Bali’s beautiful landscapes and growing tourism industry make it a prime destination for property investment. However, before buying or developing land, it is crucial to understand zoning laws. Zoning regulations determine what type of buildings and businesses can operate in specific areas, ensuring sustainable growth and environmental preservation.

Bali’s zoning system is color-coded, making it easier to identify permitted land use. This guide breaks down each zoning category, its restrictions, and how it can be utilized.

 

1. Green Zone: Agricultural and Conservation Land

 

 

The Green Zone is mainly for agriculture and conservation, helping to protect Bali’s natural beauty and maintain farming traditions.

Restrictions

1. No commercial or tourism-related developments allowed (hotels, villas, shops, or offices are prohibited).
2. Residential buildings are limited to Indonesian citizens under Hak Milik (ownership title), and the owner must live there. It cannot be rented or used for business.
3. No land conversion—agricultural land must remain agricultural.

Utilization

1. Farming, plantations, and livestock.
2. Eco-friendly agritourism activities with special permits (e.g., organic farms, educational farm visits).
3. Landowners (Indonesians) can build a personal residence, but it cannot be rented or used commercially.

 

2. Yellow Zone: Residential Land

 

 

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The Yellow Zone is dedicated to housing and residential communities. It is intended for long-term living and family residences.

Restrictions

1. Only residential buildings allowed—no hotels, large commercial businesses, or industrial facilities.
2. Limited to two or three-story buildings to preserve the neighborhood look.

Utilization

1. Private homes and residential complexe, or
2. Any kind of property that licensed under Pondok Wisata (Tourism Lodge)

 

3. Pink Zone: Tourism and Hospitality Land

 

 

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The Pink Zone is specifically for hotels, resorts, and tourism-related businesses. This zoning is meant to support Bali’s tourism economy.

 

Restrictions

1. Residential housing is not permitted unless part of a commercial hotel or resort.
2. Agriculture and conservation activities are restricted.
3. Common Sempadan Rules Include:

- Rivers (Sempadan Sungai): Buildings must be set back minimum 15 meters from the edge of the riverbank.

- Temples (Sempadan Pura): Construction must maintain a respectful distance, typically minimum 50 meters, but it can vary based on the type and importance of the temple.

- Cliffs (Sempadan Tebing): Buildings must be built at least several meters away from the edge, especially if the area is prone to erosion or collapse. Setback distance depends on geological surveys.

- Beaches (Sempadan Pantai): Usually, a minimum 100 meters from the high-tide line is required for construction near public beaches, depending on local coastal management rules.

 

Utilization

1. Hotels, resorts, villas for daily rental (short-term stays).
2. Restaurants, bars, and entertainment venues.
3. Tourism-driven commercial spaces (e.g., diving centers, surf shops, tour agencies).

 

4. Red Zone: Commercial and Industrial Land

 

The Red Zone is intended for business and industrial development. This zoning supports economic activities and commercial growth.

Restrictions

1. Residential buildings are not allowed unless part of a mixed-use commercial project.
2. No agricultural or conservation activities.
3. Heavy industries (factories, warehouses) are allowed only in designated industrial areas.

 

Utilization

1. Shopping centers, office buildings, financial institutions, and entertainment hubs.
2. Restaurants, cafes, and retail stores.
3. Factories and logistics centers in designated industrial areas.

 

5. Orange Zone: Mixed-Use Development Land

 

The Orange Zone allows for a blend of residential, commercial, and business activities. These areas are often near city centers and transitional zones between residential and business districts.

Restrictions

• Some areas may limit industrial activities to prevent excessive noise or pollution.
•  

Utilization

1. Mixed-use buildings (ground-floor commercial, upper-floor apartments).
2. Co-working spaces, boutique hotels, or serviced apartments.
3. Small-scale retail, cafes, and office spaces integrated with residential communities.

 

6. Brown Zone: Cultural and Sacred Heritage Sites

 

The Brown Zone is reserved for temples, cultural sites, and heritage conservation. This zoning ensures that Bali’s religious and historical landmarks remain protected.

Restrictions

1. No commercial or residential buildings allowed unless specifically related to cultural purposes.
2. Strict regulations on renovations and modifications to preserve historical integrity.

Utilization

1. Cultural preservation projects, museums, and community centers.
2. Traditional markets or handicraft shops (if related to local heritage).
3. Community-based tourism initiatives (e.g., cultural workshops, temple visits).

