Property valuation in Bali

Comparative real estate valuation method

First and foremost, the value of commercial real estate is determined by market value, which is the most likely selling price that a typical buyer would be willing to pay. The sales comparison approach is most useful when there are multiple properties that are similar to those that have recently sold, as is typically the case with single-family homes.

Income method of real estate valuation

The value is based on the expected return required by the buyer to invest in the property being valued, which also allows the payback period to be determined. The income approach uses two methods for estimating the value of real estate: the direct capitalization method and the discounted cash flow method.

Cost-effective method of real estate valuation

Under the cost approach, cost is determined by adding the cost of the land to the cost of the new building, less adjustments for estimated depreciation and obsolescence. The cost approach is often used for unusual properties where comparable transactions are limited.

Additional real estate valuation factors

  • Infrastructure is an important parameter for economy, middle and premium housing. In these locations, people buy food on their own or go to cafes and have fun in public places.

  • Location and view are key factors in choosing when buying relatively expensive housing, for example LUX class. The more expensive the housing, the more the focus shifts towards location and view. People living in LUX class real estate usually live in an elite villa complex, where all the infrastructure is inside and at the same time there is an excellent view of nature - the ocean, jungle, rice fields or river.
An example of assessing the cost and return on investment in real estate:

To compare the relevance of prices, we recommend using the application:

1.Go to the booking application on your smartphone or to the website

2.In the window where you want to go, indicate Bali, Changu;

3.In the filter on the left, select the 5 stars option.

Apartments L8 Resort Hotel
$4,023 per month
Apartments Umalas
$3,911 per month
Kanvaz Village Resort Seminyak
$4,239 per month
4. As a result, you will see an average price of $169 per day, i.e. $5068 per month is $60,816 per year.

5. Consider the cost of marketing (booking in booking...) 15% of revenue - $9,122.
Income before taxes and expenses for the management company will be $51,693

6. Consider the tax of 11% $5,686. Income after tax will be $46,000.

7.And finally, take into account the costs of the management company, which will be up to 30% of income. $13,802 and you will be left with a net profit of $32,200
At the same time, the costs for the management company can be 20% and at the same time, if you wish, you can manage your facilities yourself.

8. Determine rental income:

divide the received income of $32,000 by the amount of investment. For example, you bought a property for $200,000 and expect an annual income of $32,000. Divide $32,000 by $200,000 and the return is 16% per annum (cap rate).

Or divide $200,000 by $32,000 and see that the investment will pay off in rental income in 6.5 years.

9.Draw a conclusion from the point of view of rental income:

The average international capitalization rate is up to 5%, while the official capitalization rate in Indonesia is 8%, and the calculated object has a capitalization rate of 16% and a payback of 6.5 years.

We understand that the price of $200,000 is a favorable price for purchasing this property.

In addition, the annual increase in prices for land and real estate in Indonesia exceeds 12%.

10. Determine the income from the sale:

It is estimated that this property can be sold at twice the price.

At the same time, we look at the secondary market and determine that on the secondary market this object can be sold at 30% higher.

Analysis of real estate profitability by area of Bali

Detailed, up-to-date profitability analytics for the main areas of Bali allows you to evaluate the property offered to you using a comparative and profitable valuation method.
Analysis of real estate profitability by area of Bali
Rental income - Canggu
Rental income - Semenyak
Rental income - Bukit
Rental income Ubud...
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