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The coronavirus pandemic, which has left tourists and incomes painless and the hardships of the Indonesian resort of Bali, often feels compelled to sell their properties. Given the deplorable market situation, some may suffer serious losses. Meanwhile, investors who can see promising prospects have the opportunity to cut a corner of paradise at a low price.
Balangan Wave, a tourist villa of 50 villas of the same name on a surfer’s beach, has already been hit, and contractor Michael Halim lowered its starting price in May from $ 17 million to $ 9 million.
“In current market conditions, it is impossible to avoid losing sales,” Halim said. “Companies are closing, there are cash flow problems.”
While the suspension of international travel has been a severe blow to the entire circle of vacation destinations, from Hawaii to Phuket in Thailand, Bali is more vulnerable than most others. Tourism represents more than 60%. the island’s economy, providing jobs for almost everyone, from chefs and cleaners in five-star hotels to freelance guides and drivers.
During 2019, a record 6.2 million people visited the island’s beaches, hotels and yoga centers. Number of travelers. In the first quarter of this year, the influx of tourists fell 22% to 1.04 million. people before the peak of the outbreak. Now the usual crowded beach clubs are quietly drowning, and the famous Tanah Lot Temple, which has otherwise attracted crowds of visitors, is abandoned.
While major global hotel chains, such as Marriott International Inc. and Hilton Worldwide Holdings Inc., have sufficient financial capacity to survive a pandemic, the smallest and most modest hotels are struggling to survive. The number of houses for sale in Bali has increased 30 percent since the start of the pandemic, according to Indonesian company Galaxy Kuta.
“Now is a good time to buy,” said Chandran VR, CEO of the Singapore-based Cosmopolitan Real Estate, which is organizing the sale of the Balangang Wave. – Bali will recover. And when that happens, prices will skyrocket again. “
Shoppers are also looking for a two-star hotel “POP! Hotel Teuku Umar” Denpasare. Featuring striking neon window frames and interiors, the 140-room hotel was offered for 7.7 million euros in May. US DOLLAR.
Located near the beaches of Kuta and Seminiak, a 30-minute taxi ride, and offering a room for just $ 14 a day, it has been extremely popular with hikers. But not anymore.
“The hotel is not generating any revenue and operating costs have yet to be paid,” said Meirina Rajianto, an agent for Galaxy Kuta, a Bali-based company that is organizing the sale. “The owner decided to sell it rather than bleed it out even more financially.”
Bali
Even before the coronavirus hit, hotel offerings in the Asia-Pacific region were close to space, backed by private equity funds and financially viable real estate, as well as wealthy people, said Corey Hamabata, JLL senior vice president Hotels and Accommodation Group in Hong Kong. .
Among those who did not resist the appeal of Bali was the Trump Organization, which in 2015 signed an agreement to lend its name to a new hotel and golf club on the island. Although it also reduces your appetite. However, buyers are likely to remain active as more and more opportunities to buy discounted properties appear, Hambata said. “We hope that most buyers will be seduced by three main things; possibility of buying a property at a discount; to acquire a relatively little used farm and rebuild it; or acquire the property in strategic locations to “grow” a brand or platform.
The growing domestic travel market in Indonesia, the world’s fourth most densely populated country, can also support hotels, at least until foreign travelers return. The volume of domestic trips during the period 2017–2018 increased from 270 million. up to 303 million.
“We expect domestic demand to recover faster than external demand,” said JLL’s Hamabata.
While the island with 4.2 million. With the coronavirus successfully controlled early in the outbreak, the number of infections recently increased to more than 1,400, and thirteen people died. Indonesia is one of the most affected countries in South Asia, with around 54,000 infections and 2,754 deaths.
Such developments could undermine plans to open Bali’s economy. Under the three-step strategy, domestic tourists should be allowed to return as early as August, and sun-thirsty travelers from abroad are expected starting in September if things go as planned, the Jakarta Globe wrote in June. after the visit of the Minister of Tourism, Wishnutama Kusubandi, to the island.
Even in the best case scenario, tourists are unlikely to invade the island. Australia, which generally constitutes the majority of tourists visiting the island, warned that it will not open its borders until next year. In Singapore, from where the island can be reached by plane in just 2.5 hours, the government only allows major trips and warns that it will take longer to resume mass holiday travel.
As a result, there are a number of risks associated with Bali. 5,780 sq. M. Kilometers of the island have more than 4,300 hotels, according to government figures. Intense competition in the low-cost real estate market posed a number of challenges for hotel owners even before the virus broke out.
“Those whose cash flow is not high enough to painlessly await the quarantine period and who cannot afford to restructure or defer debt, are likely to face serious difficulties very quickly,” said Govinda Singh, director of Colliers consulting and valuation services for hotels and entertainment.
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