Bali is a tropical paradise that attracts numerous expatriates and foreign investors every year. The country is also a paradise for those seeking to capitalize on its tourism industry.
This article will guide you through how to start an Airbnb business in Bali, from capital requirements to types of investments.
Legal Requirements to Start an Airbnb Rental Business in Bali
When starting an Airbnb business in Bali, being aware of the legal requirements helps you identify and mitigate potential risks early on. This includes understanding company registration, types of property investments, and necessary permits and licenses.
1# Company registration PT PMA
To legally own and operate an Airbnb business in Bali, you need to set up a PT PMA (Foreign-Owned Company). This legal entity allows foreign investors to conduct business activities in Indonesia, including property rentals.
The necessary certificates you must obtain to register PT PMA are:
- Business Identification Number (NIB)
- Company Registration Certificate (SKDP)
To learn more about company registration, Emerhub can assist you.
2# Necessary Permits and Licenses
Before you can start operating your Airbnb business, you need to ensure your obtain the necessary permits and licenses for different needs.
Building Permits
Building permits certify that your property is safe, functional, and adheres to local building codes.
- PBG (Persetujuan Bangunan Gedung): The PBG is the building approval permit. It ensures that your property’s construction or modification meets local building standards and regulations.
- SLF (Sertifikat Laik Fungsi): The SLF, or Certificate of Proper Function, certifies that your building is suitable for use and meets all necessary safety and operational standards. SLF ensures that construction or renovation complies with the PBG.
Pondok Wisata License
The Pondok Wisata license is essential for legally renting out your property to tourists in Bali. The Pondok Wisata license allows you to operate a small-scale accommodation business, such as a guest house or villa, for short-term rentals to tourists.To obtain this license, you must be:
- verifying that your property is in a tourism zone (Pink Zone)
- obtaining building permits (IMB)
- providing proof of property ownership or lease agreement
Zoning Permits
Bali has specific zoning regulations that determine how land and properties can be used. Zoning permits are crucial for ensuring that your Airbnb property in Bali is in an area designated for the type of business activities you plan to conduct.
- Tourism Zone (Pink Zone): Ideal for short-term rentals with minimal restrictions. If you invest in pink zone, your property can legally operate as an Airbnb.
- Green Zone: Prohibits commercial developments, including Airbnbs. Areas like Ubud, Nusa Dua, and Sanur often fall under green zones, making them unsuitable for short-term rental investments.
- Residential Zone (Yellow Zone): Permits long-term rentals and private residences. While suitable for long-term stays, you need to check local regulations regarding density and construction standards.
- Commercial Zone (Red Zone): Commercial zones are less suitable for residential Airbnbs. Reserved for businesses like shopping centers and hotels.
- Mixed-Use Zone (Orange Zone): Allows for both residential and commercial uses, suitable for properties catering to both locals and tourists.
Budgeting for Airbnb Rental Business in Bali
Understanding budgeting is crucial for investing in the right property and amenities.
- Low-End Budget ($100,000 to $120,000): With a budget of $100,000 to $120,000, you can find properties in less tourist-heavy areas like the east or north side of Bali. These regions offer a lower initial investment but may yield a slower return on investment (ROI) due to less frequent tourist traffic. This option is ideal if you are a patient investor targeting tourists seeking quiet, tranquil locations away from busy central areas.
- Mid-Range Budget ($200,000 to $300,000): A budget of $200,000 to $300,000 opens opportunities in popular areas such as Canggu, Berawa, or Pererenan. These locations are in high demand among tourists, promising better ROI. Investing in these areas requires higher initial costs but benefits from a constant influx of visitors, making it a more lucrative option for those looking to maximize income from short-term rentals.
Types of Property Investments for Airbnb Rental Business in Bali
You need to have clear budget ranges to compare property investment strategies based on budget, location, and expected returns for Airbnb businesses in Bali.
For example, purchasing pre-built villas or off-plan properties provides quicker routes to market entry compared to building from scratch.
- Buying Land and Building: Buying land and building lets you design your property from scratch, giving you full control. However, it takes more time and costs more due to construction and a longer wait before you can rent it out. This is great if you have a long-term vision and specific design ideas.
- Buying Pre-Built Villas: Purchasing pre-built villas is a quicker way to start your Airbnb business. You can rent out the property immediately, especially if it’s near popular beaches and attractions. This option is ideal if you want a faster entry into the market.
- Buying Off-Plan Villas: Buying an off-plan villa offers a fast ROI since these villas are often near completion. You can quickly start renting them out and generating income. This is perfect if you’re looking for immediate returns.
Partner with Emerhub in Bali for Your Airbnb Business
Ready to start your Airbnb business in Bali?
We ensure your Airbnb business in Bali operates smoothly and successfully, from initial setup to ongoing management.
Contact us today via link below to learn more about how we can help you.