 

How to Check Zoning in Bali?

 

Before purchasing land in Bali, it’s crucial to verify its zoning classification. Here’s how:

 

1. Apply for a PKKPR (Persetujuan Kesesuaian Kegiatan Pemanfaatan Ruang)

 

The PKKPR is the most crucial document that confirms:

• ✅ Zoning classification of the land

• ✅ What kind of buildings or activities are allowed

• ✅ How much of the land can be built on (building coverage ratio/KLB & KDB)

•  

This approval is mandatory before applying for a building permit (PBG) or even a functionality certificate (SLF). In the past, people relied only on the ITR (Zoning Information), but now, PKKPR is the legal reference required by the government.

📌 Tip: Always apply for PKKPR before purchasing land. It helps avoid costly mistakes if the land turns out to be restricted or unbuildable.

 

2. Request a Zoning Certificate (ITR - Izin Tata Ruang)

The Izin Tata Ruang (ITR) is an official zoning document that provides the exact land designation and allowed usage. This can be obtained from:

- The Bali Provincial Government Office

- The local regency (kabupaten) office where the property is located

 

3. Use Online Zoning Maps

Some regions in Indonesia provide online zoning maps, allowing you to check land use classifications remotely. However, not all areas in Bali have updated online zoning maps.

 

4. Consult a Notary (PPAT) or Legal Expert

If you’re unsure about the zoning status of a property, a licensed notary (PPAT) or property lawyer can help you verify its legal classification before purchase.

 

5. Visit the Local Land Office (BPN - Badan Pertanahan Nasional)

The BPN (National Land Agency) provides official land records and zoning details. This is the most reliable source for verifying land legality.

 

6. Work with a Trusted and Experienced Real Estate Agent

A reputable real estate agency will have a clear understanding of zoning laws and how they apply to their listings. Real estate agents ensure that the properties they offer comply with zoning regulations, making it easier for buyers to choose the right investment. A professional agent can also guide you through the necessary paperwork and legal verification.

For the latest zoning regulations, visit the official Bali Provincial Government website:
🔗https://baliprov.go.id

 

General Construction Rules That Apply in All Zones

 

In addition to zoning classifications and setback (sempadan) regulations, there are universal construction rules that apply throughout Bali, regardless of the zoning category:

 

1. Traditional Balinese Architecture Requirement

 

 

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All buildings in Bali are legally required to incorporate Balinese architectural elements.
This regulation is based on regional cultural preservation laws that aim to protect Bali’s unique identity and spiritual values. Whether a property is in a residential, tourism, or commercial zone, developers must include features such as:

- Angkul-angkul (Balinese-style gateways)
- Aling-aling (privacy walls)
- Traditional rooflines or decorative finishes inspired by local design
 

This is not just an aesthetic requirement — it’s a legal obligation outlined in Bali’s spatial planning and architectural guidelines.

⚠️ Note: Failure to follow Balinese architectural standards can result in a building permit (PBG) being denied or revoked.

 

2. Maximum Building Height: 15 Meters

 

Bali enforces a strict island-wide building height restriction of no more than 15 meters, often referred to as the “coconut tree rule.”
This rule ensures that no structure dominates the natural skyline, preserving views and respecting sacred landscapes.

Exceptions to the 15-meter height rule are extremely limited and usually only apply to:

- Hospitals
- Airports
- Other strategic facilities, as approved directly by the provincial government

Even hotels, resorts, and apartment buildings must comply with this restriction unless they obtain special exemption status, which is rare and tightly controlled.

 

Understanding Bali’s zoning laws is crucial for investors, property buyers, and developers. By ensuring that land use aligns with zoning regulations, you can avoid legal issues, protect your investment, and contribute to sustainable development.

If you plan to buy property in Bali, always check the zoning classification before making any commitments. Consulting a legal expert or checking with local authorities will help you make a safe and informed decision. And always remember:

For more official information, always refer to the local government and National Land Agency (BPN) or an experience real estate agent to avoid misinformation.

 

Bali is a top destination for property investment, but foreign ownership of land is restricted under Indonesian law. Unlike local citizens who can own Hak Milik (freehold), foreigners must use alternative legal structures to acquire property in Bali. Understanding these regulations is essential to ensure a legally secure transaction.

