Bali Real Estate: Boom or Bust?

Bali Real Estate: Boom or Bust?
Editorial: Changes in Land Ownership Rules Now Under Consideration May Threaten Bali's Culture and Heritage.

Bali News: Bali Real Estate: Boom or Bust?
(2/2/2010) The Indonesian press has been awash with news of a promised change in property laws that, if approved, would allow foreign nationals to lease land for 75 years. The response to the proposed regulation has earned enthusiastic praise from the national property sector. Conceivably, the new rules would end the illegal and fraught-with-danger current procedure of placing a property in the name of a nominee Indonesian national. Meanwhile, members of the prestigious Real Estate Indonesia (REI) optimistically project that liberalized property ownership for foreigners will open a flood gate of demand for property purchases by foreigners, primarily in Jakarta and Bali.

One Bali-based property developer - who runs investment seminars as well as advertorials on Bali radio stations and print media, has even begun running advertisements heralding coming increases of 500 to 1,000% in both demand and prices for Bali real estate if the proposed new law is approved.

Unwittingly sounding what may be his darkest warning, the same developer even proudly quotes himself in one of his advertorials saying, "Bali real estate would be like Hawaii 30 years ago."

Threat or Fair Warning?

Similarities between Hawaii's property boom and what dark prospects that may lay ahead for Bali's delicate culture could hardly be more ominously stated. In the Hawaiian context, New England Calvinist missionaries arrived in Hawaii in the early 19th century, fell in love with the islands and, together with their progeny, imposed far reaching changes in the social and political structures. Chief among these were changes in the rules on private property that allowed the newcomers to take possession of huge tracts and, in some cases, entire islands. Hungry for more land, more money and more power - the Hawaiian pretenders even managed to extend their domination and overthrow the Island's traditional government in 1893. Over the ensuing decades, the native Hawaiians and their rich culture became increasingly marginalized through their disenfranchisement from their lands and cultural institutions.

The culture of the Balinese people is inextricably linked to the island's land. In fact, ancestral lands dictate the very position of every Balinese in society; where he must return for ritual prayers, where his ancestral spirits visit each year between Galangan and Kuningan, and the location for critical rites of passage. Membership in local banjars and subaks are property based, dictating both the rights and obligations of stewardship for every member of a Balinese community.

It is not an exaggeration to suggest that a Balinese without ties to the land is genuinely disenfranchised; something less than a true Balinese.

Sadly, developers salivating at the prospect of quick returns on the real estate market are both aided and abetted by Balinese who sell their land, lured at the idea of unheard sums suddenly landing in their hands. As a result, increasingly many are the stories of listless characters, idle in the local villages who, only a few years ago, held immense wealth but who are now penniless and landless; the proceeds from the sale of their ancestral land frittered away on motorcycles, cockfights and transitory high-living.

Property developers respond, insisting they are empowering the Balinese by placing hard cash in their hands in a process which is, after all, undertaken without coercion and completely at the will of the Balinese seller. And while such arguments are not without force, the practical consequence of the ongoing land rush in Bali is that land once sold by a Balinese to an "outsider" is extremely unlikely to ever return to the hands of a Balinese in some future cycle of land transactions. As island newcomers build homestead with little nuance of Balinese culture in their design and reap the financial gains of the promised 1,000% return on investment, the next generation of Balinese born without ancestral lands to inherit have nary a "hope in paradise" of possessing the financial wherewithal to purchase even a modest piece of real estate on "their" island.

A local pundit, only half-jokingly, described a future in which fast ferries would operate from Lombok to Bali carrying loads of Balinese to work as maids and houseboys in luxury villas now standing on their ancestral lands. Later in the day, those same ferries will bring troupes of professional dancers to recreate ersatz renditions of Balinese dance and music to the delight of the Island's new masters.

"Nyoman, be a dear and get me another gin and tonic."

Are such dire warning alarmist and overstated? Perhaps. In fact, we would be genuinely delighted if that proved to be the case.

At the same time, those who argue for a laisez faire approach to Bali’s future development are blind to the negative impact of the many changes now taking place on the island and equally naïve to the dismal outcome that awaits wherever and whenever money is the only measure of value.

In the end, it is only the Balinese who will save their island and its magnificent culture. Governor Pastika's effort to introduce island-wide zoning and building standards offer a ray of hope that wise men with noble aims might still be heard amongst the deafening din of cash registers.

Fail to head these voices screaming in the Bali wilderness and it may mean aloha ahiahi or good night to yet another tropical island paradise.

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