Site Visit Report Sahaja and Sawah Bali, Indonesia

Site Visit June 25th to June 30th 2008

Project Background

Sahaja and Sawah in Indonesian language means Simple and Natural, which exactly describes the landscape and ‘vibe’ of the project. The operating and development company is Sahaja Villas Ltd.

Prices are currently from £39,000 and prices are set to double or treble within 2 or 3 years.

Sahaja and Sawah will feature just 16 two storey townhouses and 9 single storey villas with private gardens and optional private pools. Within the development there will be a large tropical swimming pool for guests and owners, a café bar selling well presented local and western dishes and refreshments, a small shop stocking essential items and also a spa with open air treatment rooms and a tranquil area for yoga. The project will be marketed for holiday rentals as a beautiful retreat – a place to get away from the stresses of modern life and to relax and recharge.

The project land is set into paddy fields of the most brilliant green and from any point on the site there are panoramic sea views. Continue reading about the Sahaja & Sawah Villas & Townhouses property details

Sahaja Villas Ltd - Developer Background

There are two Directors of Sahaja Villas Ltd, Bernard Van Elmpt and Gert Vanderworp.

Bernard was the President of Atlas International, one of Spain’s largest and most successful development companies. His stewardship of the company spanned over 20 years and he oversaw the construction and subsequent management of over 5,000 properties from Alicante to the Costa Del Sol. Since selling his majority stake in the company 4 years ago (whilst retaining a major interest in his Atlas furniture business, legal firm and others entities too numerous to mention) Bernard began visiting Bali with a view to buying land for himself.

There he met with Gert Vanderworp, another Dutchman, who had been on the island since 1999 and built up a successful land trading business. After several successful transactions, Gert and Bernard became business partners and have since continued buying land and selling it later as ‘ready to develop’ (having straightened out any issues with the titles, borders, access and usage before finally obtaining build permits and selling on to clients). These ‘ready to develop’ land sites are mostly sold on to foreign investors whom in many cases also commission Bernard and Gert to plan and construct their luxury properties as well. In addition to this land business, Bernard and Gert have also been acquiring and holding some of the island’s the most prime land sites and have built up a land bank totalling over 150,000m2 of prime beach and ocean view land to date.

The site for Sahaja and Sawah is one on those sites, which has been deemed perfect for the development of a boutique resort.

Location

Sahaja and Sawah is located on the peak of terraced paddy fields in the Tabanan province of Bali. Tabanan is arguably one of the most beautiful areas of Bali. Paddy fields stretch as far as the eye can see, only interrupted by small, quaint villages which are dotted around the many small roads and lanes that thread through the area.

Alila Resorts have chosen Tabanan as the site of their new villa retreat, which is currently under construction and will feature a small number of luxurious villas and suites, managed by the world class Alila Group. For more information please click to: http://www.alilavillas.com/tanahlot/location.asp

http://www.alilahotels.com/

Also in the Tabanan area is the 5 star Le Meridian Resort, which is just a 15 mins drive from the project site. Here is an excerpt from their website;

“Located near the iconic Tanah Lot sea temple, Le Méridien Nirwana Golf & Spa Resort provides superb oceanfront luxury in culturally inspired surroundings. Authentic rice terraces, lushly landscaped gardens, and outdoor pools and the mist of the Indian Ocean surrounds the hotel. Le Méridien Nirwana Golf & Spa Resort is at the heart of the real Bali, away from the hustle and bustle of Kuta.

The hotel features indoor and outdoor meeting spaces for up to 300 guests, a multi award-winning 18-hole signature golf course, and an indulgent spa”.

http://www.starwoodhotels.com/lemeridien/property/overview/index.html?propertyID=1836

Compelling Business Case for the location – The Sunset Road

At present there is no main trunk road running through Tabanan so travel from the Sahaja and Sawah project site can take up to 45 minutes by car to the international airport at Denpasar and about 30 to 40 minutes to the busier resort towns of Seminyak (famed for sophisticated and chic restaurants and shops) and Kuta (famed for its nightlife and surf beach). In distance, all these places are no more than circa 15-20kms away, but the roads are very winding and it isn’t uncommon to get stuck behind a truck without the option to overtake safely. However, all that is due to change in 2009 when the new Sunset Road will be built, connecting the existing ring road that ends at Tanah Lot, on the edge of Tabanan, with the main coastal highway at Soka Beach and Bajera (see map). This new Sunset Road is targeted for completion by 2011 and is already stirring up enormous interest with locals and expats who clearly understand the positive effect it will have on opening up the province of Tabanan and thus making it even more accessible. Since the government announced plans to build the road, land prices in Tabanan have doubled, and most of the beachfront and ocean view land has been sold already. There are some thirty to forty luxury villas under construction in Tabanan (not including those in the Alila Resort) on land plots belonging to international buyers. The area of Tabanan is already becoming the place of choice for discerning home buyers.

