Property boom can have negative impact on local people

Property boom can have negative impact on local people

Anton Muhajir, Contributor, Denpasar

It was drizzling that Saturday, but Ketut Karja and his two
friends were still working in their rice field in Legian, on the
outskirts of north Kuta. Across the street, several Westerners
were seen sitting in the gazebo of a restaurant. They were
separated only by several rice fields and a highway known as
"Sunset Road".

It is a new road that connects Legian, Kerobokan and nearby
areas with Nusa Dua, Jimbaran and other tourist areas in the
south.

Where the road stands used to be rice fields and swamp. Before
the highway was built, the price of an acre of land in the area
was less than Rp 50 million, but now it is Rp 200 million per
acre.

Despite the price, there is a great demand for the land. Many
buildings are being constructed along the road. There are also
plots of empty sign, most with for sale signs on them.

"I didn't have any idea this place would change as rapidly as
this," said Karja, a farmer.

The construction of the Sunset Road began in 2002. In two
years, the 10-kilometer road was opened. Shortly after, buildings
began to pop up along the road.

Putu Suasta, a local social activist, said the river culture
in Bali had changed to a road culture. In the past, a village was
built in accordance with the flow of a river. The villagers'
houses were built along the riverbank. Now the development in
Bali is determined by roads. After a road is ready, buildings are
constructed along the side of the road.

The problem is there is no clear master plan to regulate
development activities, so anyone can build any type of building
along a road.

This has happened not only along Sunset Road but also Jl.
Marlboro in Kerobokan, Kuta, and Jl. Teuku Umar in Denpasar. Many
shop-houses and other types of buildings are located along these
roads.

According to the Denpasar branch of Bank Indonesia, the growth
of the property sector in Bali was outstripped only by banking
sector growth. Last year, the property sector grew 4.89 percent
and the banking sector 6.85 percent.

Another indication of the booming property business is the
opening of many property agents in Bali. Some of them operate
under the franchise system, like Raine & Horne.

The properties in highest demand in Bali are shop-houses.
Yoseph Kebe from Reine & Horne said more than 50 percent of his
clients were looking for shop-houses.

Not everybody, however, is happy with the flourishing property
business. Popo Danes, a renowned local architect, is a little
upset that so many of the new buildings are owned by foreigners
and many Balinese have lost their land.

Many villas and houses in Kuta, Kerobokan, Nusa Dua, Ubud and
other tourist areas belong to foreigners.

"The Balinese just work as gardeners on the property of
foreigners," he said.

Eddy Surya Wijaya, director of Etika Dewata, a local property
agent that opened in Bali last year, said 20 percent of his
customers were foreigners, while Yoseph said foreigners made up
10 percent of his clients.

Local buyers, mostly from Jakarta, Surabaya and also Bali,
prefer to buy shop-houses or buildings to run businesses.

Therefore they choose to buy property in strategic places like
near the Sunset Road, Jl. Marlboro or By Pass IB Mantra, which
connects Denpasar with Gianyar, Klungkung and Karangasem.

In those areas, a two-story shop-house measuring 5 meters by
15 meters costs between Rp 700 million and Rp 1 billion. In a
month, R&H can sell between three and five shop-houses, while
Etika Dewata sells between five and 10 units per month.

These figures have been on a rising trend, according to both
Yoseph and Eddy.

Foreigners prefer to buy land in tourist areas like in Canggu,
or Sawangan, Nusa Dua, and build villas there.

According to a government regulation, foreigners cannot
individually own land, a house, a villa or other property. But
the facts show that many buildings in Bali belong to foreigners.

Yoseph said some of them owned buildings in their capacity as
foreign investors, while others bought property using the name of
a local.

"More than 90 percent of my foreign clients use the second
method," he said.

This can be easily done. A foreigner will pay a local who will
allow the foreigner to use his or her name to buy property, and
usually the foreigner will hire the local as an employee or his
or her representative.

Ketut Sudiarta, a Balinese who works as a security guard, said
he allowed an Australian to use his name to buy land in Lovina,
Buleleng, and build a villa there.

Another method is marrying a local. There are many foreigners
who marry a Balinese man or a woman so that they can buy property
using the local's name.

"Therefore, there is no definitive data about the ownership of
property by foreigners," Popo said.

Made Pria Dharsana, a notary public who often serves
foreigners, said it was not difficult for a local married to a
foreigner to buy land or a house, while a foreign investor had to
get a permit from the Investment Coordinating Board in Jakarta.

To get the permit, the foreigner must submit a detailed
proposal.

After the investor gets a permit, he or she has to apply for
approval for the establishment of a legal body at the Ministry of
Justice and Human Rights. A building permit and a location permit
from the local administration are also required.

Following the implementation of the regional autonomy law,
local administrations also often involve themselves in the
establishment of a legal body and ask for a share of the
business, according to Dharsana.

Land owners in Bali do not care about the procedures. "If
anyone wants to by my land, I will sell it," said Nengah Sudiani,
a resident of Nusa Dua, who is selling 3.5 acres of land in Nusa
Dua at Rp 100 million per acre.

Others have deliberately tried to sell their property to
foreigners. Like Ketut, who is selling five acres in Kuku
district in Karangasem, near the tourist area of Tulamben.

"I can sell it to foreigners at a better price," he said.

Popo criticized the less-than-clear regulations about property
ownership and the attitude of the locals. After selling their
property, the Balinese usually spend the money to buy a car or to
build a large merajan, a temple at their house. Popo said the
larger the merajan, the higher the cost of (religious)
ceremonies.

"If there is no more money left, what can they do?" Popo asked
pointedly.