Luxury villas thrives despite uncertainty

Luxury villas thrives despite uncertainty

Rita A. Widiadana, The Jakarta Post, Jimbaran, Bali

As one of world's favorite holiday destinations, Bali still
attracts numerous visitors to vacation on the island regardless
of social, political and security issues, as can be seen during
the current election campaign.

Over the last few years, Bali has been grappling with an
economic downturn that has badly affected its tourism and
hospitality industries. This has been a direct consequence of the
Oct.12, 2002 bomb attack, the outbreak of SARS (Severe Acute
Respiratory Syndrome), the war on Iraq and the recent Avian Flu.

The sharp drop in the number of tourist arrivals has greatly
affected all economic and business activities here.

Before the bomb attack, for example, Bali received an average
of 1.2 million tourists annually, or some 5,000 visitors per day.
The most recent data from Ngurah Rai International airport shows
that today, the number of visitors is only between 3,000 and
3,500 per day.

Thousands of hotel rooms and commercial buildings now stand
vacant. Bali has more than 15,000 star-rated hotel rooms and
thousands of non-star rated rooms.

Despite the gloomy economic predictions for the property
business, there is still hope.

Robert W. Murdoch, the chairman of Australia's THP Group, said
that the international tourism industry has been significantly
changing since the Sept. 11 terrorist attack, which was followed
by other calamities.

"The tourism industry in Bali has also changed in terms of
tourist patterns," he said.

In the past, backpackers from Australia and neighboring
countries flocked to Bali to enjoy the its beauty. They packed
the hotels and other types of tourist accommodation around Kuta
and Sanur beaches.

More affluent guests went to star-rated hotels and villas in
the Nusa Dua resort and the popular "art village" of Ubud in
Gianyar.

"After a series of tragic events, people have become more
cautious and they prefer to spend their holidays in secure
places," Murdoch explained.

People, especially the rich ones, are still willing to travel
worldwide but they are very selective in choosing flights and
accommodation, he said.

"High security and privacy are their utmost requirements when
traveling abroad," he said.

Staying in private, exclusive and secure villas is an
attractive option for these wealthy holidaymakers.

"The market remains very lucrative although the number of
niche clients is quite limited. This might be the background for
the mushrooming of luxury villa developments in Bali," Murdoch
commented.

He said he tried to attract upscale clients from Australia,
China, Japan, South Korea, the European countries and the United
States to his new establishment here.

The THP Company both in Australia and through its Indonesian
counterpart is currently developing the Chedi Villas in Bukit
Jimbaran, south of Denpasar.

During the first stage of the project, he said, the company
was building 23 villas, while the second stage of the project
would comprise the construction of 18 villas.

"The villas, when finished, will be on the market at
US$285,000 per unit," he explained. Chedi Villas offer the
opportunity to acquire fully furnished and fully serviced luxury
villas and the potential to earn income from their rental when
not being used by the owners.

The villas will be managed by General Hotel Management (GHM),
which also manages the Legian Bali and numerous hotels in Asia.

Murdoch added that the THP Group also plans to build luxury
villa complexes in Tabanan, Klungkung and Karangasem regencies in
East Bali.

Separately, Yuni Suwignyo, director of sales at Pat-Mase
Residence, voiced similar opinions. "I am optimistic that Bali
will regain its previous image as one of the most preferred
holiday and business spots."

She acknowledged that the upcoming general and presidential
elections would test the property business on the island.

"We are now entering a 'wait-and-see' period when everybody in
this business still has no idea about the post-election situation
and the consequences for investment," she explained.

Yuni, however, was certain that if the general and
presidential elections pass of peacefully, business activity
would pick up rapidly.

"I predict that the island's property business will be back to
normal within 2 years from now," she noted.

Interestingly, while the construction of many hotels and other
buildings has been temporarily halted, the development of villas
remains profitable, especially in the Jimbaran area, which is now
an alternative area to Nusa Dua, Sanur, Kuta and Ubud.

"Since the opening of The Ritz Carlton and Four Seasons a few
years ago, Jimbaran has been transformed from a barren wasteland
into an attractive site for secluded and private properties for
the well-to-do market," she maintained.

The 2002 bombings have altered the pattern of property
ownership. "People used to go for villas or hotels in remote
areas of the island. But, since the Bali bombing, foreign
visitors want to be close to Ngurah Rai Airport. Jimbaran, which
is only 15 minutes away from the airport is an ideal choice," she
added. Pat-Mase Residence, owned by the Ciputra Group, is now
developing 43 villas.

"Each of the villas are being sold for US$250,000. Our target
market is mostly European customers," she explained. She said she
could guaranteed secure legal instruments, including freehold
land titles, for foreigners wanting to purchase villas in Bali as
long as they have local nominee.

The villas will be managed by the international chain Swiss
Bell Hotel. Owners of the villas can benefit financially from
their property, and simultaneously gain a beautiful second home
in Bali.

The management applies a 9 percent annual profit sharing
system, and are ready to help the owners fully avail of their
property by renting out their vacant villas. "Eighty percent of
the available villas are already sold," she said.

For those who neither want to own a villa nor possess the
energy to go through the complex purchase system, many villas are
available for rental.

Erick Rikmawan, the marketing director of Bali Villa
Worldwide, a villa management and marketing agent, confirmed that
the demand for private villas was rapidly increasing among
affluent customers.

"Currently, we are marketing around 40 villas scattered around
Bali," Erick said, adding that most villas are fully occupied.
"It's the power of word of mouth. Many of our guests are repeat
customers. They also invite friends and relatives to stay in our
villas when they come to Bali," explained Erick.

Economically, renting a villa is much more effective. "We
charge US$250 per night for a three-bedroom villa, fully
furnished and fully serviced," he added.

According to Erick, his company has received a large number of
orders for the April to July period -- during the legislative and
presidential elections. "The general election seems to be having
no effect on the villa business here," he added.