resort, hotel owners concede to lower selling prices in bali
Tourism and Hospitality sector has been the main key business player in Bali being the main tourist hub. Now the pandemic has hit this sector hard the owners of the properties are now prompted to sell them below the market prices.
As on cards the asking price values have not been budged in the Hospitality sector since the outbreak the owners are now more considerate and open to selling their properties with a discount up to 25% off the market price according to a realtor group in Bali.
“Bali’s tourism slump has greatly affected both property leases and sales. Annual and monthly lease prices could drop up to 50 percent, while sales of property are also seeing more price concessions during negotiations,” the realtor firm's sales manager, Fransiska Annie, told The Jakarta Post in a phone interview on July 8.
The realtor also admitted that the travel restrictions have made it difficult for the buyers to visit and survey the property to understand the fair value and condition.
Bali's economy is heavily dependent on tourism, hence it has been hit hard due to the pandemic. BSP Data shows that hotel occupancy in May stood at 2.07% with a 50 point drop compared to the same month last year. It has been the steepest dive of all the provinces in May.
The realtor also shared that despite the fall in the occupancy rates, property owners in Bali have also backed off from unreasonable negotiations due to the buyers unrealistic price demands which could reach 50% below market price.
Steve Atherton Director of Colliers International Indonesia Bali property owners are in a tough spot right now and struggling to find the middle ground on pricing due to the lingering uncertainty over the current and future economical situation.
“With declining tourism and the fact that so many hotels are closed, it creates a real vacuum of financial information regarding the operations and how to price the assets in the first place,” Atherton told the Post on July 6.
Steve also suggested that since the confusion lies at the both ends from buyer and seller to determine the clear property value, best solution would be to both sides selling partial stakes of the property.
“The current owners would be able to monetize the property and have cash to repay bank loans and obligations, and both sides could work together for the better future. That, I think, is the healthy way for both owners and investors,” he said.
Paulus Totok Chairman of Real Estate Developers Association also shared his thoughts and said there have not been massive property sell off observed in Bali so far and the last time property price drop in the hospitality sector hit the equilibrium was in 2013 after the property bubble.
“Bali has gone through a price correction following a bubble between 2012 and 2013, so currently there are no major changes in prices,” he told the Post on July 8.
However he also acknowledged that there has been an increase in Bali hotel owners filing bankruptcy and acquiring from the banks.