Bali and the Indian Ocean Villa Market

The 2024 baseline by destination#

The arithmetic begins with five jurisdictions and a sixth subset. Bali recorded approximately 6.3 million international arrivals in 2024, a 20.1 per cent year-on-year rise and a fresh peak above the 6.2 million of 2019 (BPS-Statistics Bali Province). Indonesia as a whole drew 13.9 million arrivals for the full year (BPS-Statistics Indonesia), with Bali absorbing roughly 45 per cent of the national figure.

The Maldives crossed two million arrivals for the first time on record. The Ministry of Tourism logged 2,046,615 visitors, up 9.1 per cent, with the two millionth arriving on 26 December 2024. China was the largest source market, up 40.7 per cent. The country operates 170 resorts with 42,147 beds, plus 15 hotels and 870 registered guesthouses.

Mauritius drew 1,382,177 tourist arrivals, up 6.7 per cent, with air at 97.5 per cent of the flow (Statistics Mauritius, Handbook 2024). Average length of stay was 11.4 nights and tourism earnings reached Rs 93.6 billion. Seychelles posted approximately 350,000 visitors, with NBS confirming 294,071 in the year-to-3-November window. European visitors accounted for roughly 73 per cent of the flow.

Sri Lanka closed 2024 at 2,053,465 international arrivals, a 38.07 per cent increase on 2023 (SLTDA), the steepest percentage recovery in the region. India was the leading source market in December at 21.3 per cent, with Europe contributing 51.9 per cent of the annual total. The absolute figure remains below the 2018 peak of 2.33 million.

The Gili archipelago is the constrained Indonesian subset. Lombok province (NTB) recorded 3.6 million arrivals in 2024, approximately 88 per cent domestic. North Lombok, the gateway to the Gilis, posted +88.9 per cent cumulative growth in early 2025 (BPS-NTB).

Bali at the saturation point#

Bali is the largest market in the set and the most exposed to its own success. Land prices in Canggu and Berawa moved from roughly USD 321,000 to USD 484,000 per villa equivalent between early 2024 and early 2025 (propertia.com listings sample, 16,000-plus listings, April 2026). Seminyak and Canggu transact at approximately USD 1,200 to 1,700 per square metre. Uluwatu, the southern cliffside corridor, transacts at approximately USD 966 per square metre on average, roughly 40 per cent below equivalent Canggu pricing, with premium cliff-edge parcels commanding a different curve again.

The supply response is now visibly over-built in the central corridor. Thousands of villas were delivered between 2022 and 2024 in Canggu, Berawa, Pererenan, Uluwatu and parts of Ubud (Rumavi Bali market report, 2026). Occupancy is forecast to soften in 2025 in the mid-tier undifferentiated segment. The premium tier behaves differently: Uluwatu cliff-edge and Bukit Pandawa parcels still price on scarcity within a small subset of the island.

The branded residential pipeline confirms the bifurcation. Mandarin Oriental Bali at Bukit Pandawa is scheduled to deliver 68 branded villas across an eight-hectare cliff site for a 2027 opening, above a 110-key resort. Anantara Ubud opened October 2024 with 85 keys and 15 branded residences. Aman Villas at Nusa Dua trades in the secondary market at the upper bound. Six Senses Uluwatu, Capella Ubud and Bulgari Resort Bali at Uluwatu sit within the same pool. The premium operator footprint is dense, but the parcels it occupies are not replicable.

Water and land use are hard underwriting variables. Over 65 per cent of Bali's freshwater is funnelled to tourism, with over-extraction from private wells lowering the water table and raising saltwater intrusion in the coastal south (Asia Media Centre, 2025). The October 2025 severe flooding in southern Bali, driven by record monsoon rain on a warming atmosphere and by the paving over of paddy fields that had provided drainage, was the visible reckoning. The premium investor must price the water table and drainage layer at the parcel level.

Pererenan, Uluwatu and the geography of premium#

The Bali premium market is not Bali. It is a small set of corridors where supply is constrained by clifftop topography, by setback rules, or by the carrying capacity of the road and water grid. Pererenan, immediately north of Canggu, has absorbed the overflow as central Canggu has densified, at prices that have not yet caught up with the southern neighbour. The arbitrage is visible. The question is whether the same density curve that consumed Canggu in five years will consume Pererenan in three.