This article outlines the legal ownership options available for foreigners, key requirements, and important considerations, along with real-life study cases to help new investors understand each method.

 

Legal Ownership Options for Foreigners

 

1. Freehold (Hak Milik) – NOT Available to Foreigners

 

Foreigners cannot own Hak Milik (freehold) in Indonesia. This type of land ownership is strictly reserved for Indonesian citizens. Any claim suggesting that foreigners can own freehold property is legally incorrect.

- Only Indonesian citizens can hold Hak Milik

- Foreigners must use leasehold or other legal alternatives

 

2. Leasehold (Hak Sewa) – Available to Foreigners

 

A leasehold agreement allows foreigners to lease land or property for a specific period.

Lease Term: Usually 25–30 years, with extension options.

Legal Protection: The lease must be notarized (PPAT) and registered.

Usage: Can be used for residential or commercial purposes, depending on zoning laws.

 

Tax Obligations for Leasehold:

Withholding Tax: The lessor (property owner) must pay 10% if they have an NPWP (tax ID) or 20% if they do not.

Notary Fee: Typically 1% of the total lease transaction value.

 

Also read "What is a leasehold vs. freehold property in Bali?" for more information. 

 

3. Right to Use (Hak Pakai) – Available to Foreigners

 

Hak Pakai is the only title that foreigners can hold individually under Indonesian law.

Validity: 30 years, extendable for 20 + 30 years (maximum 80 years).

Ownership Limit: A foreigner can own only one property under Hak Pakai.

• Requirements: The buyer must have a valid stay permit (KITAS/KITAP).

 

Example:
David, a retiree from France, wants to buy a villa in Bali for personal use. Since he has a long-term stay permit (KITAP), he qualifies for Hak Pakai. He purchases a house under this title, allowing him to legally live in it for up to 70 years (30 years initially, with two 20-year extensions).

 

4. Right to Build (Hak Guna Bangunan – HGB) – Available Through a PT PMA

 

Foreigners cannot own HGB individually, but they can acquire it by establishing a PT PMA (Foreign-Owned Company).

• Land Use: HGB allows a PT PMA to construct and own buildings on leased land.
• Validity: 30 years, extendable for 20 + 30 years.
• Restrictions: HGB remains linked to the PT PMA and is not considered personal ownership.

 

There are two types of HGB:

 

1. Pure HGB (HGB Murni)

 

This occurs when a landowner releases their Freehold rights (Hak Milik) and transfers the land to the Indonesian government, which then reassigns it as HGB under the PT PMA’s name.

- The original Freehold ownership is permanently removed.

- During renewals, the process is handled directly with the Indonesian National Land Agency (BPN) without involving the previous landowner.

- If the PT PMA does not renew HGB, the land becomes a government asset.

- HGB can be sold to another PT PMA or an Indonesian citizen. If sold to an Indonesian citizen, it can be converted back into Hak Milik (Freehold).

 

2. HGB Above Freehold (HGB di atas Hak Milik)

 

In this case, the Freehold owner retains ownership but grants the PT PMA HGB rights for a set period through an agreement.

- The landowner and PT PMA agree on how long the PT PMA can hold HGB rights.

- During extensions, the Freehold owner must approve the renewal before the process is handled by BPN.

- If the PT PMA does not renew HGB, the land returns to the original Freehold owner.

- Any transfer of HGB to another PT PMA also requires the Freehold owner’s approval.

 

Important Note: HGB cannot be inherited by individuals because it is classified as a company asset. It can only be transferred to another PT PMA or sold to an Indonesian citizen to convert it back into Hak Milik (Freehold).

 

How to Establish a PT PMA as a Foreigner?

 

 

Foreign investors who want to own property under HGB must establish a PT PMA.

- Minimum Investment Requirement: IDR 10 billion (~$650,000) per business sector depending on the business sector.

- Company Structure: Requires at least 2 shareholders (can be foreigners/foreign company or locals/local company).

- Legal Documents: Must register in the system of OSS Indonesian Republic and have Business Trade Number (NIB).

- Company Director: At least one director must be appointed (can be foreign).

- Business Activities: The PT PMA must operate in an approved business sector, such as tourism or property rental.

