramic Golf).
- Daily rent.
Yields will be around 15% per annum — with proper management and stable occupancy.
Where is the difference with what developers show? The fact is that few take into account the seasonality of tourist flow and possible downtime, repair costs, interior renovation, utilities and tax liabilities.
Another factor on which profitability depends is the growth of competition. There are more new properties — rental rates are going down. Although demand remains high, due to oversupply in some locations the profitability of properties is decreasing.
Legion Real Estate agency recommends investors not to “raise the bar”, but to count on about 10-15% per year: “A conservative forecast will save your nerves. A good investment is when expectations coincide with reality. Invest money based on facts and figures, not emotions,” experts explain.
Photo of Aleksandr Guliaiev at work
2. Lack of Understanding of Legal Aspects
The key thing to understand is that, under Indonesian law, foreigners cannot directly own land. Several legal mechanisms are available, each with its own specifics and risks:
- Hak Pakai (Right of Use). A foreigner can own property for 25 years, with the option to extend for the same period. It is convenient for personal use but not suitable for commercial activities.
- Hak Guna Bangunan (Right to Build). Foreign citizens are allowed to construct and own buildings on land for 30 years, with the possibility of extension. This option is suitable for commercial purposes.
- Nominee Agreement. Many foreigners make agreements with a local resident, who officially registers the property in their name while the foreigner effectively “owns” it through a contract. Although this method is popular, it is not legally recognized.
- PT PMA (Foreign Investment Company). An investor can establish a company in Bali with foreign capital. This legal entity can purchase certain types of land. However, this requires an investment of approximately $700,000 and hiring multiple directors.
- Long-term Lease (Leasehold). Land or a villa can be leased for an extended period (typically 25-30 years with an extension option). This does not grant ownership but allows for secure use of the property — as long as all documents are correctly prepared.
Founder of real estate agency in Bali Legion Real Estate
Legion Real Estate warns against participating in simplified or dubious schemes to bypass the law. Regulatory authorities can annul such transactions upon inspection, and in that case, recovering the investment would be impossible.
Another common issue is failing to conduct due diligence before purchasing. Investors must ensure that the developer:
- Has all necessary building permits
- Has no outstanding debts
- That the property matches the declared land designation
To minimize risks, Legion Real Estate experts recommend working only with professionals — lawyers specializing in transactions involving foreign buyers.
“Legal literacy is not just a formality; it’s the key to securing your investments in Bali,” says the agency. Indonesian laws are complex and constantly evolving. To shield their clients from these difficulties, Legion Real Estate provides comprehensive legal support throughout the entire transaction.
Legion Real Estate expert on real estate investment in Bali
3. Underestimating Climate and Construction Quality
Bali experiences frequent rainfall, high salt content in the air, and extreme humidity (sometimes up to 95%). The island’s tropical climate significantly shortens the lifespan of buildings. Materials that last for decades in Europe may require repairs within just 2-3 years in Bali.
“People who are used to a different climate may not realize how serious this is. They see beautiful pictures and attractive prices but don’t consider maintenance costs,” says Aleksandr Guliaiev, founder of Legion Real Estate.
Common issues faced by property owners include:
- Mold and fungus
- Corrosion of metal components, including concrete reinforcement
- Deformation of wooden structures (termite damage)
- Electrical wiring damage
- Concrete deterioration (a frequent issue when using unwashed local sand)
Another critical factor — Bali is prone to earthquakes. This means houses must be built using specialized construction techniques to ensure structural stability. That’s why Legion Real Estate only collaborates with developers with impeccable reputations.
Legion Real Estate award from developer in Bali
4. Choosing the Wrong Location
“Even if the view from your window is stunning, if there’s no proper road, that’s a problem,” says Aleksandr Guliaiev from Legion Real Estate. He advises investors to focus on properties in tourist-friendly areas with developed infrastructure.
When choosing a location, consider:
- Accessibility: Are the roads in good condition? Are there buses or other public transport options? How long does it take to reach key locations?
- Utilities: Are there frequent power outages? Is the internet reliable? Is water supply consistent?
- Nearby amenities: Are there hospitals, shops, cafes, parks, and entertainment venues?
Legion Real Estate emphasizes that property value and growth potential are directly tied to the area’s development.
Several key investment zones in Bali include:
- Premium Areas (Seminyak, Canggu, Ubud, Nusa Dua) – Excellent infrastructure, stable tourist demand. Property values grow 10-15% per year.
- Developing Areas (Uluwatu, Tabanan, North Coast) – High growth potential (up to 20% per year) but also higher risks due to uneven infrastructure development.
- Remote Areas – Developers may highlight scenic views and low prices, but these areas often lack infrastructure, making properties less liquid.
“Even if you’re buying property in Bali for yourself rather than for rental income, you may need to sell it someday. When that time comes, location will be a key factor,” say Legion Real Estate experts.
Choosing a location to buy real estate in Bali with Legion Real Estate
5. Lack of a Property Management Strategy
Some investors focus only on purchase costs and expected income, overlooking operational expenses. However, owning property in Bali comes with ongoing costs, including:
- Property management (15-20% of rental income)
- Taxes (annual land and building tax)
- Utility bills
- Property maintenance
- Staff salaries
These expenses can amount to 5-8% of the property value annually, which is higher than in many European countries. Without proper planning, an investment may turn out to be less profitable than expected.
Legion Real Estate helps its clients address all these concerns upfront. As a major agency, it is among the first to receive exclusive offers from developers — often before official sales begin. Experts assist investors in selecting the best opportunities and, if needed, take over property management responsibilities.
Legion Real Estate also provides legal support at every stage, acting as the client’s advocate in all situations. Moreover, buyers can count on ongoing assistance even after the deal is closed.
