FINANCIALS
Investment Yield
The concept behind Wabi Umalas is to provide villa owners with a fantastic vacation home as well an attractive commercial investment. With its ‘cutting edge’ architecture, expansive land and floor areas, contemporary upscale furnishings and accessories, and top of the line service Wabi Umalas will be a very sought after location for international booking agents.
One key element that separates Wabi Umalas from other villas on the island is that it will be operated by a professional management company with a long and successful track record in commercial rental of private villas. Many other villa developments are run by people with no previous management or rental experience.
Bali Homes Management, the company contracted to manage both the day-to-day operations as well villa rental marketing, has recommended a strategy offering discounts of 20% or greater for the initial year of commercial operation. This strategy of ‘introduction phase pricing’ has been used successfully for many of the villas BHM currently manage. It serves to create a high level of occupancy and awareness in the first year which then carries forward into following years which are priced at regular rack rate. In reference to the yield tables below, this is the key explanation for the large percentage jump in Year 2 compared to Year 1.
The investment story of Wabi Umalas is not just about rental yields. Another key consideration is that unlike the majority of developments in Bali that are on short- to mid-term leasehold land, each Wabi Umalas villa stands on its own freehold title. This gives an opportunity for considerable capital gains, noting the district of Umalas is quickly becoming prime real estate. Please click here to see a table of the land prices of Bali for freehold land over the last 10 years.
The following tables provide projected annual yields across a number of occupancy scenarios for each of the villa formats.
Two-bedroom villa
Occupancy |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
50% |
3.0% |
5.1% |
5.3% |
5.6% |
5.9% |
60% |
4.4% |
6.9% |
7.2% |
7.6% |
7.9% |
65% |
5.1% |
7.8% |
8.2% |
8.6% |
9.0% |
70% |
5.8% |
8.6% |
9.1% |
9.5% |
10.0% |
75% |
6.6% |
9.7% |
10.2% |
10.7% |
11.2% |
80% |
7.3% |
10.6% |
11.2% |
11.7% |
12.3% |
Three-bedroom villa
Occupancy |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
50% |
3.4% |
5.6% |
5.9% |
6.2% |
6.5% |
60% |
4.9% |
7.6% |
8.0% |
8.4% |
8.8% |
65% |
5.6% |
8.6% |
9.1% |
9.5% |
10.0% |
70% |
6.4% |
9.6% |
10.1% |
10.6% |
11.1% |
75% |
7.3% |
10.8% |
11.3% |
11.9% |
12.5% |
80% |
8.1% |
11.8% |
12.4% |
13.0% |
13.7% |
Four-bedroom villa
Occupancy |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
50% |
3.3% |
5.6% |
5.8% |
6.1% |
6.4% |
60% |
4.8% |
7.5% |
7.9% |
8.3% |
8.7% |
65% |
5.6% |
8.5% |
9.0% |
9.4% |
9.9% |
70% |
6.3% |
9.5% |
10.0% |
10.5% |
11.0% |
75% |
7.2% |
10.6% |
11.2% |
11.7% |
12.3% |
80% |
8.0% |
11.7% |
12.3% |
12.9% |
13.5% |