Can Foreigners Build a Villa in Bali? A Complete Guide

Bali Property Advice June 24, 2024 5 Min Read

(Image by thisbevos on Canva)

Bali is a beautiful island located in Indonesia, called the Island of Gods because of its captivating natural beauty. Since then, Bali has caught the global eye because of its beauty and ranked as one of the top tourism destinations in Indonesia. Property development in Bali has grown rapidly, especially in the southwest area where many villas are built amidst the gorgeous paddy field making it the best selling point of the villa.

Many foreigners aim to build a villa in Bali, whether for an investment opportunity or a long-term residency on the Island of Gods. To guide you through the process, here’s a comprehensive guide for foreigners to build a villa in Bali.

Can foreigners build a villa in Bali?

Yes, foreigners can build a villa in Bali. However, the building process is different for Indonesian citizens.

The main difference between foreigners and Indonesian citizens lies in property ownership and legal restrictions, Indonesian citizens can fully own both land and buildings with freehold rights while individual foreigners can only hold the leasehold right.

This limitation is designed to control foreign ownership in Indonesia as well as to protect national assets.

Ownership: Exploring Types and Rights

In Bali, there are two types of land ownership. To rent land (leasehold) and to buy land (freehold). Both of the options come with legal considerations, especially for international investors. The foreigner cannot obtain freehold ownership individually, however, a foreigner who owns PT PMA can hold the freehold ownership under the company’s name.

1. Leasehold Ownership (Hak Sewa)

Foreigners are allowed to obtain leasehold ownership. The leasehold arrangement is secured through a legally binding contract (lease agreement) between the prospective owner (lessee) and the property owner (lessor). This agreement permits the lessee to build and own a villa on the land for a designated period.

If the contract is approved, the tenant has the right to occupy, alter, or lease the land during the term of the lease. In addition, the tenant has the right to build a villa on the leased land, provided the landlord permits this.

With this right, foreigners can lease the land for a long period, which is 20 years, and can be extended for 20 years more.

2. Freehold Ownership (Hak Guna Bangunan)

Foreigner individuals cannot own the freehold ownership. However, only foreign-owned companies registered in Indonesia (PT PMA) can own the freehold ownership, not the individuals.

In addition, the development of villas must also adhere to environmental permits, determined based on the area's size. Three types of environmental permits must be processed through the Department of Environment (AMDAL (mandatory for significant environmental impacts), SPPL (moderate environmental impacts), and UKL/UPL (minor environmental impacts).

Land Zoning in Bali

Finding a proper land zoning is the first step before building a villa in Bali. Every land area in Bali is placed under different land zoning categories to determine what can be done within the areas. Here’s the list of land zoning categories:

Agricultural (Green Area): The agricultural zone is for farming and plantation only. Building a property is strictly prohibited in these areas. In addition, the green area is characterized by fertile soil, direct access to water, and proximity to other farms.
Residential (Yellow Area): This area is suitable for building villas or homes. As it is designated for residential property. Usually located in the urban and suburban areas of Bali. This land is suitable for residences because it has good access, proper utilities, and public access.
Commercial (Red Area): This type of land zoning is suitable for those who want to build business activities in Bali such as shops, restaurants, hotels, and offices. Meant for commercial activities, this land is divided into three categories: central business center, tourism commercial, and neighborhood commercial. Commercial land for sale in Bali is distinguished by its strategic locations, proximity to public amenities, and dense population areas.
Tourism (Pink): The Tourism Zone or Pink Zone is where accommodations like hotels, resorts, and villas are usually built. Divided into two: primary zoning (larger scale accommodation, while the secondary scale is used for smaller accommodation). Typically located near the beach, cultural hub, and entertainment spot.
Commercial & Residential (Mixed-Yellow): Mixed-use zoning in Bali blends residential and commercial spaces, creating lively neighborhoods. This can involve vertical integration, with shops below and apartments above, or horizontal integration, where homes and businesses are built side-by-side. This approach fosters convenience for residents, allowing them to live, work, and shop within a single area. It's a common strategy in urban areas to create vibrant communities.

Due Diligence

Due diligence is an essential step for any property buyer. Like many countries, Indonesia has its own set of property laws and regulations that can be complex and challenging for those unfamiliar with the system. Furthermore, the due diligence process is done by an appointed notary. After the due diligence part has been completed, the next part that needs to be checked is the tax to ensure the land has no unpaid tax left.

PBG and SLF: Crucial Procedures for Villa Development

PBG and SLF are two important steps that must be taken before building a villa to be able to ensure that the building complies with safe and appropriate standards.

