Leasehold: Holiday Rentals vs. Long-Term Rental Villas in Bali

The first, and possibly most significant factor to take into consideration when investing in leasehold property in Bali is how quickly can you get your initial investment back.

A number of different aspects will impact this. Possibly the most significant is how long is left on the lease as this has the most immediate impact on how long it takes to get the expected returns.

So what to expect?

It’s been my experience that most investors are looking to get around 10% ROI annually. This is feasible if the length of the lease is good (20+ years) so there’s enough time to get your initial investment back and also enough time to make a decent profit.

Getting those returns can be achieved through short-term holiday rental villas and long-term rental villas.

But there are important differences to be aware of.

Holiday rental villas in Bali must have the proper operating licenses. Long-term rentals villas don’t.

Short-term holiday rentals

There are two operating licenses available for short-term holiday rental villas:

  1. Pondok Wisata

  2. Hotel Melati

The difference between them is based around the size of your operation. If you have a property with more than 5 bedrooms you have to have a Hotel Melati license. Anything smaller will be covered by a Pondok Wisata license.

In order to get either license, your villa must be located within a Tourism Zone and be approximately within 500 meters of the beach. These villas generally command higher prices as land in these sorts of prime location will usually be more expensive.

All that being said, a property in the right zone and with the right licensing in place can be a very good investment if you put the time into running the business.

Short-term holiday rental villas can often achieve more than 10% ROI. We’ve actually seen some go over 15%, but they’re not common. They’re able to get this sort of return if they’re committed to marketing, managing and maintaining their villa (or villas.)

This however, can easily turn into a full-time job, either for the owner/investor or dedicated teams employed to run things efficiently (and profitably.) But many investors who live abroad find it difficult to do this when they’re not living in Bali full-time.

Our research shows that short-term holiday rental villas that average between 70% and 80% occupancy per year are more likely to hit between 10% to 15% ROI.

Those are high occupancy numbers and they come at a price. Maintenance, repairs, salaries and commissions to OTA’s such as Booking.Com, Agoda and Airbnb need to be considered. They add up and cut into your profit.

Long-term rental villas

Anything renting for over 6 months is usually considered to be long-term. Villas in this space also have very good potential and can provide a good solid passive income with much less hassle.

Long-term rental villas in Bali are usually paid for upfront. Tenants usually cover costs including staff, electricity, garbage and security fees.

Long-term rentals do not need operating licenses. They also don’t need to be in dedicated tourism zones. This has two significant affects:

  1. Your villa can be located in a residential zone, which means a much wider and varied choice of properties.

  2. Your choice of villas is very likely to be better quality for the same price as a short-term holiday rental property.

In my experience, long-term rental villas can easily achieve around 10% ROI annually. Most leases are at least 25 years long and that gives you enough time to get your initial investment back and still have time to make a solid profit.

Berawa Beach at sunset

Where’s good to invest?

A good area to buy a property for long-term rentals is in Berawa, Canggu where there don’t seem to be many good quality yearly rental options available. And that means if you’ve got one, chances are someone will want it … quickly.

There are a few reasons for this:


Berawa has easy access from Seminyak, Batubelig and Jalan Raya Canggu.

International Schools

A number of new international schools have been built in the area over the past couple of years and families with school-age kids need to be close by.

More facilities

There are also more facilities being offered in the area. Facilities like banks, medical clinics, restaurants and grocery shops have led to many expats moving into the area.

 First published on Gapura Bali

Seven Stones Indonesia is a property company headquartered in Bali, Indonesia, with a mission to help people who are interested in buying and selling residential and commercial real estate.

If you’re thinking about property, ROI, capital gains or lifestyle investments in Bali, Jakarta, Surabaya, and Indonesian’s Eastern Islands and need some friendly advice and guidance then why not email or check out Seven Stones Website | Seven Stones Linkedin | Seven Stones Facebook

If you’d like to subscribe to our newsletters or need more information about this blog or other property matters please complete this form. We’d love to hear from you!
[contact-form-7 id=”24326″ title=”Blog Contact Form”]

Latest Article
Govt Allocates More Subsidies for Electric Motorcycles
According to reporting from Antara News, Dadan Kusdian, Indonesia’s Secretary General of the Ministry...
Netherlands Consider Easier Visas for Indonesians
Citing Antara News, Tempo is reporting that Indonesia and the Netherlands discussed strengthening consular...
Ministry to Implement KRIS at 3,060 Hospitals by 2025
Indonesia’s Health Ministry is targeting to get more than 3,000 national hospitals to implement...
Hospital-based Specialist Doctor Program Launched
Speaking at the launch of a hospital-based specialist doctor program on Monday (6/5/24,) Indonesia’s...
Indonesia Anticipates Prabowo’s Cabinet
Prabowo Subianto and Gibran Rakabuming Raka will be sworn in as the country’s new president and vice...

