Eat Pray Sell
Somehow Pretty Woman Julia Roberts has unwittingly managed to ignite a domino inspired pilgrimage of high-end cultural and self-awakening tourism into Bali from long haul Western markets.
Talking to my driver Ketut during a recent soiree around the island conducting research on the property market, he is able to list off locations in Uluwatu and Ubud that appeared in movie. He can't help but ooze enthusiasm about JUU-LEE-AHH and how it has picked up his business.
While I am usually immersed in all things real estate and tourism in Phuket, traveling to overseas competitor's often gives perspective and a quick pulse check on how Thailand is measuring up in Asia's great development race.
Certainly Bali has been caught up in a condo hotel craze that makes Justin Bieber or Lady Gaga pale in comparison. Currently there are between 4,000-5,000 units on the market and monthly take up rate in new projects is well into recurring double digit numbers.
With many pricing points below USD100,000 these formula driven products often have familiar brand names including Outrigger, Best Western and even Thailand's own Anantara , who are managing two projects.
One project we visited the Rich Prada located within the Dreamland mixed-use development was hosting an open house. Busloads of prospective buyers were eagerly signing reservations and snapping up units, which offered hotel management, and views over a world-class golf course.
Over 80 units were sold within the day in the over 900 unit mega offering and fatigue was setting in for the salespeople when yet another motor coach arrived and potential Indonesian buyers from Jakarta filled up the mock up unit.
Of course not every development is like this but viewing the key difference between resort real estate in Phuket, which remains, geared to a shrinking foreign market and Bali is the strong local sector.
In many cases individuals are purchasing multiple units and even some banks or financial institutions are taking on completed units for recurring rental yields. What is ultimately driving the market remains a 36-month tourism surge and strong local economy.
Winding back the clock to the Asian contagion in the 90's and then those nasty riots in Jakarta was the start of a build up of land banks by wealthy Indonesian's over the last decade. Bali's perceived less volatile ethnic climate was considered an exercise in diversification of assets.
Traveling up to the luxury villa market which was pioneered on a similar timeframe to Phuket most of the new offerings in the USD1 million and up are again hospitality led residential.
Branding is key and familiar names include W, Banyan Tree, St Regis and Bvlgari.
While pricing points in general remain 20-30% lower than Phuket, there is considerably more sales activity last year and in the first quarter of the year then our Thailand home base.
Again the underlying story remains domestic buyers and certain markets such as Japan, which see little activity in the Kingdom.
Rolling over to the secondary market and reflecting on where the how the two destinations compare in their development cycles important.
Clearly Phuket, which has dramatically shifted into a secondary centric clearinghouse given its limited penetration in the domestic market, while Bali has better diversification for the moment. The latter has resale's in the highway ahead versus the rear view mirror.
Land sales are also seeing strong movement from both Indonesian and overseas institutional purchases with appreciation and demand going skyward.
There does remain the dark side of developer off plan defaults, sagging transportation infrastructure, clogged highways, and trash disposal issue and water shortage along with mounting crime.
While a high power public struggle between islands governor and seven semi-autonomous regencies is creating chaotic overdevelopment and a limited ability to implement building regulations and zoning.
One of the most prolific cases is the possible enforcement of a 5 km none commercial zoning around the Uluwatu temple. A number of luxury hotel and residential projects have been caught up in the crosshairs.
In this aspect there remains a remarkable similarity between Bali and Phuket in terms of the control of centralized legislation and approvals and local inconsistent interpretation.
While the airport redevelopment is targeted for completion in 2013 for APEC and better connections to areas such as Nusa Dua, getting to and fro around the island has drawn heavy criticism internationally in recent articles in Time magazine and the Wall Street Journal.
As to the journey ahead, both of our competing island's are at different points in their journey yet striking resemblances are around every corner. For the moment property in Bali has the red-hot hand and who can begrudge them after the bombing in 2002 and 2005 drove tourism to its knees.
One has to worry though on what will happen to all those keen investment and lifestyle buyers once guaranteed returns roll off and hotel supply and demand switch places. But as always-good locations, and strong properties will prosper while those who simply tried to cash in on a trend will wilt.
For now Julia and company perhaps need to look for a sequel on the island of the fire spitting property gods – could I suggest Eat Pray and Sell as the suitable mantra of the moment.