Bali hotels on sale amid tourism slump
Gone are the Australian surfers and Chinese tour groups. Also missing are yoga aficionados seeking inner peace.
With no tourists and no income courtesy of the coronavirus pandemic, struggling hotel owners on the Indonesian resort island of Bali have been forced to put their properties up for sale. Given the dire state of the market, some may have to stomach a loss. For investors with a long view, it’s a chance to grab a slice of paradise on the cheap, bangkokpost.com reported.
Balangan Wave, a 50-villa resort under construction near its namesake popular surfing beach, has already hit the market, and developer Michael Halim has slashed his asking price to $9 million from $17 million in May.
“In the current market, one can’t avoid selling at a loss,” Halim said. “Businesses are closing, there’s cash flow issues.”
While the halt to international travel has devastated holiday hot spots from Hawaii to Phuket in Thailand, Bali is more vulnerable than most. Tourism accounts for more than 60 percent of the island’s economy, providing jobs for everyone from chefs and cleaners at five-star resorts to self-employed guides and drivers.
A record 6.2 million travelers flocked to the island’s beaches, hotels and yoga retreats in 2019. This year, tourist arrivals slumped 22 percent to 1.04 million in the first quarter, even before the worst of the outbreak.
Now, the usually pumping beach clubs lay quiet and the oncethronged Tanah Lot Temple is deserted.
While major global chains such as Marriott International Inc. and Hilton Worldwide Holdings
Inc., have the financial firepower to stay afloat during the pandemic, smaller hotels at the budget end of the market are struggling to survive. The number of lodgings listed for sale in Bali has jumped 30 percent since the pandemic struck, according to Indonesian property firm Galaxy Kuta.
“It’s a good time to buy,” said Chandran V R, managing director of Singapore-based Cosmopolitan Real Estate, which is handling the Balangan Wave sale. “Bali will bounce back to normal. When that happens, prices will soar again.”
Also looking for a buyer is the two-star POP! Hotel Teuku Umar in Denpasar. With eye-catching neon window frames and interiors, the 140-room hotel was put up for sale for $7.7 million in May.
Situated a 30-minute taxi ride from Kuta and Seminyak beaches, and with rooms as low as $14 a night, it was a hit with backpackers. Not anymore.
“The hotel has no income at all and has maintenance costs to pay,” said Meirina Rajianto, an agent at Bali-based Galaxy Kuta, who is handling the sale. “The owner decided to sell rather than bleeding more money.”
Before the coronavirus hit, hotel deals across Asia Pacific were at record levels, fueled by cashed-up private equity and real estate funds, along with wealthy individuals, said Corey Hamabata, senior vice president of JLL’S hotels and hospitality group in Hong Kong.
Still, buyers are likely to remain active as opportunities to buy discounted assets arise, Hamabata said. “We expect most buyers will be driven by three main themes: Buying at a discount; buying under-utilized properties to improve them; or buying properties in strategic locations to grow a brand or platform.”
“We are expecting domestic demand will be quicker to recover than international demand,” said JLL’S Hamabata.
While the island of 4.2 million had early success in containing the virus, it has recently seen a spike in infections to more than 1,400, with 13 deaths. Indonesia has surpassed 54,000 cases, with 2,754 deaths, making it the worst hit Southeast Asian nation.