How to calculate Bali property yield: an analyst's method
Balinsky recorded a walkthrough with analyst Evgeny Zhuikov on how to calculate the yield of Bali property step by step — from general statistics to a precise calculation for a specific property. Below are the key points for anyone thinking about buying.
The expert — Evgeny Zhuikov, a Bali real estate market analyst. He calculates the yield (ROI) of properties for investors and sometimes for developers. He maintains a database of Bali projects with open class criteria.
The figures below come from the expert. Balinsky has not verified them.
1. The Bali-wide average tells you almost nothing
The main data source, according to Evgeny, is AirDNA, a statistics service for Airbnb. Booking has two drawbacks: it is mostly hotels, and it has no occupancy history.
- Average occupancy across all of Bali in AirDNA is about 61%.
- But that figure mixes Amed (about 30%), Kintamani (about 50%) and Canggu or Bingin, where occupancy can reach 90%.
- So the average has to be narrowed down: area, number of bedrooms, price class.
2. The calculation works like a funnel
- Step 1. Take all properties in the area that rent through Airbnb. Split them by bedrooms and price. Apply the average revenue to the price of similar properties. This is a rough guide.
- Step 2. A refined analysis. Take the most similar properties in a narrow location and remove those that got into the sample by chance. Look at the layout and the exact location.
After refining, the figure can move either way — up or down.
3. Why small apartments show a "high percentage"
Balinsky asked about apartments of around 26 m² that came out at about 22% a year in the database. According to Evgeny, the reason is the low price of a small unit: at the first step revenue is taken as an average per unit, with no adjustment for floor area. He advises recalculating such figures with a refined analysis.
4. Compare only with properties of the same class
Evgeny assigns a property's class using about 17 parameters. Among them:
- distance to the ocean;
- quality of interior and exterior finishing;
- floor area;
- the complex's facilities.
An example from the walkthrough: for a property in Nusa Dua, 27 similar ones were taken — at the same distance from the ocean and of the same class. In that sample, 4-bedroom villas within 500 m of the ocean earned noticeably more than 2- and 3-bedroom ones — even per bedroom.
5. Price per square metre per year of the land lease
In Bali, foreigners usually buy on a long lease (leasehold) rather than outright. So Evgeny divides the price per square metre by the number of lease years.
- Two identical properties at the same price: one has a 25-year lease, the other 30. The second is better value — its square metre per year is cheaper.
- This metric matters if you hold the property until the lease ends.
- Look at the living area — enclosed and air-conditioned. Total area includes terraces and rooftops. A developer can add a lot of them and charge the same price, but there will be less actual living space.
6. Which costs to deduct
- First, the platform (Airbnb, Booking) takes its commission.
- The rest goes to the management company. It takes its share — about 20%, according to Evgeny — and withholds taxes as a tax agent.
- Some management companies include utilities (laundry, electricity) in their 20%; others bill the owner. By his estimate, the difference can eat up about 0.5% of the yield.
- Repairs are usually paid by the owner.
What to ask the management company: what amount the 20% is taken from and what the commission covers.
7. "Gross" and "net" ROI
- The calculation includes the price, commissions, utilities, inflation, lease term and the quarter of completion.
- Net ROI accounts for the construction period: the money is invested, but there is no rent yet.
- By the end of the lease the invested capital is zero. So Evgeny factors in inflation and the "depreciation" of the lease term.
- In one example he analysed (a 25-year lease), it was better to exit the property after about 7 years. This is not a rule: the timing depends on the lease and the yield. With a yield of about 14% and a 30-year lease, he says, the curve does not go negative.
- He does not count on a lease extension. He calculates only for the term clearly written in the contract.
8. He does not factor in price growth
Evgeny observes that a square metre on the secondary market is currently cheaper than in new projects on sale. The quality of new properties, he says, is far higher.
- Land price growth can be added only for freehold — outright ownership.
- A lease has a limited term, and there is little historical data.
9. Reselling during construction is a risk
- Evgeny calls quick resale (flipping) a risky business.
- With a direct transfer of the lease agreement, he says, you have to account for a 10% tax. It nearly kills the quick-resale model.
- An exit is not guaranteed. If similar complexes start going up nearby and sell for less, selling yours will be hard.
10. Apartments on the Bukit
- According to Evgeny, there is almost no apartment market on the Bukit yet. Many will appear over the next two years.
- Their competitors are 1-bedroom villas and hotel rooms.
- Lower risk — areas that already have hotels and infrastructure: Nusa Dua, Jimbaran.
- Higher risk, but also potential — new growth points such as Melasti.
- Projects in residential zones are more suited to monthly rentals. That is calmer, but the income is lower.
The full interview (in Russian) is available via the "Watch video" button below.