If you’re looking to invest in a holiday property that provides a high rental yield, set your sights on Lombok. This island in Indonesia’s West Nusa Tenggara province has long stood in the shadow of Bali, its neighbour only 40 kilometres away. With Bali now being seen as over-commercialised and busy, holidaymakers are now looking to pristine Lombok as their tropical vacation destination.
As a savvy real estate investor, this creates a fantastic opportunity. Here are four reasons why Lombok is shaping up to become Indonesia’s newest rental yield paradise.
1: Government focus
The Indonesian government wants to attract at least 20 million visitors annually by 2020. To pursue this goal, its tourism ministry is investing money into developing destinations identified as alternatives to Bali. Lombok is one of them. Back in 2011, the government opened Lombok International Airport to encourage direct flights to the island. In 2017, the government inaugurated the Mandalika Resorts Project on Lombok’s southern coast. Mandalika is designed as a high-end hub for conventions and events. You can expect other infrastructural developments as the Indonesian tourism ministry continues boosting Lombok’s profile.
2: Low supply of high-end accommodations
While tourism traffic and government spending are well underway, Lombok still lacks adequate luxury accommodations. Many visitors want to experience the island from the comfort of an upscale holiday villa or apartment. The number of tourists wishing to stay in high-end vacation homes will only increase as world-class events like the MotoGP 2021 start coming to Lombok.
3: Year-round market
Just like Bali, the weather in Lombok is fantastic all year-round. The island may experience some rain, especially in the monsoon months. However, these monsoon rains are not likely to completely stop holidaymakers from coming to the island for a taste of the tropics. You can expect to have a high occupancy rate for your rental property regardless of the month, even during the wet season.
4: Low investment and operational costs
Perhaps the biggest reason why it makes sense to invest in real estate in Lombok right now is cheap property prices. It doesn’t cost a lot to buy a house in Lombok in the current market. For example, you can get your hands on a two-bedroom villa in a good neighbourhood for USD$400,000 or so. The cost of staffing and maintaining your rental home will also be low. Because the cost of investing and running a Lombok rental home is low and the demand for the right kind of accommodation is high, you can expect high rental yields.
To maximise your rental yields consider the styling of your investment property. Bringing the outdoors inside can enhance the tropical experience for holidaymakers so you can command a higher income. Consider a traditional Indonesian style or a more westernised feel with a few resort style beanbags to set the tone.
The real estate market in Lombok is a hotspot right now however it won’t be this way forever. Prices will inevitably shoot up as more investors get on this bandwagon. So, if you’re looking to invest in Lombok holiday properties for high rental yields, you should act now.
Invest Islands offers a wide range of consultation services focusing on land ownership and development in Indonesia. Contact us with your enquiries today.