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Andi Refandi
Andi serves as a Senior Account Executive on Emerhub’s global team.
Bali, renowned for its beautiful landscapes and vibrant culture, has become a hotspot for tourists and digital nomads. With an average of more than 500,000 monthly visitors, rental properties are lucrative, and prefab homes are emerging as eco-friendly, cost-effective options for foreign investors and prospective Airbnb hosts.
This guide will outline how to own and operate prefab homes in Bali and establish a foreign-owned accommodation business.
Key Features of a Prefab Home
Prefab homes (or prefabricated homes) are structures built off-site, usually in a factory, and then transported to the final location for assembly. This method of construction offers several advantages, making prefab homes a great choice for Bali’s property market:
1. Flexible Modular Design
Prefab homes are easily customized to fit specific needs. It allows homeowners to choose layouts ranging from modern open floor plans to traditional Balinese designs with separate structures for different functions.
2. Eco-friendly
Bali has become a top destination for eco-conscious travelers. Prefab homes built with sustainable materials attract this growing market, which includes wellness tourists and digital nomads. Materials like bamboo, teak, and natural stone are often used in construction, making them a sustainable choice that aligns perfectly with Bali’s growing sustainable eco-friendly tourism.
3. Cost-effective Investment
For investors, prefab homes present a cost-effective solution, requiring less capital to build while offering faster returns due to their quick completion time.
4. Fast construction process
The construction process, which typically takes just 2-3 months, is another major benefit compared to the longer timelines of building traditional homes, thus allowing for quick market entry into the Bali property market.
How to Set Up a Prefab Home Accommodation Business in Bali
Setting up a rental business with a prefab home in Bali is a straightforward process. Here’s what you need to do:
1. Choose Your Preferred Property Location in Bali
Prime locations like Canggu, Seminyak, and Ubud being popular among tourists and expatriates. Canggu is known for its vibrant lifestyle and surf culture, while Seminyak offers upscale amenities and nightlife.
Other areas such as Umalas, Munggu, and Seseh are gaining popularity for their quieter neighborhoods while remaining close to tourist attractions, often offering lower property prices with potential for appreciation as demand increases.
Keep an eye on tourist seasons and demand fluctuations to adjust pricing strategies, optimize occupancy rates, and maximize revenue during peak periods while preparing for potential downturns during off-peak times.
Identifying your target market, whether for long- or short-term stays, is crucial, as short-term rentals can yield higher income but require more intensive management, whereas long-term rentals provide consistent cash flow with less oversight.
Additionally, conducting thorough research on rental properties in different neighborhoods is essential. At Emerhub, we can assist by analyzing key factors such as pricing, occupancy rates, and guest reviews to identify the most attractive features for renters.
2. Secure Land Ownership as a Foreigner in Bali
As a foreign investor, owning property in Bali comes with certain legal considerations. While foreigners can’t own freehold property in Indonesia, there are several options for legally acquiring property for a prefab home accommodation business.
| Property Ownership Structure | Description | Requirements |
| Leasehold Property (Hak Sewa) | – Allows foreigners to lease land in Indonesia for up to 75 years with the possibility of an extension. – Does not confer ownership rights but provides the lessee with the right to use the land during the lease term. | – Notarized lease agreement – Valid passport |
| PT PMA (Foreign-owned Company) | – Allows foreign investors to legally own and operate businesses within the country. – Essential for entrepreneurs looking to engage in ventures beyond property leasing. | – Minimum of 2 shareholders – At least 1 director must be a resident with Tax Number (NPWP) – 2.5 billion Indonesian Rupiah (approximately US$150,000) minimum capital requirement – Registered commercial address in Bali – Business classification under Indonesian Standard Industrial Classification (KBLI) – Business license (NIB) – Quarterly investment reports – Annual tax returns – Taxpayer Identification Number (NPWP) – Deed of establishment – Local bank account |
| Nominee Structure | – A local individual or company holds property on behalf of a foreign investor. – Used by foreigners who wish to bypass restrictions on direct land ownership in Indonesia. – Relies heavily on trust, as any disputes could lead to complications in property rights. | – Nominee or Shareholder agreement – Deed of Sale and Purchase Agreement (Akta Jual Beli) – Power of Attorney (Surat Kuasa) – Loan agreements and share pledges (optional) |
Emerhub’s team of local business experts can assist you in navigating the complexities of Bali’s property regulations. From setting up a legal entity such as PT PMA, to managing all the necessary permits and documentation, Emerhub provides you with comprehensive support to make your investment in Bali stress-free.