Uluwatu, on the Bukit peninsula, is where premium operators concentrate. The cliff-edge geography is finite, the road and infrastructure layer materially constrained. Land prices remain approximately 40 per cent below equivalent Canggu pricing while nightly rates on cliff-edge product run at or above Canggu averages. Uluwatu is a small constrained market within a large unconstrained market: unit-level returns will diverge accordingly over a ten-year horizon. Pererenan, by contrast, is a credible three- to five-year trade, not a structurally scarce twenty-year hold, because topography on the central west coast does not constrain supply the way the Bukit cliff does.

Bali Provincial Regulation 4 of 2026 and the closing of the nominee window#

On 24 February 2026, Governor Wayan Koster signed Bali Provincial Regulation 4 of 2026. The text criminalises nominee land ownership arrangements in which a foreign buyer holds the beneficial interest in Hak Milik (freehold) land through an Indonesian counterparty. Civil nullity under Article 26(2) of the Basic Agrarian Law of 1960 had been settled jurisprudence for decades. The 2026 regulation moves the same arrangements into criminal territory, with prosecution available against the foreign principal, the Indonesian nominee, and any intermediary or facilitator.

The penalties are not theoretical. The regulation cross-references Law 41 of 2009 on productive agricultural land protection (up to five years' imprisonment and IDR 1 billion fine for illegal land conversion) and the Indonesian Criminal Code (KUHP) for document manipulation. Administrative sanctions add business closure, licence revocation and mandatory demolition. Enforcement in 2026 is concentrated in Tabanan and Gianyar regencies, the heartland of the Subak irrigation system.

The nominee shortcut is no longer a shortcut. A foreign buyer entering Bali in 2026 must hold through one of the recognised structures: Hak Sewa (long-term lease), Hak Pakai (Right to Use, capped at 80 years on the 30 + 20 + 30 formula under Government Regulation 18/2021), or a PT PMA company holding Hak Guna Bangunan on a parcel held by an Indonesian counterparty. Each requires onshore legal capability and a notarised Akta Jual Beli executed before a Land Deed Official (Pejabat Pembuat Akta Tanah).

Maldives, branded resort residences as the operative structure#

The Maldivian constitution prohibits freehold land ownership by foreigners. Land is reserved for Maldivian citizens. The operative route for foreign capital is the long-term lease, granted by the state to a resort developer under the Tourism Act and structured as a sub-lease to the individual villa buyer. The maximum lease term is 99 years.

Soneva Fushi was the first resort to introduce a structured villa ownership programme for foreign buyers, in 2011. The Soneva Villas portfolio runs from two to nine bedrooms across Soneva Fushi (Baa Atoll) and Soneva Jani (Noonu Atoll). Villa 11 at Soneva Fushi is a nine-bedroom reserve, and the 4 Bedroom Water Reserve at Soneva Jani is the largest overwater villa in the country. The legal grammar is leasehold; the operational grammar is closer to a strata-style branded residence within an operating resort.

The branded resort residence model now extends across the upper tier of the archipelago. Cheval Blanc Randheli, the LVMH Maison in the Noonu Atoll, runs 46 villas and residences. One&Only Reethi Rah operates as a flagship with periodic high-end residential releases. The next decade of supply will be driven by the same handful of operators: any single atoll has finite carrying capacity, and the regulatory frame does not permit independent freehold development outside the resort structure.

Climate exposure is the binding destination-level constraint. Sea level rise in the central Indian Ocean has run at approximately 4 to 6 mm per year over the past three decades, two to three times the global mean (South-West Indian Ocean studies cited by AIVP, 2024). New coral microatoll analysis suggests central Indian Ocean sea levels have risen 30 to 40 centimetres over fifty years. For a country whose highest natural point is approximately 2.4 metres above sea level, the underwriting horizon is not abstract.

Mauritius, residency by investment with a real estate anchor#

Mauritius is the only jurisdiction in the set that gives a freehold-equivalent title and a residency permit at the same threshold. The Property Development Scheme (PDS), which has replaced the older Integrated Resort Scheme (IRS) and Real Estate Scheme (RES), allows a non-citizen to acquire residential property within an approved development at a minimum investment of USD 375,000 (or equivalent in any freely convertible currency). The acquisition triggers a Residence Permit covering the buyer, spouse and children under 24, valid for the duration of ownership.

The PDS is the operative scheme in 2026. Older IRS and RES inventory continues to trade with the same freehold grammar. The Ground +2 Scheme allows non-citizens to acquire apartments in buildings of at least two storeys, without the same threshold or residency. The Smart City Scheme adds a fifth route for mixed-use developments. For the buyer whose thesis is part-year residence anchored by a property holding, the PDS is the standard.

