Bali is, simply put, a beautiful island. So we weren’t surprised when two of our closest friends made the decision to move out there permanently, lured by the Echo Beach surf and the scuba diving in Gili Islands. They asked us for some help, so recently we’ve been looking into how much it costs to build a villa in Bali, including all the land costs, legal costs, cost of building materials, and price of labor.
It’s not as cheap as we first thought, but once you factor in the size of what you’re getting – and the fact that you’re in Bali – it’s a good deal. That’s providing you have the money, and plenty of time – in Bali, patience, or sabar, is practically a contractual obligation.
So from what started as an in-house project, here’s our comprehensive guide to all the costs involved in building a villa in Canggu, Bali. We’ve based this on info from business contacts in Indonesia as well as the experiences of a digital nomad couple who moved there back in 2016. Here’s an overview of what we found out, followed by a full breakdown.
How Much Does It Cost To Build A Villa In Bali?
Whether you’re in Bali or Bel-Air, the cost of property is governed by just three things: location, location, and location. You may decide to build your villa in Kuta or Seminyak, but here are some costs based on the villa our friends want to build in Canggu.
For a mid-range, 3-bedroom villa with a pool 5 minutes from the beach, we’re looking at a total cost of $290,000 (unfurnished). This includes leasing 240 sqm (2.4 ares) of land, which would be about $78,000 based on $1,300 per are per year for a 25-year lease. Building costs and labor at $850 per sqm work out at $204,000, and then add another $15,000 or so for legal fees and bribes (err… charitable neighborhood donations).
Those costs are simplified, so here’s a complete breakdown of all the costs involved in building a villa in Bali: from empty plot to fully-furnished slice of paradise.
Building A Villa In Bali: Complete Cost Breakdown
Buying The Land
There’s an official decree that states “Indonesia’s land is a gift from God to the Indonesian people”, which means foreigners cannot legally own land or property anywhere in Indonesia. Instead, the easiest and most common option is a long-term leasehold agreement.
These typically run for an initial period of 25 years and are priced per are (100 sqm) per year. The cost includes the hak sewa, which is the right to build a property (and a pool) on that land.
Location is everything, and the prices start at $400 per year for an inland plot in the middle of nowhere, to over $3,500 for some of the most desirable beachside locations. So, over 25 years for a 3 are plot, your total outlay can range from $30,000 to $250,000 and up. Just as a reminder, the land we’re looking at for our personal Canggu project is $1,300 per are per year.
The main problem with renting land in Bali is finding it. A lot of the best locations have been snapped up, and the not-so-desirable locations command a premium. Even under the current Covid-19 regime, Bali’s land prices are increasing month by month. A good idea is to keep your eye on some specific plots over a few months to get a feel for how the market moves.
It might be worth looking at some of the less-residential places for inspiration: secluded places like Nyang Nyang Beach are quite affordable now, and a good investment for the future.
There are countless Bali estate agents happy to sell you a leasehold, and they’re a great source of data. When we started our own construction project we bookmarked a site run by Paradise Property Group to check the weekly price fluctuations (We’re not affiliated with them in any way – they just have a usefully large range of land for sale in Bali). If you lease land through an estate agent, expect to pay up to 5 percent as a fee.
The 25-year leasehold is usually extended to anything up to 70 years, but that needs to be pre-arranged. When the contract ends, the land, including any improvements, is returned to the owner by law. And ‘any improvements’ includes any building development, so effectively after 70 years you have to hand back your villa and pool for free. But we guess that’ll be a problem for your grandchildren.
There are a lot of forum posts about finding a local nominee to help you actually buy and own the land. This is never a good idea, as legally the land will always belong to the nominee, no matter what kind of deal you’ve made. Every foreigner living in Indonesia has a story about how a friend was contacted by the nominee the minute their house had been finished, with demands to pay double for the land or face immediate (and legal) eviction.
Worse still is Australian Susi Johnston’s story, which involved mafia intimidation and the planting of drugs in attempts to evict her from her $3m mansion, which was built on land ‘acquired’ through a nominee. She refers to it as her nightmare in paradise, and fought her case all the way to Indonesia’s Supreme Court. The court declared that “no nominee arrangement is valid”, and Susi Johnston now faces crippling debt and a jail sentence.
So, in short: don’t use a nominee to buy land, or you could end up losing everything.
Permits and Permissions
Before you break ground in Indonesia, you need to obtain a building permit, known as an IMB (Izin Mendirikan Bangunan). It’s illegal to begin any construction until you have this document in your hand, and they can take between 4 and 10 months to come through (remember what we said about sabar?)
The cost of an IMB is about $200 to $300, but normally the building contractor or architect will sort out all the paperwork and add this fee to his Bill Of Quantity (BoQ). If not, choose another contractor. If you need more info on this, we found some useful advice at mrfixitbali regarding the IMB building permit.
