Bali remains one of Southeast Asia’s hottest real estate markets. But if you’re considering buying property here, a key question is: Which offers a better return — leasehold or freehold?
The answer depends on your goals: short-term rental income, long-term capital gain, or simply owning a home in paradise. In this article, we’ll compare leasehold and freehold ROI across Bali’s most popular areas.
What’s the Difference?
- Freehold (Hak Milik): Full ownership of the land, available only to Indonesian citizens or through a PT PMA (foreign company).
- Leasehold (Hak Sewa): Right to use a property for 25–30 years, legally available to foreigners.
Both can be rented, lived in, and sold (under certain conditions), but they differ in cost, legal structure, and long-term value.
Comparing ROI: Leasehold vs Freehold
1. Canggu & Berawa
- Freehold
- High land prices: $500K–$1M+ for top locations
- Annual rental yields: ~5–6%
- Capital gain potential: steady but saturated
- Leasehold
- 30–40% cheaper entry price
- Higher yield (~7–9%) due to lower investment cost
- Easier to rent for short/mid-term stays
Verdict: Leasehold wins for cash flow. Freehold holds value long-term, but entry is expensive.
2. Uluwatu & Bingin
- Freehold
- Still relatively affordable
- Rapid growth = high potential for appreciation
- Leasehold
- Popular among surfers and digital nomads
- Strong Airbnb-style demand = high occupancy
Verdict: Leasehold provides better short-term ROI; freehold is best if you plan to hold 10+ years.
3. Ubud
- Freehold
- Great for long-term living or retreat development
- Growing demand among health & wellness investors
- Leasehold
- Affordable, but ROI depends on unique concept or niche
- Best for mid-term rentals and boutique stays
Verdict: Both work. ROI depends more on positioning than on ownership type.
4. Seminyak & Petitenget
- Freehold
- Expensive and mature market
- Harder to find undervalued assets
- Leasehold
- Lower barrier to entry
- Excellent rental potential (tourist zone)
Verdict: Leasehold performs better for short-term rentals. Freehold may underperform unless bought pre-pandemic.
What Impacts ROI in Bali?
- Property management quality
- Occupancy rate (location, photos, amenities)
- Lease duration remaining (short leases = lower resale value)
- Maintenance & renovation budget
- Legal clarity of contract
Conclusion
- Leasehold is best for investors seeking rental income, quicker returns, and lower upfront cost.
- Freehold is ideal if you’re Indonesian, using a PT PMA, or want to hold the asset long-term.
At Mata Property Bali, we analyze every opportunity for potential ROI — not just surface value. Whether you’re looking for cash flow or capital gain, we’ll help you make the right move.
Ready to compare properties side by side? Contact our investment team today.
