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Andi Refandi
Andi serves as a Senior Account Executive on Emerhub’s global team.
For decades, tourists have known Lombok as Bali’s sister island, but that’s not its only identity. In the past few years, Lombok has gained significant attention from foreign investors. Here are a few reasons why people from around the world are investing in Lombok.
Why are people investing in Lombok?
Lombok’s location, population, culture, economy, new projects, tourism, and real estate make it an excellent investment opportunity for foreign investors. Here are the most crucial factors that showcase the strength of the island.
The geographic location of Lombok
Lombok is an Island situated in the West Nusa Tenggara province of Indonesia. It is one of the most beautiful islands in the region, which only adds to its attraction for people from both within and outside Indonesia. Lombok is home to approximately 3.4 million people, and 1 million more tourists visit annually. The island is divided into 5 regions
- West Lombok
- North Lombok
- Central & East Lombok
- South Lombok
- Gili Islands
All these regions are surrounded by islands, beaches, and waterfalls.
Tourist demands signal high return on investment
Another reason why foreigners are investing in Lombok is because of the volume of tourists visiting the island every year. Reports indicate that the MotoGP Race alone brought 65,000 new visitors to the Island, while it is estimated that approximately 1 million tourists visit Lombok each year. As the number of tourists rise, according to the NTB Tourism Agencies, the island only has enough hotels, villas, and homesteads to accommodate 24,000 people. The government of Indonesia was working to increase this capacity to 100,000 by the end of 2022, which also paved the way for international investors.
The most popular areas of Lombok are Kuta Mandalika, Senggigi, Rinjani, Gili Islands, and Mataram. There are enhanced options for purchasing a property and opening new hotels and initiating businesses along the shore.
International Street Circuit
The International Street Circuit is located in the Madalika resort area. It measures 4.3 km in length and has already hosted rounds of the Asia Talent Cup and Superbike World Championship in late 2021. The MotoGP World Championship was also held at this circuit in March 2022.
Development projects are further improving tourist experiences
Lombok’s Mandalika Development Project aims to create luxury tourism in Lombok, similar to Nusa Dua, Bali. The Mandalika project has been assigned to the Indonesian Tourism Development Corporation, the same organization that contributed to the transformation of Bali. Given the government’s drive for tourism enhancement, investing in Lombok is on the precipice of becoming as lucrative as investing in Bali.
Economic zone incentives for investments in Lombok
Indonesia introduced the Special Economic Zone model in 2000. In the past, there was only one Free Trade Zone (FTZ) across the whole country, located in Batam, which is close to Singapore. Through the Mandalika Project, Lombok now receives numerous SEZ incentives, including tax and non-tax benefits. For investments exceeding US$ 1.2 Million, SEZs offer tax breaks up to 50%, lasting for five years. This tax break can be further extended for 20 years.
Why are Investments in Lombok’s real estate tempting for foreigners?
Lombok is among the fastest-growing tourist destination in Indonesia, with a 10% year-on-year growth. By comparison, Bali faces over-tourism and even a dip in its year-on-year tourism numbers. As Lombok excels, a substantial portion of it remains underdeveloped. There is a high demand for co-living spaces, restaurants, spas and wellness centers, and much more. Investments in any of these categories can provide higher rates of return due to a lack of competition in the market as well as the growing demand for services by a growing number of tourists every year.
Lombok’s geographic location makes it ideal for tourists
Lombok is two hours away from Singapore and only half an hour away from Bali.
Due to various tourist attractions like Gili Islands, Tiu Kelep waterfall, Kalak hot springs, Senggigi, and beaches, Lombok has been gaining much popularity recently. It is now referred to as the “next Bali” for surfers, holidaymakers, beach-lovers, travelers, and investors.
Ease of access
The Zainuddin Abdul Madjid Lombok International Airport recorded a 74% growth in passenger traffic during the first quarter of 2022 when compared with Q1 of 2021.
There are several domestic and international flights connecting Lombok to the rest of Indonesia and the world. Silk Air connects Singapore to Lombok, Garuda Airlines that fly between Lombok and Kuala Lumpur, with a stopover in Jakarta, and Air Asia connects Kuala Lumpur with Lombok.
Garuda Indonesia, Citilink, Lion Air, Wings
Affordable land available in Lombok for investors
Bali is suffering from over-tourism and over-investment since 2019. As a result, Lombok is poised to offer cheap and lucrative property investment opportunities. As more investors look to expand their investments in Indonesia though, property prices are increasing in Lombok. This goes to show the confidence investors have in this island.
Construction and advancements are already underway
Conclusion
Given the focus of international investors due to the government offering special incentives for the region, Investing in Lombok could be a limited-time opportunity. In contrast to the highly competitive market of Bali, Lombok is still a hidden gem, and worth exploring for long-term and high-return investments.
Get in touch to learn more about why Lombok is considered to be the next Bali for foreign investors.
