We have had a thoroughly enjoyable 2022 here in South Lombok. Its been a busy year welcoming some of our friends, family, customers and clients based overseas back to the island. The waves have been more crowded than 2021…. but the good vibes and energy around the island more than makes up for this.
Here’s our review of the year that was 2022 and our thoughts on what’s in store for the Lombok property market in 2023.
As always, if you would like us to expand on any items raised or would like to chat through your plans for 2023 and beyond drop us a line here.
Villas or Land, what are buyers looking for?
2022 was marked by the almost immediate rebound in International Visitor numbers once travel restrictions were lifted, and this shift has altered where we have seen demand from buyers.
In 2021 most purchasers we assisted were seeking land with long term plans for future development, but with more International buyers visiting, we have seen a strong shift in demand for quality villas for immediate use.
This has been true for both owner-occupiers as well as investors seeking strong rental returns. We have also seen the strongest growth in values for completed villas as opposed to land. With purchasers also noting that existing villas have the advantage of immediate cash flow on top of capital gain.
Central locations catering to tourism have seen the bulk of the demand. With Kuta of particular interest due to the low entry points available ($200-400k USD for a centrally located 2/3-bedroom villas) and its appeal to long term expatriates looking to live full time in the area. The recent opening of the impressive new campus of the Mandalika Intercultural School has also been a key driver of this demand.
It’s worth noting that this trend has been mirrored in neighbouring Bali, and the less affordable Bali becomes (and the worse the traffic gets), the more demand we see in Lombok.
Owners of land lucky enough to have accommodation or tourism infrastructure constructed in their immediate vicinity have seen good gains in values. The continued development close to the beach in Serangan, the ongoing construction of Tampah Hills in Tampah and the opening of Amber Resort at Torok being good examples.
Quality land holdings within 30 minutes of the school campus and airport have also seen improvements including; Are Guling, Selong Belanak, Tampah and Kuta.
Was there a typical buyer in 2022?
We feel less so than ever. Whilst there is ongoing strong demand from traditionally strong European and Australian markets, there has been a very noticeable uptick in completed sales to Indonesia purchasers looking at relocating from large cities as remote work becomes the norm for many. This is also the first year we have assisted buyers from all continents.
So what is on the cards for 2023?
Villa Pricing Predictions
We predict prices for completed villas to continue to increase in 2023 due to the following factors:
– Increased building costs for new builds making existing villas more appealing in comparison;
– Strong 2022 rental revenue figures giving evidence of the strong yields on offer to villa owners;
– Increased demand from owner-occupiers both Domestically and Internationally;
– Existing investors with positive experiences adding to their portfolios; and
– Values have been kept artificially low for 2 years with prospective buyers unable to inspect easily in person. The market is playing catch-up.
And where are land prices heading?
We believe there will be a continued flight to quality. As noted earlier those owners with neighbours developing quality hospitality projects are certain to see benefits. Beachfront, Central Kuta, Plots with stunning views and those that are well serviced will always be in demand and we will no doubt see growth from what is still a very low price point here in Lombok.
It can’t all be good news, can it?
Well, we are seeing more sellers than buyers in more remote locations that haven’t seen development move forward. Less populated areas, land with limited access to water, poor road infrastructure and larger holdings with no remarkable or stand out feature.
Larger villa developments with high management fees and/or poorly performing management and poorly conceived land subdivisions with high ongoing fees will also continue to be challenging to exit.
Where are the opportunities for 2023?
Well managed, centrally located villas will continue to offer the ideal combination of capital gain and a strong rental yield.
Repositioning existing villas via a renovation or improving the quality of management/guest experience.
Shovel ready land plots within 30 minutes of the airport with existing road, water and electrical infrastructure on site.
And where can I find these opportunities? I’m glad you asked, Reef Property Lombok
Get in touch. Stay in touch and we look forward to seeing you here in South Lombok soon.
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