An upcoming resort development in Lombok, Indonesia, Invest Islands unveils luxury villas in Lombok aims to be the first internationally branded luxury hotel to break ground in the southern part of the tourist island. The new resort is called Gran Melia Lombok Resort & Spa and will be anchored by Spanish-based hospitality group Melia Hotels International.
The hospitality operator was brought in by Invest Islands, a seven-year-old real estate investment company that owns the land and conceptualised the master plan for the resort. Gran Melia Lombok will comprise 125 private villas that will be sold to individual investors as holiday homes for their own use and as investment assets through a pooled rental agreement with the hotel.Co-founders Kevin Deisser and Jack Brown started Invest Islands to source land-plots in mature tourism island markets in Indonesia to flip to developers and landowners.
The company’s first investment and development project is an 88-unit residential development called Mandala Eco-Village, which is also in south Lombok. The project was launched in October 2021 and the initial sales phase saw all 14 units that were released snapped up. The units that have been sold range from US$150,000 to US$575,000 ($206,300 to $790,800), depending on the design of the unit.
Cornering the luxury accommodation market
Invest Islands’ hunt for a second investment location led them to Torok Bay in south Lombok. “We were looking for investment opportunities in (Indonesian) islands that show strong tourism growth, and we were also looking at the traditional mature tourism island markets in Bali, Phuket and Koh Samui,” says Brown.
They found an opening in the tourist market in Lombok in 2015 for their second investment project. “The tourism market in Lombok is supported by numerous government infrastructure projects and stimulus programmes,” he says.
For example, Lombok International Airport received a US$500 million boost from the Indonesian government to double the airport’s passenger capacity from 3.5 million passengers to seven million passengers.
However, “there is still a huge under-supply of high-quality accommodation” in Lombok, he points out.Brown says that there is no five-star or ultra-luxury hotel development in south Lombok. Thus, Invest Islands hopes that with Gran Melia Lombok, it can capitalise on this gap in the market and monopolise it for as long as possible by offering luxury hotel accommodation.
Most of the tourists going to south Lombok tend to be motorsports fans who regularly attend various races and events held at the nearby Mandalika Circuit throughout the year. But Lombok also receives beach-going tourists who enjoy surfing, diving, snorkelling and yacht charters.
These tourists tend to be more affluent and would be open to luxury accommodation offerings, says Brown.
Breaking ground at Torok Bay
Gran Melia Lombok’s site, Torok Bay, is a crescent-shaped bay that faces the Indian Ocean and is backed by hills in south Lombok. The site originally comprised 11 different parcels of land that were owned by different local landowners. It took Invest Islands about two years, from 2016 to 2018, to convince the landowners, one by one, about selling their land parcels, as well as converting their certificate into a Hak Guna Bangunan title, the official land title foreign entities need to build on land in Indonesia.The 16.3ha site consists of 14ha of hillside plots and 2.3ha of beachfront sites. These acquisitions and land title conversions cost Invest Islands about US$6 million, and the various plots have been consolidated into a single master-planned development site.
According to Brown, when the company acquired the 11 adjacent plots, it also discussed with local stakeholders its plan to develop the site into a luxury resort. The next step was to engage a hospitality operator to manage the development. Brown says that they were considering five different hospitality groups, including Accor Group. “But we were not a very big priority on their list that year due to the scale and number of hotels in their pipeline. But Melia came in and convinced us that this would be a special project to them,” he says.
Melia Hotels operates and manages over 400 hotel properties worldwide and only 12 are named Gran Melia for their elite status and unique attributes, according to the hospitality group. Invest Islands officially signed the hotel management contract with Melia Hotels in October 2021. Melia Hotels’ engineers and architects are working with Invest Islands to ensure the new project is built to the hospitality group’s brand standards.
Hospitality group-run rental assets
Invest Islands says that the total development value of Gran Melia Lombok will exceed US$80 million and the entire project is scheduled to be completed by 2025. “We’re due to open at the start of 2025, so we have time to catch the recovery of the hospitality industry,” says Brown. It also expects strong buying interest from local and foreign buyers, with most overseas-based buyers coming from Singapore and Hong Kong.