3. Choose a Prefab Home Builder
- Reputation: Choose builders with a strong track record, certifications, and positive client reviews.
- Material Quality: Opt for builders using durable, high-quality, and eco-friendly materials.
- Build Quality: Check for quality assurance, including inspections and compliance with building codes.
- Licensing and Compliance: Confirm the builder is legally registered and meets Indonesian regulations.
- Project Management: Choose a builder who manages design to delivery and communicates well throughout.
- Cost Transparency: Get detailed quotes with clear cost breakdowns and potential extra fees.
Our team can assist you with due diligence in finding the best prefab home builder in Bali. We can help verify the prefab builder’s reputation and track record to ensure they meet the highest standards of quality and compliance. We will also check the builder’s licensing and legal standing, allowing you to invest with confidence. From cost transparency to project management capabilities, we provide a comprehensive evaluation to help you select the most reliable prefab builder for your accommodation business.
4. Obtain Licenses and Permits
Before renting out a prefab home in Bali, you’ll need to obtain the proper licenses and permits. This is especially crucial considering recent directives to regulate accommodation businesses on the island. Here are some of the licenses you’ll need to apply for:
| License | Description | Qualifications for Foreigners |
| Pondok Wisata / Homestay License | – Required for renting out villas or small-scale accommodations – Used for short-term accommodations with fewer than 10 rooms. – Allows you to operate your prefab home as a rental through platforms like Airbnb. | – Must have a local business partner or establish a foreign-owned company (PT PMA) in Bali. – Property must be in a designated tourism zone (pink zone) where short-term rentals are permitted. – Secure the PBG (Building Approval) and SLF (Building Functionality) certificates for the property. |
| Building Approval Permit (Persetujuan Bangunan Gedung – PBG) | – Permit needed to construct or modify a building in Bali, including prefab homes. – Replaced the IMB process in 2021. | – Building layout must comply with local regulations. – Structural integrity must meet Indonesian standards. – A prototype design is required before starting construction. |
| Building Function Certificate (Sertifikat Laik Fungsi – SLF)) | – Necessary for operating a rental business legally. – Certifies that your building is fit for occupancy. | – Issued PBG – Project complies with local spatial and zoning plans – Building adheres to safety standards concerning air quality, water, and waste management. – Construction is adequate to fulfill the building’s intended function. – Depending on the project, an environmental or community assessment may be necessary. |
Keep in mind that zoning laws in Bali are essential regulations for applying for building permits, as they dictate how land can be used and developed. Knowing these zoning categories can help you as a foreign investor position your properties effectively. Here are key zones you should consider:
- Residential Zones (Yellow) – Permits housing developments, including prefab accommodations, with adherence to local building codes and architectural styles. Ideal for long-term accommodation.
- Commercial Zones (Red) – Designed for businesses like shops and restaurants; ideal for prefab accommodations seeking higher foot traffic.
- Tourism Zones (Pink) – Specifically for tourism-related developments, allowing hotels and resorts; beneficial for attracting guests in Bali’s thriving tourism market. Great for short-term stays.
- Agricultural Zones (Green) – Reserved for agricultural use; construction is prohibited, making it critical to avoid these areas for accommodation projects.
Emerhub can help you navigate the process of obtaining licenses and permits for your prefab home accommodation business in Bali. Our team is well-versed in local regulations and requirements and will ensure full compliance for your rental projects.
5. Market Your Property
Once your prefab home is ready for occupancy and legally registered, you can add a listing on short-term rental platforms like Airbnb, Booking.com, or Agoda. On your listing, highlight its eco-friendly features and prime location. If possible, take professional photos of your property to attract guests. Use social media and digital marketing to promote your prefab home rental.
Kickstart your Prefab Home Business in Bali with Emerhub
If you’re looking to invest in Bali’s growing property market, Emerhub can help kickstart your business.
Our expert team can assist in navigating Bali’s property market, obtaining necessary licenses and permits, and ensuring compliance with local regulations. From helping you find the right prefab home builder to managing documentation, and analyzing key market factors, you can trust Emerhub to guide you every step of the way.
Want to invest in prefab homes in Bali? Fill out the form below, and one of our experts will be in touch to help you get started!
