Bali hotels go on sale for cheap with virus hammering tourism- Bali News

Bali hotels go on sale for cheap with virus hammering tourism

Gone will be the Australian surfers and Chinese tour groups.   With no tourists and no income courtesy of the coronavirus pandemic, fighting resort owners on the Indonesian resort island of Bali have been made to put up their properties for sale.  Given the dire condition of this current market, some might need to stomach a reduction.  For investors with a long perspective, it is an opportunity to catch a slice of heaven on the cheap.

Bali hotels go on sale for cheap with virus hammering tourism- Bali News


Balangan Wave, a 50-villa hotel under construction close to its namesake popular surfing beach, has already hit the marketplace, and programmer Michael Halim has slashed his asking price to $9 million from $17 million in May."In today's market, an individual can not avoid selling at a loss," Halim said.  "Businesses are closing, there is cash flow difficulties."While the halt to global travel has devastated vacation hot spots from Hawaii to Phuket in Thailand, Bali is more vulnerable than most.  Tourism accounts for over 60 percent of the island's economy, providing jobs for everybody from cleaners and chefs at five-star hotels to self-employed drivers and guides.

A record 6.2 million travellers flocked to the island's beaches, resorts and yoga retreats in 2019.   Now, the usually pumping beach clubs lay silent and the once-thronged Tanah Lot Temple is abandoned.While major global chains like Marriott International Inc. and Hilton Worldwide Holdings Inc., have the financial firepower to stay afloat during the pandemic, smaller resorts at the budget end of the market are struggling to survive.  The amount of lodgings listed for sale in Bali has soared 30 percent because the pandemic struck, according to Indonesian property company Galaxy Kuta."It's a fantastic time to purchase," said Chandran V R, managing director of Singapore-based Cosmopolitan Real Estate, which is tackling the Balangan Wave sale.   

When that happens, prices will soar ."  With eye-catching neon window frames and insides, the 140-room resort was put up for sale for $7.7 million in May.Situated a 30-minute cab ride from Kuta and Seminyak shores, and with chambers as low as $14 per night, it was a hit with backpackers.  Not anymore."The hotel doesn't have any income whatsoever and has maintenance costs to cover," said Meirina Rajianto, an agent at Bali-based Galaxy Kuta, who's handling the sale.  "The owner decided to sell instead of bleeding more money."Ahead of the coronavirus hit, resort prices across Asia Pacific were at record levels, fueled by cashed-up private equity and property funds, together with wealthy people, said Corey Hamabata, senior vice president of JLL's resorts and hospitality team in Hong Kong.Among those attracted to Bali was the Trump Organization, which signed an agreement in 2015 to give its name to a different resort and golf club on the island.  Even it is scaling back, using its regional partners indicating last week they may elect for a four- or five-star hotel -- not six -- to make it more affordable.Nevertheless, buyers are going to stay active as opportunities to purchase discounted assets appear, Hamabata stated.  

"We anticipate most buyers will be driven by three major themes: purchasing at a discount; purchasing under-utilized properties to improve themor purchasing properties in strategic places to develop a new or platform."An increasing domestic travel market in Indonesia, the world's fourth-most populous nation, may also prop up resorts until the globe-trotters return.  

"We are anticipating domestic demand will be faster to recover than global demand," stated JLL's Hamabata.While the island of 4.2 million had early success in containing the virus, it has seen a spike in infections to over 1,400, with 13 deaths.  Indonesia has surpassed 54,000 cases, with 2,754 deaths, which makes it the worst hit Southeast Asian country. Below a three-step strategy, national tourists would be allowed back in August, with global sun-seekers welcomed in September if everything goes according to plan, the Jakarta Globe reported earlier this month, after a trip by tourism ministry Wishnutama Kusubandio into the island.

In the best case scenario, it is unlikely tourists will arrive in droves.Its main source of tourists, Australia, has indicated it is very likely to maintain borders closed until next year.  In Singapore, only a 2 1/2-hour flight away, the government is just allowing essential trips and has warned that mass vacation travel will take longer to resume.

This makes Bali a risky bet.  The 5,780-square-kilometer island has over 4,300 resorts, according to government figures.  "Those with very little cash flow to pay the lockdown period and not able to restructure or delay debt obligations will probably come under pressure very quickly," said Govinda Singh, head of resorts and leisure for valuation and advisory services in Asia in Colliers.

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