 

Key Legal Considerations

 

1. Due Diligence: Commonly focus on legal matters to verify the legality of landand the legality of ownership

2. Notary (PPAT) Involvement: A certified Indonesian notary should process the transaction.

3. Tax Obligations for Freehold Transactions:

- Buyer’s Tax (BPHTB): 5% of the property value.

- Seller’s Tax: 2.5% of the property value.

4. Tax Obligations for Leasehold Transactions:

- Withholding Tax: 10% (with NPWP) or 20% (without NPWP) for the lessor.

- Notary Fee: 1% of the lease transaction value paid by the buyer.

 

Remember, foreigners cannot own freehold property in Bali, but they can legally acquire property through Hak Sewa (Leasehold), Hak Pakai (Right to Use), or Hak Guna Bangunan (HGB through a PT PMA).

 

 Why Do People Invest in Bali’s Property Market?

 

Bali is one of the world’s most famous tourist destinations, known for its breathtaking landscapes, rich culture, and growing expat community. With millions of visitors every year, the island has become a hotspot for real estate investors looking to make a profit. Many purchase villas to rent out to tourists, while others buy land or property, hoping for long-term value appreciation.

But is property investment in Bali profitable? The answer depends on several key factors, including tourism growth, rental income potential, and the risks involved. In this article, we will explore these aspects to provide a balanced and fact-based perspective for investors.

 

1. How Tourism Growth Affects Bali’s Property Market

 

A strong tourism industry directly supports a profitable real estate market. When more visitors come to Bali, the demand for accommodation rises, making short-term villa rentals highly attractive to investors.

 

Bali’s Tourist Growth and Its Impact on Rental Properties

 

 

Bali’s tourism industry has recovered strongly after the pandemic, with international arrivals increasing each year. As reported by theBali Tourism Board, over 5.2 million international tourists visited Bali in 2023. This growth is expected to continue, making rental properties even more valuable.

The demand for private villas and short-term vacation homes is continuously growing in areas such as Canggu, Uluwatu, and Pererenan, where many tourists prefer private stays over hotels. 

 

 

The increase in digital nomads and long-term visitors has further boosted demand for monthly villa rentals, providing investors with a stable and high-yielding market.

Additionally, the Indonesian government is investing in infrastructure projects, such as the Bali Light Rail Transit (LRT), which will improve transportation across the island. This development is expected to further increase property values, especially in areas near major travel routes.

The continued rise in tourist arrivals means consistent demand for rental properties, especially in prime locations. This creates strong opportunities for investors looking to generate passive income through short-term and long-term rentals.

 

2. Rental Income: How Much Can Investors Earn?

 

One of the biggest reasons investors choose Bali is its high rental yields compared to other typical locations in Southeast Asian markets. Rental properties, especially luxury villas, Airbnb rentals, and long-term accommodations for expats, generate significant income for owners.

 

How Much Rental Income Can You Expect?

 

Bali continues to be one of Southeast Asia’s most lucrative property markets, with high rental yields across both short-term and long-term accommodations. Investors, particularly in high-demand areas like Canggu, can expect strong revenue growth fueled by increasing daily rental rates and occupancy demand.

According to  Bukit Vista, Bali offers some of the highest rental yields in Indonesia:

- 8% to 15% per year for short-term vacation rentals (Airbnb, villas)

- 6% to 10% per year for long-term rentals (expats, digital nomads)

 

 

According to the latest Canggu rental market analysis, property owners have experienced a +30.46% increase in daily rental rates from 2022 to 2024. This surge reflects rising demand, particularly for larger villas catering to families and groups.

Revenue growth has followed a similar trend, with total rental income increasing by +40.32% over the past two years. This suggests that investors can expect higher annual earnings, particularly in the 5+ bedroom villa category.

 

Projected Earnings Based on Villa Size

 

- 1 to 2-Bedroom Villas: These properties attract solo travelers, couples, and digital nomads. While their revenue remains lower than larger villas, they still benefit from steady occupancy rates and rental yields ranging from 6% to 10% annually for long-term leases.

- 3 to 4-Bedroom Villas: This segment appeals to families and mid-sized groups. Their revenue trend has grown steadily from 2022 to 2024, making them ideal for investors looking for a balance between affordability and profitability.

- 5+ Bedroom Villas: The top-performing investment category, these villas generate the highest revenue and have seen consistent growth in daily rental rates. With larger groups and luxury travelers willing to pay premium prices, rental income for this segment continues to outpace smaller units.

