As a popular hub for the tourism and hospitality businesses, Lombok has positively come to fill Bali’s shoes with its diverse culture, strategic location, and appealing landscapes.
With its proximity to Bali and Sumbawa, this enchanting island has transformed its travel and tourism sector that has attracted a large number of tourists over the past few years.
Consequently, an increasing number of foreigners come to Lombok to invest in rental property. In this article, we will provide you with all you need to know about investing in the Lombok rental industry.
Why Foreigners Should Consider Investing in Lombok
Lombok is an attractive place to invest in a vacation property that is known to yield a high rental return. Here are four reasons why Lombok is becoming the latest rental utopia in Indonesia:
With a goal of attracting at least 20 million visitors annually, the tourism ministry of Indonesia has chosen Lombok to invest in and expand the country’s tourist destinations. The government opened Lombok international Airport in 2011, launched Mandalika Resorts projects on Lombok’s southern coast in 2017, and has presented prospects of numerous such infrastructure developments in the future to boost Lombok’s profile.
Low Supply of High-End Housing
Investing in Lombok presents a lucrative opportunity for business in luxury accommodations as the rising number of tourists are lacking the comfort of high-end holiday villas or apartments. With world-class events like the MotoGP 2021 coming to Lombok, the demand for upscale housing will only increase.
Owing to the fantastic weather all year round, the holiday market in Lombok never goes dry, even during the rainy seasons. A high occupancy rate of the rental property may be expected regardless of the month.
Low Operational Costs
Last but not the least, the cost of buying and maintaining a rental home in Lombok is very low in the current market. For instance, a good two-bedroom villa in a posh neighborhood would cost around US$400,000. Owing to the low cost and higher accommodation demand, one can expect high rental returns when investing in Lombok.
Investing in Lombok: Understanding Property Rights and Licenses
One of the obligations of a business owner is to protect the business assets, like land and property. For foreign nationals, Indonesia has numerous land limitations. The following are certain rights of ownership:
Right to Build
The right to build, also known as the HGB (Hak Guna Bangunan) certificate, allows investors to erect constructions on specific types of property. Right to build certificate gives investors to utilize the land for up to 50 years. However, if the utilized land is under the state land, it can be extended for another 30 years — a total of 80 years. But it is important to note that the HGB certificate is exclusively available to Indonesian nationals and Indonesian-based entities like PT PMA.
Right to Use
One of the greatest methods to gain access to land in Indonesia is to form a PT PMA. However, ex-pats who are unable to form a PT PMA may still utilize Indonesian land by obtaining a “right to use” title. One may also hire it for a maximum of 25 years with the “right to use.” It can last up to 80 years depending on the terms of the lease between the lessor and the lessee.
Property Licenses and Permits
A visitor can stay with a local family for a charge under the terms of a homestay license. Rooms are often simple or less expensive than other types of lodging. Obtaining a Pondok Wisata license or homestay license allows one to run a holiday rental villa with 3 to 5 rooms. It is to be noted that only Indonesian nationals can get a Pondok Wisata license. For foreigners to obtain this license, they must incorporate a PT PMA beforehand.
A complete hotel license, or a Melati license, is required if a facility intends to supply more than 5 rooms. The hotel, for example, must be located in a tourism zone and also be located around 500 meters from the beach.
Commence Your Property Investment in Lombok with Cekindo
Cekindo, with its comprehensive business setup solutions, cuts the hefty procedures in half and provides hassle-free business registration services. Moreover, along with market research to avoid any pitfalls, Cekindo helps you in setting up your land and property investment plan in the most secure way. We also provide immigration services like the acquisition of different types of visas, consultancy to help you stay on top of legal compliances.