PBG (Persetujuan Bangunan Gedung): A PBG is a permit issued by the government that allows the owner of a building to construct, renovate, maintain, or alter a building. In the new law, the PBG serves as an update to the IMB (Building Construction Permit) regulation. PBG serves to ensure the legality of the building, ensure that the building meets safety standards, and as building data.
SLF (Sertifikat Laik Fungsi): SLF is a certificate issued by the government to the building owner to certify that the building is suitable for use following the plan. SLF has its functions, namely: ensuring the building is safe for use, ensuring the building meets standards that guarantee safety, comfort, and health, and recording the physical existence of the building.

Hidden Challenges When Leasing Land (To Build a Villa) in Bali

While securing a dream property in Bali might seem straightforward, there are crucial factors to consider beyond price and location. Here are two potential challenges to be aware of:

Inheritance Disputes: Property ownership in Bali can be complicated by inheritance issues. Disputes between heirs, like the one between A and B, can lead to delays in transferring ownership and hinder rental income collection.
Double Lease Issues: The lack of proper registration with the Indonesian National Land Agency (BPN) and reliance solely on a notary's deed led to a "double lease" situation. This issue was further exacerbated by the client's failure to conduct due diligence during the property purchase.

Popular Areas to Build a Villa in Bali

Knowing the right area is needed to maximize the ROI, occupancy, and opportunity. Here are our top 3 area recommendations to build your dream villa

Canggu

Bali’s current popular area deserves to be put on top of the list. Real estate development in this area has grown rapidly over the past few years during and after the Covid pandemic hit. Located in the southern area of Bali, Canggu is now a hub for youngsters making it culturally diverse. Canggu's prime location, coupled with high demand for villas and an abundance of strategically positioned land, has positioned it as a lucrative rental investment market.

Seminyak

Remaining as one of the top destinations in Bali with plenty of entertainment choices and beaches, Seminyak has become one of the hubs of the Bali villa market. The property market in Seminyak has grown consistently throughout the years, this area offers a wide range of property choices.

Uluwatu

Famously known for its coastal beauty, Uluwatu is one of the best places to invest in Bali. In addition to its beauty, Uluwatu is also known for its rich Balinese culture and white-sand beaches. This stunning coastal area is still in development progress and many midscale up to luxury villas are being built there.

Do not hesitate to contact us if you’d like to know more about building a villa in Bali or other real estate-related topics. In the meantime, feel free to browse our collection of villas for sale leasehold in Canggu and other locations if you’re looking for the perfect Bali villa to buy.

Disclaimer: The content of this publication is provided as general information only and does not constitute legal, financial, tax, or other professional advice from Bali Home Immo. Some of the information provided in this publication is obtained from a third-party source and we do not guarantee that the content of this publication is accurate, complete, or up-to-date.

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How to Use a Power of Attorney to Buy Property in Bali as a Foreigner

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If you want to buy property in Bali but can’t be there in person—whether you’re living overseas, managing a busy schedule, or handling legal limits as a foreigner—a Power of Attorney (POA) can help you complete the process.

A Power of Attorney is a legal document that gives someone else (your agent) the authority to represent you in legal or financial matters. In Bali, POA is commonly used in property transactions, especially by foreign buyers or Indonesian investors who live abroad.

Power of Attorney is fully legal and regulated under Indonesian Civil Law (Articles 1792–1819 of the KUHPerdata). In practice, POA is:

Drafted and signed before a licensed Indonesian Notary (Notaris/PPAT).
Sometimes translated into Bahasa Indonesia if issued by a foreigner.
Used together with your passport copy and legal documents when you are a non-resident.

It allows you to legally assign another person to sign contracts, attend the notary, and handle the full sale or purchase process without needing to be physically present in Bali.

Key reasons to use POA in Bali (Property Transaction in Bali)

You live overseas and can’t travel to Bali.
You want your notary or legal consultant to handle the transaction for you.
You are setting up a PT PMA and need a representative to sign the company property documents.
You’re buying an off-plan villa and want to assign someone to manage the construction-related approvals.

In addition, if you are currently outside Indonesia and wish to make a PoA, you may need to do an Apostille.

What is an Apostille? Why is it Needed, and When Do You Need One?

An Apostille is an official certificate that makes a document from one country legally valid in another country. It is used to confirm that the document is genuine and can be accepted abroad without further legalization. For example, if you are in France and sign a PoA to authorize someone in Indonesia, the document must include an Apostille in order to be recognized as valid by the Indonesian authorities.

Why is an Apostille Needed?

An Apostille is needed when you want to use an official document, such as a PoA, Birth Certificate, company documents, or property agreements, to be validated in another country. It helps authorities in that country trust that the document is real and properly issued.

When Do You Need an Apostille?

You need an Apostille before sending or using a document in another country. An Apostille is usually issued after the document is signed and/or notarized in the country where the document was originally issued. It’s important to check whether the country where the document will be used requires an Apostille and whether the type of document you have qualifies for one.

What Can Your Representative Do with a POA in Bali?