Additionally, you cannot apply for an IMB or any other documents if there are unpaid taxes on the land. It’s impossible to say how much these could be, or whether you’ll be responsible for them. If there are any outstanding amounts, they can be a useful negotiating tool when discussing the purchase price with the landowner.
If you’re building a villa to rent out, you’ll also need a license called the Pondok Wisata. As it can only be applied for by an Indonesian, foreigners must get it via a nominee. In this case, the nominee is usually the landowner and the process is totally legal. The cost of a Pondok Wisata is up to $3,500, based on the size of your property. Again, your contractor and/or landowner should include this in the price.
Architects and Building Managers
There are so many unforeseen things that can go wrong when building a new house or villa, and those things are infinitely harder to deal with in a foreign country. It pays to have an experienced local to oversee construction deadlines, the ordering of materials, and to fix all the contractors you’ll need. Usually, that task will be handed to an architect or building manager.
A local architect in Bali will charge between 10 and 15 percent of the overall construction costs, which could end up adding $15,000 to $20,000 to your overall outlay. The problem here is that less reputable architects will regularly over-inflate the cost of, well, everything, in order to push up their own fees. In the minds of many Indonesians, this is a perfectly acceptable practice: any foreigner with hundred of thousands to spend on a property is obviously very rich, and won’t miss a few thousand dollars here and there.
Some of the work typically performed by an architect can be contracted out to other people: for example, an independent qualified draughtsman would typically charge £2,000 to $3,000 for completing and submitting documentation, whereas an architect will charge roughly double that. However, taking work away from the architect just to save a few thousand dollars can create a bad atmosphere, and we can almost guarantee that this will end up costing you more in the long run with surprise ‘delays’ and ‘surcharges’.
A better option is to hire a Building Manager, often called a Project Manager. This person is loyal to you, the client, and is there to look after your interests. If they suddenly come up with a friend from Bali who “works as an architect”, or particularly if they offer to do the work themselves, they’re not the right guy. A Building Manager in Bali costs the same as an architect, so expect to pay about $20,000.
Hiring a good Building Manager will eventually save you money, as there will be less chance for contractors to inflate their prices, or get lazy and take 3 months to do a 2-week job. You just need to ensure that everyone working on your project understands that the Building Manager has the final say over everything.
Construction Costs: Labor and Materials
Labor is cheap in Indonesia, and there are a lot of construction crews vying for villa business. As a rough guide, the cost of construction, including materials, should be between $500 and $1,000 per square meter. That’s based on the size of your villa’s floorplan, not the land, so assuming your villa has an area of 200 sqm gives an average cost of $150,000 for labor and materials. If you’re building a pool as well, this could add another $12,000 (on average).
Irrespective of what a lot of construction companies may tell you, they will all work to a fixed-price contract. Some contractors will insist they get paid based on the size of the property, but they’re probably setting you up for a price hike. There’s no reason why a reputable builder wouldn’t give you a fixed price, and if they won’t then just find someone else who will.
Other Professional Fees
Apart from the cost of an architect or building manager, there are other professional fees you can expect to pay. These are usually costed per square meter, so based on your 200 sqm property, the fees are likely to be:
- Structural engineering fee: $3,500
- MEP (Mechanical, electrical and plumbing) design fee: $1,700
- Quantity surveyor’s fee: $1,200
Other Other Fees
Yes, we know it’s a silly heading, but there really are that many different expenses when building a villa, especially in Bali. One to take note of is Banjar, which is basically a local community group that acts as a village government system and village council. It is independent of the Bali police, and operating costs are collected from the village community.
Bali residents typically contribute about $10 per month for Banjar, but as the rich villa owner, your ‘suggested’ contribution could be as much as $100 per month. It’s not a fortune, but over the length of a 25-year lease, your Banjar contributions could approach $20,000.
To build a villa here is not an easy task. Finding the right plot of land is difficult, and the leasehold price will probably be higher for a foreigner than for a Bali native. There will be months where all you can do is wait for a particular government official to actually open the mail on his desk so he can grant your application — and nobody will care that it’s costing you money to wait.
Finding ways to shave off a few dollars by doing some of the legwork yourself might seem like a good idea, but that’s not usually how it’s done in Bali. You just need to accept that your villa will probably cost 30% more than you budgeted, and won’t be finished in time for that 25th wedding anniversary celebration you had planned.
But if you’re happy with all that, you’ll get a property that you can be proud of, designed to your particular specifications and in a killer location. It might have cost you a lot of time and a lot of money, but as you lie back and relax just remember: you’re in your own villa on the island of Bali – one of the most beautiful islands on Earth.