The tourism baseline supports the residential thesis. 1,382,177 arrivals in 2024, European source markets dominant, average length of stay 11.4 nights, structurally above the regional average. The country has a 15 per cent flat income tax, no inheritance tax and no capital gains tax on residential sales between non-citizens. The fiscal frame is among the most accommodating in the Indian Ocean.

Climate exposure is moderate but not absent. Mauritius sits within the same Western Indian Ocean SLR band as the Maldives and Seychelles, with maximum modelled inundation of 54.1 square kilometres under upper-bound scenarios. The premium operator footprint (Four Seasons Anahita, One&Only Le Saint Géran, Royal Palm Beachcomber, St Regis Le Morne) concentrates on the calmer western and northern coasts.

Seychelles, capped foreign ownership and the Sanction regime#

Seychelles operates the most restrictive foreign ownership regime in the set, by design. The Immovable Property (Transfer Restriction) Act requires every non-Seychellois purchaser of immovable property to obtain a government Sanction before completing the transaction. The Sanction is valid for twelve months and is issued at the discretion of the relevant Ministry on review of the buyer's identity, source of funds and intended use.

The moratorium on foreign residential purchases was lifted by Cabinet in January 2025. Between 2014 and early 2025, new foreign-acquired residential transactions had been effectively frozen, with only Designated Area developments (Eden Island, Zil Pasyon and a small number of branded schemes) carrying pre-approved access. The 2025 lifting reopened the market subject to the Sanction requirement and to minimum thresholds on plot size and price (around SCR 10 million for high-end properties).

The residency-by-investment threshold is materially higher than the property threshold. A non-Seychellois investing USD 1,000,000 in a qualifying Seychelles business qualifies for permanent residency through the official investor route. A property acquisition above USD 2,000,000 also qualifies in parallel. The structural difference with Mauritius is that property and residency are decoupled at the lower thresholds and only converge at the upper bound.

The tourism baseline is small but consistently high-end. Approximately 350,000 visitors per year, roughly 73 per cent European, with the UAE and United States as fastest-growing source markets. The premium operator footprint (Six Senses Zil Pasyon, North Island, Four Seasons Mahé, Constance Lemuria, Anantara Maia) concentrates on the inner-island group (Mahé, Praslin, La Digue), whose carrying capacity is finite by geography and conservatively managed.

Sri Lanka, 99-year leasehold and the 2017 reform#

Sri Lankan law prohibits direct freehold ownership by foreigners, and foreign acquisition has been routed through the 99-year leasehold structure for over a decade. The Land (Restrictions on Alienation) Act of 2014 introduced a flat 15 per cent land lease tax on foreign-acquired leases, which materially compressed post-tax yield and structurally suppressed the luxury market through the 2014 to 2016 window.

The 2017 reform abolished the 15 per cent lease tax retroactively for leases executed on or after 1 January 2016. The amendment unlocked the 99-year leasehold structure at full pre-tax economics. Leases are registered with the Land Registry; sub-letting and assignment are generally permitted with consent. The freehold prohibition remains the constitutional baseline.

The 2024 tourism recovery is the steepest in the region. 2,053,465 arrivals, +38.07 per cent, with India as the leading source market and Europe contributing 51.9 per cent of visitors. The absolute figure remains below the 2018 peak of 2.33 million but the trajectory is constructive. The southern coast (Galle, Mirissa, Tangalle, Weligama) carries the premium exposure, with names including Cape Weligama, Anantara Tangalle and Amanwella.

The political-stability premium remains a real underwriting input. The 2022 economic crisis, the IMF programme that followed and the 2024 political transition compress the discount rate institutional buyers apply to Sri Lankan exposure. For the buyer with a high-conviction view on stabilisation, the entry-cycle stage is constructive. For the buyer without it, the regional comparators carry less embedded political risk.

Tenure as the binding constraint#

The most important distinction across the six markets is not the headline arrivals figure, it is the tenure available to the foreign buyer. Mauritius is the only jurisdiction that gives a freehold-equivalent title at a defined statutory threshold. Seychelles gives freehold but rations supply through the Sanction regime. The Maldives gives 99-year leasehold within a resort structure. Sri Lanka gives 99-year leasehold outside the resort structure. Indonesia, across Bali and the Gilis, gives Hak Pakai at a maximum of 80 years or PT PMA Hak Guna Bangunan at the same effective horizon.

