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Bali’s pandemic renters face a rude awakening as prices soar

Bali, Indonesia – At the height of the pandemic, Maria, a refugee from the Philippines, was paying 2.8 million rupees ($180) each month to rent a hotel room in Bali, Indonesia.

But when international tourists began to flock to the popular resort island earlier this year, Maria’s hotel in Canggu, a seaside town popular with surfers and late-night revelers, saw its prices increase fivefold.

“One day they raised it to 400,000 rupees a day without notice,” Maria, who asked to be referred to by a pseudonym, told Al Jazeera.

“Now I stay in a small room near [the provincial capital] Denpasar without air conditioning. It’s all I can afford.”

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As Bali recovers from COVID-19, the cost of accommodation on the island is skyrocketing, a sobering reality for renters, many of them foreigners who sought refuge in Bali during the pandemic.

Property advertising in Bali.
Bali is experiencing a construction boom as visitors return to the popular tourist island [courtesy of Ian Neubauer]

When Indonesia closed its borders in April 2020, reducing daily visitors from more than 44,000 to virtually zero, many hotels turned to the long-term rental market to survive.

Hoteliers implemented deep discounts to attract some of the tens of thousands of foreigners on the island. Facing increased competition, the island’s 4,000 vacation villas have lowered sales prices by 50 to 75 percent to secure renters. With no way of knowing when or if tourists would return, hundreds of hotels were delisted and put up for sale.

But with international travel coming back to life, Bali has become a homeowners market practically overnight.

“I was paying 10 million rupees ($641) a month, and one day the owner told me she would raise the price to 40 million rupees ($2,565),” Gina Marks, an American expat, told Al Jazeera.

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For most of the pandemic, Marks lived in a small two-bedroom villa in Seminyak, a waterfront district south of Canggu.

“I understand he had to go up,” he said. “But by increasing it so much, I felt betrayed because I kept food on it. [the landlord’s] table during the pandemic.”

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The post-pandemic price correction has not been limited to short-term accommodation. Land and house values ​​in the more popular parts of the island are also appreciating rapidly.

“In Canggu, I would say property has gone up 20 to 30 percent this year,” Mark Ching, director of the Tamora Group, a developer of villa and apartment projects, told Al Jazeera.

“There are two reasons behind this. The first is that foreigners can freely travel here again and that has created a lot of confidence for Indonesian investors who saw how quiet things were during the pandemic and how busy the streets are now. There is a crazy race to be among the first to take advantage of it.”

The second reason, according to Ching, is the Omnibus Law, legislation introduced in November 2020 that allows foreigners to buy apartments and land while giving them permanent ownership and resale rights.

“It was one of the reasons we started our latest project, but due to COVID, there were few foreign buyers,” Ching said, referring to The Tamora apartment complex in Canggu.

“However, lately most sales have been to foreigners taking advantage of the Omnibus Law.”

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‘Going crazy’

In Cemagi, an upcoming tourist district of lush green rice fields located a half-hour drive from Canggu, property prices are rising even faster. In 2019, the going rate for leased land, the most common ownership vehicle available to foreigners building detached villas in Bali, was 8 million rupees ($513) per 100 square meters per year.

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During the pandemic, prices fell to 6 million rupees ($385). Today, the same land is being advertised for 12 million rupees ($770), and villa projects are springing up like mushrooms.

“For two years, during the pandemic, almost nothing was built, but now it is going crazy and there is no way anyone can stop it,” Markus Cristoph, the German owner of Udara, a yoga retreat in Jerusalem, told Al Jazeera. Seseh.

Although tourists are returning to Bali, visitor numbers remain well below pre-pandemic levels.

Bali saw around 276,650 arrivals in August, 12 percent more than July but less than half the number reported during the same month in 2019.

Still, local observers say visitors have concentrated on a handful of hotspots on the island.

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Rents have gone up so much “because 100 percent of these 20 percent want to stay in Canggu,” said Ching of the Tamora Group.

Traffic congestion in Bali.
A rapid influx of visitors to Bali is exacerbating traffic congestion on the island. [Courtesy of Ian Neubauer]

Along with Bali’s small, winding roads, the sudden increase in population has caused chronic traffic congestion in the area.

The problem is especially pronounced in Berawa, the most popular beach and street in Canggu and home to the new Atlas Beach Fest, the largest beach club in Southeast Asia with a capacity of 10,000 visitors per day.

Next door, Finns Beach Club hosts up to 8,000 people each day.

“I live in Berawa. Every day I find it more difficult to travel,” said Ching. “I’m going to have to move.”

Internal migration of wealthy expats and Indonesians is also causing property values ​​to rise in other desirable parts of Bali, said Manuele Mossoni, director of architecture firm 2M Design Lab.

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“I think very soon there will be a total saturation of the market in Canggu because they can’t house as many people in the same place,” Mossoni told Al Jazeera. “Investors are discovering different places like Uluwatu in the south. Balian [an hour’s drive west of Canggu] it is another good example where investors have grabbed the land and are waiting for the right time to build.”

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Mossoni, which had to double its workforce to 30 staff members and move to larger premises this year to meet demand, believes property prices in Bali have yet to go much higher.

“Over the next five years, I think prices will rise even faster than now because there are many people from Europe and America who realize that after the bad period of the pandemic, Bali is a pretty good place to stay.”

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