Bali Fuel Prices Rise With Property Market
Below article was written on 28 March 2011, when Indonesian Government has not decided if the fuel prices would be increased for sure. Although fuel price increase was delayed for now, the value of Bali properties indeed keeps on increasing. A recent study by Knight Frank and Elite Havens shows the price of land in Bali increased by an average 34 percent in 2011, was proven to be right as we have witnessed it how it is gracefully grows. Guess, the most questioned now is if the property transaction is also as good as its increment? ... Yes, it is.
The Jakarta Post recently reported that Bali’s government disclosed a plan to increase the price of subsidized fuel by Rp$1,500 (US16 cents) to Rp$ 6,000 (US 65 cents) as of April 1.
Although a final decision has not been announced property prices have already begun rising. Real Estate Indonesia’s (REI) Bali branch chairman Dewa Putu Selawa said property prices have increased 15 per cent on average since early March.
“The increase is not only because the rising price of construction materials. The property business is very sensitive to rumors and discourse. Once the discourse of the fuel-price hike started, all property businesspeople reacted by increasing the prices,” said Selawa.
Selawa also said that those in the real-estate business showed various reactions, depending on their capital. About 25 per cent of the island’s real estate tycoons who had hefty capital were holding onto their property stock while waiting for the government’s final decision.
“Many businessmen canceled the sale of their properties because of the discourse. That’s because the prices would again increase when the fuel price is hiked. They were waiting to get the highest profit.”
Selawa is one of the individuals who has raised the prices of his properties. According to the Post, those with small capital had no choice but to sell their properties at the current prices.
“I have a property that is worth Rp 350 million per 100 square meters. Due to the discourse on fuel-price hike, I increased the price up to Rp 500 million per 100 square meters. When the fuel price is hiked, the prices of other needs would increase and the land prices would also increase,” said Selawa.
Even if the government does not go through with the plan he is confident that property prices will not fall.
“Don’t ever expect that property prices will go down. The property prices will always rise,” he said.
Another property developer, Widiana Kepakisan, said that the discourse about fuel prices has increased the price of building materials, transportation, as well as cost of labor.
“The discourse has automatically driven the increase of land prices,” he said. “Fuel is like a political commodity. Once the government in Jakarta said they will increase the price, it affected businesses in this island automatically.”
Widiana also increased the prices of his properties in Jimbaran.
“A unit of house type 70, which was worth only Rp 825 million before the discourse, now is priced at Rp 925 million per unit,” he said.
Bali has the highest rate of increased land prices in the country. A recent study by Knight Frank and Elite Havens shows the price of land in Bali increased by an average 34 percent in 2011, while the normal growth rate was only around 8 to 16 percent.
Source: property-report.com