 

What This Means for Investors?

 

With rising demand, increasing rental prices, and strong tourism growth, 2025 presents one of the best opportunities for property investors to invest  in Bali. Rental yields remain highly competitive, with expected returns of 8% to 15% annually for short-term rentals (such as Airbnb villas) and 6% to 10% for long-term leases (targeting expats and digital nomads).

As daily rates and revenue continue their upward trend, investors in high-demand areas like Canggu, Uluwatu, and Pererenan are positioned to see even greater returns in 2025. With tourism booming and Bali remaining a top destination for digital nomads and luxury travelers, this year offers a golden window for maximizing rental income.

 

3. Example of Rental Profitability – How Much Can You Earn?

 

Let’s say you buy a 2 bedroom villa in Canggu for $250,000 and rent it out for $150 per night after deducting OTA (Online Travel Agency) fees and hospitality taxes. If your villa is occupied 75% of the time, that means guests stay there for about 274 nights per year.

This would give you a total yearly income of $41,000 before expenses. However, as with any business, there are costs that reduce your actual profit.

 

What Are the Costs?

 

- Property Management Fees: Most investors hire a property management company to handle guest bookings, check-ins, maintenance, and cleaning. This typically costs 20% to 30% of rental income. If we assume a 25% management fee, that equals $10,250 per year.

- Maintenance & Utilities: Regular expenses like cleaning, pool maintenance, electricity, water, and small repairs generally range from $3,000 to $5,000 per year. Using an average of $4,000 per year, this ensures the property stays in top condition and appealing to renters.

- Local Rental Taxes: Rental income in Bali is subject to a tax rate between 10% and 20%, depending on the ownership structure and type of rental. If we assume a 15% tax rate, this would mean a tax payment of $6,150 per year.

 

 

How Much Profit Do You Keep?

 

Before Taxes:
After deducting property management and maintenance costs, the pre-tax net rental income is $26,750 per year. This results in a pre-tax rental yield of around 10.7%, which is significantly higher than the average in many Western property markets.

 

After Taxes:
If we apply a 15% rental income tax, that’s $6,150 per year in taxes, leaving a final net rental income of $20,600 per year. This gives a net rental yield of around 8.2% after all costs and taxes.

However, rental income can vary depending on:

- High-Demand Areas for Rental Income: Locations like Canggu, Pererenan, and Uluwatu attract a steady flow of tourists, making them ideal for short-term rentals. Villas in these areas typically rent out faster and at higher rates due to strong tourist demand.

- Property Type: Modern villas with private pools attract more guests and can charge premium rates.

- Marketing & Management: Professionally managed properties on Airbnb, Booking.com, and Agoda tend to have higher occupancy rates.

 

4. How to Minimize Risk and Protect Your Investment

 

 

Work with Trusted Real Estate Agents
A good agency like   Bali Home Immo can help you find legally safe properties, negotiate lease terms, and avoid common scams.

Use Legal Ownership Methods
Avoid nominee arrangements and choose leasehold or PT PMA ownership (for freehold property) to secure your investment. Consult with our legal team to ensure compliance with Indonesian laws.

Hire a Reliable Property Manager
Professional management helps maintain high occupancy rates, proper maintenance, and smooth guest experiences, ensuring a steady rental income.

 

So, Is Property Investment in Bali Profitable?

 

Yes, property investment in Bali can be highly profitable—if done right. The island’s booming tourism, strong rental yields, and growing demand for luxury accommodations make it an attractive market for investors. However, success depends on avoiding key risks, such as legal complications, poor location choices, and ineffective property management.

The right approach involves working with professionals who understand the local market. Navigating foreign investment laws, leasehold agreements, and zoning regulations can be complex, but partnering with a reliable real estate agency like  Bali Home Immo ensures a secure and smooth investment process. Our team of experienced property consultants helps investors identify prime locations, handle legal ownership structures, and optimize property management to maximize returns.

By choosing the right property in a high-demand area, ensuring legal compliance, and leveraging professional expertise, investors can achieve long-term profitability and passive income from Bali real estate. With rising daily rental rates and increasing revenue trends, 2025 presents an ideal time to invest in Bali’s thriving property market.

Thinking about investing? Browse our exclusive listings and get expert guidance from our team.