The Cost of Building a House

House and Land prices and construction costs in Bali

How much does it cost to buy land and build in Indonesia? Prices have been rising rapidly over the past two decades.

Here we look at how much you would expect to pay to buy land and to build a house in Bali.

Land prices have increased rapidly

Until 2016 the price of land in Bali was spiralling out of control. Of course the capitalist system dictates that prices find their own level, if people are willing to pay then prices will increase. But, in an ever increasingly globalised world, what of the local people? They are suddenly having to compete with foreigners who think nothing of spending $300,000 on a house sitting on three or four are of land (an are is 100 square metres). Just to put this into perspective $300,000 is around Rp2,850,000,000 which to an Indonesian earning Rp2 million a month represents their full pay for a trifling 118 years!

The price of land is now beyond the reach of most Balinese. Sadly the high prices tempt them to sell their land not realising that they will probably never be able to buy it back. In Balinese culture land belongs to the family and is passed on from generation to generation. Each generation are only the custodians of land.

If this trend continues the Balinese will be progressively disowned of their land bringing social problems and, we can only expect, serious tensions between the Balinese and their new neighbours. The long term ramifications don't bear thinking about.

Fortunately there has been some respite. In 2016/2017 the bubble burst and the real estate market stagnated and land prices fell by around 30%.

So let us quickly look at the current price of land and the cost of building on this island. Before we start I know there will be those who have different experiences from my own and there may well be others who, for their own reasons, will disagree with the figures I am quoting. I once knew a man who had completed a 3 year degree course in land valuation and I asked him "Ted, how do you determine the value of land?" He smiled, sucked his finger and lifted it enquiringly into the wind.

Land Prices

Naturally freehold land prices vary according to where the land is but as a rule of thumb prices that people may expect to pay at the moment (2019) are as follows:
In some outlying village areas land can still be bought for around Rp100 million Rupiah an are (around US$7,000 for 100 square metres).
In developing areas of Canggu, and the bukit around 600 to 800 million Rupiah an are (US$40,000 to US$55,000 per hundred square metres).
Sanur tends to be around 600 million Rupiah on the West side of the bypass to 1 billion Rupiah (around $US70,000 on the Eastern side while Jimbaran tends to be cheaper probably around 500 million Rupiah per are.
At Candi Dasa residents advise me that land costs around 300 million an are.
As soon as you get near the beach or have sea views prices increase markedly rising to Rp900 or Rp1 billion an are.

Note that these are freehold land prices and obviously 25 year leases should cost a lot less.

Building Costs

Builders use a rule of thumb to roughly estimate building costs. It all depends on the standard of building and the square meterage of floor area.

Costs start at around 4.5 million Rupiah per square metre for a basic standard of building. This would be a building with a white tiled floor, concrete walls, low quality wooden window frames, plywood doors, plywood ceilings and a low quality clay tiled roof. Bathrooms and kitchens would be fully functional but may have concrete benches and low quality fittings and equipment. Electrical, plumbing, septic and water systems are included.

At the other end of the scale the highest standard of building is probably around 12 or even 14 million Rupiah per square metre. At this price you would expect to have the highest quality marble or teak wooden floors, walls with stone cladding and high quality interior finishes, wood shingle or high quality tiled roofs, high quality wooden window frames and wood panelled doors. Kitchens and bathrooms would be professionally built with the best fittings available and bedrooms would have built in wardrobes and sophisticated lighting designs.

As an example let us consider a medium quality house in a ricefield in Canggu. The land is a 4 are block and the house is 10 metres by 10 metres with two floors.
The land cost is 4 are x Rp800 million = 3,200 million
The house has 2 floors each 10 x 10 which is 200 square metres at a cost of 9 million per square metre = Rp1,800 million.

Total estimated cost is 5,000 million or around US$354,000.

It should be noted that costs have increased dramatically in the past few years. As recently as 2007 land was costing Rp50 to Rp80 million an are in many areas and building costs were 1.5 to 5 million per square metre.

It has to be said that these increases are mostly due to peoples willingness to pay, a situation often fuelled by people selling property who have a vested interest in pushing up the prices and who are usually dealing with people from overseas who have little understanding of the real estate market here in Bali.