Bali Real Estate in 2025: The Market Is Overheated, IRR Is Declining, and Locations Are Overvalued

From 2023 to 2025, the number of serviced apartment projects more than doubled. However, rental demand and average occupancy rates remained stagnant. As a result, the internal rate of return (IRR) for new projects is beginning to fall.

Rising land and construction costs in highly competitive areas like Canggu and Pererenan have not been met with a comparable increase in rental income. With stable occupancy and costs exceeding historical levels, the return on investment (especially over a 5-7 year horizon) is becoming less predictable.

A number of projects that began planning in 2022-2023 are now at risk of being stalled. The reason is a dramatically changed market situation: shifting price points, changing demand, rising competition, and outdated business models. Developers who have not adapted to the new realities will have to reconsider their strategies or halt their activities.

Despite the overall overheating in southern locations, villas in Ubud continue to sell steadily. The audience, focused on wellness tourism, retreats, and long-term stays, shows stable organic demand. Lower land costs, less competition, and quality architecture ensure the stability of this segment.

Nusa Dua is experiencing a surge in construction activity. However, the pace of infrastructure development—transportation, social, and service—is lagging behind. With a shortage of schools, cafes, urban amenities, and public transport, the location may face a situation of "concrete over-saturation," where properties exist, but life does not.

The Bali market is no longer for impulsive investments. The high cost of entry, slowing growth in rental income, and overheated locations demand deep analysis of IRR, operational margins, and payback periods. 2025 will be a filter that separates "trendy projects" from sustainable business models.