The pricing of any villa parcel must integrate the tenure horizon. A 99-year leasehold in the Maldives and an 80-year Hak Pakai in Bali do not trade at the same multiple because the residual value at year 25 is materially different. A freehold-equivalent PDS unit in Mauritius is transferable to any qualifying non-citizen on the same terms; a Bali Hak Pakai requires re-papering at each renewal interval. The Indonesian regime is the most durable because Hak Milik is reserved by Article 33(3) of the 1945 Constitution and Article 21 of the Basic Agrarian Law of 1960 for Indonesian citizens. No future government can extend freehold to foreigners without a constitutional amendment, making the 80-year Hak Pakai ceiling the most durable form of supply constraint in the set.

Climate exposure, honestly disclosed#

Climate exposure is not a single number, it is a set of distinct vectors. Sea level rise in the Western Indian Ocean is running at approximately 4 to 6 mm per year over the past thirty years, two to three times the global mean. For the Maldives, with a highest natural point of approximately 2.4 metres above sea level, the SLR vector is destination-defining. For Mauritius, with maximum modelled coastal inundation of 54.1 square kilometres, the vector is parcel-defining. For Seychelles, with 9.92 per cent of the population in highest-exposure zones, the vector is community-defining.

Monsoon shift and coral bleaching are the second-order vectors. The Gili Matra Marine Protected Area is projected to cross the annual coral bleaching threshold from 2026 (De Clippele et al., University of Glasgow, 2023). The same modelling identifies twelve Indonesian MPAs with annual bleaching events by 2030, rising to 99 by 2044. For a destination whose product proposition is the marine ecosystem, the bleaching trajectory is a hard underwriting input. The same is true, in a different chronology, for the Maldivian atoll system and for the Seychelles inner-island coral cover.

The Bali case is different because the climate vector is on land. Over 65 per cent of the island's freshwater is funnelled to tourism, the water table is dropping, and saltwater intrusion is advancing in the coastal south. October 2025 saw the most severe flooding in southern Bali in a decade. The parcel-level underwriting question is no longer whether the property is on the beach. It is whether the property sits on a drainage layer that can absorb a 100-year rain event on a 25-year recurrence interval.

Climate exposure does not invalidate the regional thesis. It changes the underwriting variables. Setback discipline beyond statutory minimums, elevation above the projected high-water mark, water and waste self-sufficiency, drainage capacity, and a light operational footprint are not optional. They are the conditions on which long-horizon value depends.

What this means for the foreign buyer#

The allocation logic across the six destinations follows the buyer's profile, not the headline arrivals figure. A buyer prioritising freehold liquidity and a stable residence permit, with a high-spend European visitor pool and predictable cyclone-zoned underwriting, allocates to Mauritius under the PDS. A buyer prioritising statutory scarcity and a small, conservatively managed market allocates to Seychelles. A buyer prioritising branded operating quality within a 99-year leasehold structure, with a willingness to underwrite low-elevation SLR exposure, allocates to a Maldivian resort residence.

A buyer prioritising structural scarcity at the parcel level, with a long horizon and a constitutional supply ceiling, allocates to the constrained Indonesian alternative. Gili Air, on a 175-hectare landmass with a fixed perimeter and a Hak Pakai tenure ceiling reinforced by Bali Provincial Regulation 4 of 2026, is the small-scale expression of the thesis. Bali itself is now a two-tier market: the central corridors (Canggu, Berawa, Pererenan) are saturating, while the premium tiers (Uluwatu cliff-edge, Bukit Pandawa, Nusa Dua) remain priced on scarcity within a larger market that has moved past it.

A buyer prioritising the early cycle, with a constructive view on Sri Lankan political stabilisation, allocates to the southern coast of Sri Lanka. The 2024 +38 per cent arrivals print and the 2017 leasehold reform are the entry conditions. The 2026 to 2028 window is the relevant entry cycle.

The portfolio implication is that these six destinations are complements, not substitutes. A family office with structured exposure across the set captures different return drivers: residency-anchored compounding in Mauritius, scarcity-led capital preservation in Seychelles and on the Gilis, branded operating yield in the Maldives, supply-elastic risk in Bali's central corridor and cycle-entry beta in Sri Lanka. Allocating across the set with discipline is the portfolio.

Skin in the game. Victaura, through its parent Greystone B.V. (Netherlands), holds an active commercial position only on Gili Air, through the Gili Air Villas project (boutique-scale, 16 villas plus a small hospitality component on approximately 3,200 square metres). Greystone does not currently hold positions in the Maldives, Mauritius, Seychelles or Sri Lanka. Readers should assume that commentary on Indonesia and the Gilis may be influenced by, or benefit, Greystone's position. Commentary on the other four destinations reflects desk research and primary regulatory texts only. This document is marketing material under MiFID II Article 24(3). It is not investment advice.