Andrzej Barski

Director of Seven Stones Indonesia

Andrzej is Co-owner/ Founder and Director of Seven Stones Indonesia. He was born in the UK to Polish parents and has been living in Indonesia for more than 33-years. He is a skilled writer, trainer and marketer with a deep understanding of Indonesia and its many cultures after spending many years travelling across the archipelago from North Sumatra to Irian Jaya.

His experience covers Marketing, Branding, Advertising, Publishing, Real Estate and Training for 5-Star Hotels and Resorts in Bali and Jakarta, which has given him a passion for the customer experience. He’s a published author and a regular contributor to local and regional publications. His interests include conservation, eco-conscious initiatives, spirituality and motorcycles. Andrzej speaks English and Indonesian.

Terje H. Nilsen

Director of Seven Stones Indonesia

Terje is from Norway and has been living in Indonesia for over 20-years. He first came to Indonesia as a child and after earning his degree in Business Administration from the University of Agder in Norway, he moved to Indonesia in 1993, where he has worked in leading positions in education and the fitness/ wellness industries all over Indonesia including Jakarta, Banjarmasin, Medan and Bali.

He was Co-owner and CEO of the Paradise Property Group for 10-years and led the company to great success. He is now Co-owner/ Founder and Director of Seven Stones Indonesia offering market entry services for foreign investors, legal advice, sourcing of investments and in particular real estate investments. He has a soft spot for eco-friendly and socially sustainable projects and investments, while his personal business strengths are in property law, tourism trends, macroeconomics, Indonesian government and regulations. His personal interests are in sport, adventure, history and spiritual experiences.

Terje’s leadership, drive and knowledge are recognised across many industries and his unrivalled network of high level contacts in government and business spans the globe. He believes you do good and do well but always in that order. Terje speaks English, Indonesian and Norwegian.

Contact Our Consultants

[wpforms id=”43785″]

Ridwan Jasin Zachrie

CFO of Seven Stones Indonesia, Jakarta

Ridwan is one of Indonesia’s top executives with a long and illustrious career in the financial world. He holds several professional certifications including being a Certified Business Valuer (CBV) issued by the Australian Academy of Finance and Management; Broker-Dealer Representative (WPPE); and The Directorship Certification for Directors and Commissioners, issued by the Indonesian Institute of Commissioners and Directors.

His experience includes being the Managing Director at one of the top investment banking groups in the region, the Recapital Group, the CFO at State-owned enterprises in fishery industry and the CEO at Tanri Abeng & Son Holding. He’s also been an Independent Commissioner in several Financial Service companies and on the Audit and Risk Committee at Bank BTPN Tbk, Berau Coal Energy Tbk, Aetra Air Jakarta as well as working for Citibank, Bank Mandiri and HSBC. His last position was as CFO at PT Citra Putra Mandiri – OSO Group.

Ridwan has won a number of prestigious awards including the Best CFO Awards 2019 (Institute of Certified Management Accountant Australia-Indonesia); Asia Pacific Young Business Leader awarded by Asia 21 Network New York USA (Tokyo 2008); UK Alumni Business Awards 2008 awarded by the British Council; and The Most Inspiring Human Resources Practitioners’ version of Human Capital Magazine 2010.

He’s a member of the Board of Trustees of the Alumni Association of the Faculty of Law, Trisakti University, Co-Founder of the Paramadina Public Policy Institute and actively writes books, publications and articles in the mass media. He co-authored “Korupsi Mengorupsi Indonesia” in 2009, which helps those with an interest in understanding governance in Indonesia and the critical issue of corruption. Ridwan speaks Indonesian and English.

Per Fredrik Ecker

Managing Director of Seven Stones Indonesia, Jakarta

Per is the Managing Director of the Seven Stones Indonesia (SSI) Jakarta office and has more than 25-years’ experience in Indonesia, China, and Western Europe. He previously worked in senior management positions with Q-Free ASA, Siemens AG, and other companies in the telecom sector. Over the last six years, he has been the Chairman of the Indonesia-Norway Business Council (INBC) and recently become elected to be on the board of EuroCham Indonesia.

His most recent experience is within Intelligent Transport Solutions (ITS), Telecom, and other sectors within the Indonesian market. He is today through his position in SSI and by representing Norway Connect, promoting Nordic and European companies that would like to explore business opportunities in the Indonesian market. He’s also playing an active role to help create the Nordic House concept in Jakarta that will provide an excellent platform for Nordic companies entering Indonesia, where they’ll find a community that can offer support with trusted information and affordable services to enter this market.