Bali Leasehold vs. Freehold: Unlocking Investment Secrets in the Island of Gods
Bali, the Island of Gods, beckons with its stunning landscapes, world-class surf, and vibrant culture.
But beneath the surface lies a complex and evolving property market.
Understanding the differences between leasehold and freehold ownership is essential for making a profitable investment.
Are you ready to uncover the secrets of Bali’s booming real estate market?
Hint: leasehold options, especially in emerging areas like Kedungu, offer unique advantages for foreign investors.
What is Leasehold vs. Freehold?
Understanding the Basics
Before diving in, let’s clarify the fundamental differences between these two property ownership structures:
- Freehold: Grants full ownership of both the land and any structures on it. Ownership is permanent and can be passed down through generations, similar to property ownership in places like the U.S., Europe, or Australia.
- Leasehold: Grants the right to use the land for a set period—typically 30 years, with an option to extend for another 20 years (up to a maximum of 50 years in many cases). You own any buildings on the land, but not the land itself.
Can Foreigners Own Freehold?
The short answer is no.
Under Indonesian law, foreigners are prohibited from owning freehold land.
However, alternatives exist:
- Hak Pakai (Right to Use): Available to foreigners with a KITAS (temporary stay permit), typically granted for 30 years with options to extend.
- Hak Guna Bangunan (HGB): A land use right often granted to foreign-owned companies (PMA), valid for up to 80 years through extensions.
While these structures offer long-term rights, renewals are not automatic and are at the discretion of local land offices (BPN).
As a result, many foreign investors find leasehold a simpler, more flexible, and often safer path.
Leasehold Dominance: The 80/20 Rule
Did you know?
80% of property transactions in Bali are leasehold, according to data from REID (Real Info ID), a leading real estate data platform.
Here’s why leasehold is so popular:
- Lower upfront costs compared to freehold.
- Broader appeal to the large pool of foreign buyers.
- Simpler resale process, especially in high-demand areas.
Leasehold properties offer strategic advantages for investors seeking high returns with minimized legal complexities.
The Nominee Trap: Why It’s Risky
Some foreigners attempt to sidestep ownership rules by using a local “nominee” to hold property titles.
This is a high-risk strategy and strongly discouraged.
Why?
- The nominee legally owns the property and can claim full rights.
- The foreigner has no legal protection if disputes arise.
- Indonesian authorities are increasingly cracking down on nominee arrangements.
With legitimate leasehold and PMA options available, there’s no need to take unnecessary risks.
The Smart Investor's Strategy
Understanding Land Price Escalation
Success in Bali’s property market hinges on when and where you invest.
In well-established areas like Canggu or Seminyak, prices have already seen major growth. Meanwhile, emerging areas—such as Kedungu, Yeh Gangga, and Kelating Beach—present significant opportunities for appreciation.
The "Coconut Law" and Horizontal Growth
Bali enforces a height restriction—often called the Coconut Law—limiting buildings to a maximum height of 15 meters.
This means developers can’t build high-rises, forcing growth to spread horizontally into new, undeveloped areas.
Smart investors target regions on the cusp of this expansion, where prices are still reasonable but poised to rise rapidly.
How to Spot the Next Hotspot
Signs of an area poised for growth include:
- Close proximity to popular surf spots (attracting tourists and digital nomads)
- New cafés, boutique shops and co-working spaces opening
- The start of luxury villa developments
- Leasehold land prices rising (typically between 5–14 million IDR per are per year)
Kedungu checks all these boxes and is fast becoming a favorite for savvy investors.
Why Leasehold Still Wins in Kedungu’s Emerging Market
Looking for smart ways to invest in Bali?
Start here.
In emerging areas like Kedungu, leasehold is winning the race.
Why?
Because it’s affordable, flexible, and accessible for foreigners.
And in a fast-moving market, that matters.
Here’s what’s really going on:
💡 Leasehold investments often grow faster than freehold—especially in early-stage hotspots.
You don’t need massive capital to get started.
You don’t need complex legal setups.
And you don’t have to wait decades to see results.
But What About Freehold?
Yes, freehold offers full land ownership.
But that comes with a price.
It’s more expensive.
It requires local nominee structures or a PMA.
And it can be harder to resell to other foreign investors.
Let’s Break It Down:
- Leasehold = lower entry cost + easier resale
- Freehold = long-term play + higher upfront capital
Still with me?
Good. Because here’s where it gets interesting.
Think Like an Investor
The real question isn’t “Should I buy?”
It’s “When should I buy?”
Timing is everything.
And here’s the sweet spot:
- Right after early development starts
- Before the masses catch on
That’s when prices are still reasonable…
And growth potential is highest.
What Should You Look For?
Here’s how to spot an area on the rise:
- A surge in new restaurants, gyms, and cafés
- Increasing construction activity
- Rising property prices in neighboring areas
- Expanding infrastructure (new roads, better internet, and utilities)
When you see these signs?
That’s your cue.
Use Local Knowledge
Don’t guess.
Get boots on the ground.
Talk to agents.
Walk the streets.
Visit the warungs and cafés.
And if possible—partner with someone who knows the market well.
It could save you millions.
Or at least a few headaches.
Final Takeaway
Want to win in Bali real estate?
Here’s what smart investors do:
- Understand leasehold structures and their advantages
- Enter emerging markets early to maximize returns
- Treat land as an appreciating asset, not just a home
With the right strategy, Bali property investments can yield exceptional returns.
But success requires careful planning, smart timing, and a data-driven approach.
