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.