As part of their purchase, buyers will also have to sign a pooled rental agreement that would allow Melia to control their property for at least 11 months each year. Owners can also opt to hand over the properties to Melia for the entire year, says Brown.
He adds: “The buildings have a payback period of about eight years, and that is based on the 55% occupancy. The return on investment is about 9%–12% based on estimated projections. ”However, the project does not come with any rental guarantees. Instead, Invest Islands is the majority equity stakeholder in the project. Brown says that investors should be assured as the developer is committed to the long-term success of the project.
Upon the project’s completion, Melia will run the marketing, accommodation bookings, services, staff, and maintenance of the development.
“Melia’s contract with us stipulates that they have to keep the occupancy over 40% throughout the year. We expect the development to see an average occupancy of about 55% over the first three years, which we believe is a conservative but realistic view as the hospitality industry rebounds,” says Brown. He believes that once the development is stabilised, it should command an average occupancy of about 75%–80%.
Four distinct villa styles
A unique feature of Gran Melia Lombok will be the four distinct architectural styles offered for the villas. “To make the hotel more interesting and to offer different types of accommodation that suit different lifestyles, we decided to approach different architects to deliver different themes,” says Brown.
This will give the entire development a visually striking appearance, akin to a series of villages in different zones scattered throughout the site, he says.
Two of the architectural styles feature a modern appearance and layout. The clean architectural lines of the two-bedroom Aurora villas are designed to maximise the panorama of the lush surroundings, and the modern-style interior complements the tropical setting.
Meanwhile, the three-bedroom La Residenza villas feature a contemporary design with an open-plan layout to create airy and well-ventilated interiors. These villas also come with dual vantage points with an east-west orientation.
According to Brown, these types of contemporary villas tend to be favoured by Singaporean and Hong Kong buyers who believe they are easier and cheaper to maintain, and will attract more buyers when they sell the property in the future.
On the other hand, the most popular villa design choice so far has been the Inspiral eco-luxury villas, whose design and build materials emphasise eco-friendly and sustainable materials and products. Hillside Inspiral villas will consist of two- and three-bedroom suites, while the beachside villas will consist of one- and two-bedroom suites.
Lastly, the one-bedroom Kayma villas lean on the glamping aesthetic that have been popular in recent years. These luxury tented suites are fitted with bespoke fittings to enhance the comfort and luxury of the experience.
“This variety [of styles] adds a lot of value to the development, and the diversity is more visually interesting compared to a traditionally built hotel,” says Brown, who adds that each villa will occupy an 8,600 sq ft plot.
As for pricing, 11 Aurora-style villas will be from $907,000 and 14 La Residenza villas will be from $1.058 million. At least 23 hillside Inspiral villas will be developed along with four beachside Inspiral villas, and prices start from $1.4 million. Lastly, 14 luxury tented Kayma villas will go for $681,000.
“At first glance some people might consider these to be quite high prices, but I would say this is like owning a share of the hotel’s revenue from the rentals it will generate,” says Brown. “In addition, it includes the paid-up capital to launch the hotel and the luxury fixtures and fittings. Thus, owners would be buying real estate and buying into a hotel project as well.
”Gran Melia Lombok will also include hotel facilities and amenities such as wedding venues, three restaurants, a beach club, clubhouse, spa, gym, swimming pool, as well as a children’s club area.
Invest Islands will retain about 25 hotel suites in an annex beside the clubhouse and 28 beachside villas that will be located away from the private villas. “We want to have our own foothold in the project as co-investors,” says Brown. These will be rented out, in addition to the villa units that tourists can book with the hotel.
Invest Islands has launched the first sales phase comprising 11 villas for sale, and it says that it has sold seven units. The company will open a sales office in Singapore by the end of this year to support its global sales launch that will kick off in Jakarta and Singapore in the middle of this month.
It plans to release about 40 more private villas for sale and has signed Savills as its global marketing agent.