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If written correctly, your Power of Attorney can allow your representative to:

A Power of Attorney (PoA) may authorize the appointed representative to sign the Sale and Purchase Agreement and along with other contractual documents, such as lease agreements or other legal arrangements, provided such documents are explicitly listed in the PoA.
In the context of establishing a PMA (Foreign Investment Company), a Power of Attorney (PoA) may be used to authorize a representative to act on your behalf to establish a PMA by conducting all necessary actions to establish your PMA..
Of course, PoA may also assist you in financial matters and other actions by permitting your agent to make and receive payments related to your Property purchase on your behalf, and/or collect original certificates or permits.

💡 Important: When preparing a PoA, it’s essential to specify each authority you're granting to your representative. Keep in mind that government offices, notaries, or land agencies in Indonesia may reject a PoA if it's too general, unclear, or not compliant with local legal standards. Therefore, always double-check the specific requirements with the relevant authorities before finalizing your POA to ensure smooth processing and hassle-free acceptance. We always advise checking with your trusted legal advisor..

Steps to Create a Power of Attorney for Property in Bali

Here’s how to legally create a POA in Bali:

1. Choose a Trusted Person

This can be a lawyer, notary, legal consultant, business partner, or real estate agent you trust.

2. Draft the POA

Include:

- Your full name, passport details
- The agent’s identity
- Property details (address, type of property)
- Clear tasks the agent can perform

3. Notarize the POA

Sign it before an Indonesian notary (if you are in Bali) or, if you are abroad, please follow the Apostille procedure of the country where the document originates.

4. Submit to Relevant Authorities

Your POA will be used during signing with the notary, land office, or developer.

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Whether you're an investor, a foreign buyer, or someone working remotely, POA gives you the flexibility to complete the sale legally and efficiently, as long as it's drafted carefully and notarized properly.

Remember: always consult with a professional notary or legal advisor in Bali before signing any POA. If you need help, check with the Bali Notary Association or a trusted real estate agency that works with foreign buyers.

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Selling a property can be an overwhelming process when it is done alone. While the process may seem easy, it can be daunting.

Before selling your property, there are many things to consider, from navigating the local market, land zoning, tax, and legal. This is where a qualified real estate agent steps in to help and guide you throughout the process of selling property

Although some people prefer to sell their property independently, an experienced and qualified real estate agent could help you ensure a smooth sales process.

Here are some of the benefits of using a qualified real estate agent

1. Knowledge and Expertise

A professional real estate agent knows the local market and laws related to buying and selling property in the area. A qualified real estate agent understands the pricing trends, land zoning, legal, and tax. This can be a crucial moment to help you sell your property and minimize the risk to the very minimum. Plus, you do not have to worry about the complex paperwork because the agent will help you navigate it.

2. Digital Exposure

In today’s digital era, online presence plays a crucial role in selling your property. A Real estate agent uses their marketing skills and targeted campaigns on websites, social media, and professional photos/videos to highlight your property's best features and spark buyer interest. Other than that, their established network can also open doors to other potential buyer.

3. The timesaving process

Selling a property involves a significant amount of paperwork and legal procedures. A real estate agent could help you with the work and handle these processes. Aside from the paperwork, a real estate agent will also handle other tasks such as responding to buyers' inquiries and negotiating offers. By delegating these tasks to a professional, you free up valuable time and energy to focus on other aspects of your move. Their experience also ensures the entire process adheres to real estate laws and regulations.

4. Negotiation Expertise

The negotiation stage can be challenging to those who aren’t familiar with the process of property selling negotiation. A skilled real estate agent is equipped with the negotiation skills that would be beneficial for your property to be sold at the best price possible, their knowledge of negotiation tactics, and presenting a unique sell point of your property can significantly impact the final sale of your property.

If you are considering selling your property, hiring a real estate agent could help your selling process with ease as you will get helped throughout the process. Their market knowledge, negotiation skills, and digital presence ensured a smooth process of property selling. The real estate agent will help you through the process with expertise, and support, that allows you to get the best experience and best deal of your property.

Established in 2009, Bali Home Immo is the first real estate agency in Canggu with more than 7000 Bali properties listed in its database. Bali Home Immo (PT. Bali Properti Kontruksi) is a licensed property agency (SIUP-P4 certified) located in Bali, Indonesia and have been successfully operating as a trustworthy and reputable real estate agency with more than 13 years of experience. Long-standing partnerships and a committed, dedicated team are the driving force behind the work that takes place every day at Bali Home Immo.

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Our expertise in the local market and extensive network affiliated with 93 local and international partners including Goplaceit.com, Rumah123, Kangaloo, Luxury Estate, and many more will also help you bring global exposure to your real estate investment and find your dream Bali property. Looking to buy villas for sale in Bali? Check out our online catalogue of Bali real estate and follow us on social media for updates.