Enquire Here For a map showing the location of project and also map showing the location of planned Sunset Road and the full site visit report.

The Site of Sahaja and Sawah - Landscaping and topography

The site itself is on the highest point of lush, terraced paddy fields which reach down to the beach, which is just under 1km away. From all areas of the site there are 180 degree panoramic ocean views. These views cannot be obscured by future development as the project site is so far above the land towards the beach that if a two or even a three storey property was to be built directly in front of the site, the ocean view would remain unchanged.

A lot of the land surrounding the project site is owned by Bernard and Gert, so any future development will be sympathetic to the environment and complimentary to Sahaja and Sawah in particular. In the future there are likely to be several other small retreats, restaurants and spas in the area which will further assist with bringing visitors to Tabanan, in addition to the numerous luxury villas currently under construction.

Enquire Here http://internationalhorizons.co.uk/registerInterest.php?job_ref=AYsahaja&sawahabali for several pages feature photographs taken during the recent site visit and the full site visit report.

Real Estate Prices – Seminyak V Tabanan

In the already accessible and highly popular (and high density) area of Seminyak, a two bedroom villa with a private pool on a plot of circa 350m2 would cost approximately a minimum of £175k/ $350k and would likely have no ocean views at all, and be sold under a 50 or 75 year lease (see Seri Villas, Seminyak which was inspected as a comparable http://www.theserivillas.com ). The Sahaja Villas in Sahaja and Sawah are priced at circa £95k / $200k and are available as freehold and so have a much greater value as a mid to long term investment and a lot more room for potential upside. They also have ocean views and are in a far superior landscape.

It can be conservatively anticipated that the villas in Sahaja and Sawah may double in value within 3 to 5 years.

Tabanan strongly appears to be at the early stages of a significant growth curve.

Land costs - Tabanan

Land in Bali is measure by Are (pronounced “Ara”).

1 Are = 100m2

Land in Tabanan has trebled in price since 2004.

2004 – beachfront or prime ocean view land was sold for an average of 25-30m Rupia per Are

2006 – beachfront or prime ocean view land was sold for between 50-60m Rupia per Are

2008 – ocean view land (beachfront no longer available) was recently sold for 76m per Are (in April of this year)

Building Materials – Price Increases

Since oil and commodities have become more and more expensive, the knock on effect is the massive increase in building materials (mainly cement, steel and roof tiles) which have increased the cost of building villas in Bali by 15% since the beginning of 2008. All the materials for Sahaja and Sawah were purchased in advance, in bulk, but any other projects starting on Bali will have to be sold at a higher rate per m2 in order to make acceptable margin.

It is anticipated that build costs will continue to rise by at least 10 to 15% per year due to world markets. This bodes well for resale values as new stock coming to the market will have to be substantially more expensive than the Sahaja and Sawah properties.

Land Laws in Bali – Protecting the Environment

The days of unplanned development in Bali are well and truly over and a range of new laws protecting the environment have recently been passed. It is expected that as Tabanan is fairly undeveloped, the new laws will ensure that the natural landscape should remain as unspoilt and unchanged as possible, with developers being forced to be considerate. Here are some of those new laws, which are now genuinely, strictly enforced:

• No buildings can be erected on the beach, a 100m set back is required before any structures can be built
• Only one storey buildings can be built on the beach, 2 storey buildings are only permitted at least 500m
• back from the beach.
• Development projects must be low density, and at least 60% of the overall project land plot must be
• retained for common gardens/ open space.
• Three storey and above buildings are rarely if ever allowed, except in the centre of Denpasar (the capital of Bali).

Freehold Tenure – Nominee Ownership in Bali

The tenure of the Sahaja and Sawah villas will be offered as either freehold for foreigners, using the tried and tested Nominee method of ownership (which is accepted by law endorsed by notaries in Indonesia) and is known as Hak Milik, or, foreigners may opt to purchase leasehold, in their own name – which is known as Hak Pakai.

Following several meetings with Notary Agung Diatmika (a respected Notary and who also holds the position of Chairman of all notaries in Tabanan and Badung) please find below some notes on the nominee structure;

Currently, Foreign Investors are not entitled to own ‘freehold’ property known in Indonesia as the Right of Ownership (Hak Milik). However, it is possible to enter into a legal agreement with an Indonesian Nominee, who secures the title to the property on behalf of the foreigner. While the Indonesian Nominee is the registered owner, the Foreign Investor holds the land certificates as security. In Indonesia land cannot be sold without an authentication procedure which includes sighting of the original land certificates. At the time of property purchase, the Indonesian Nominee and the Foreign Investor simultaneously sign a legal Power of Attorney. The Power of Attorney waives all rights of the Indonesian Nominee and gives full beneficial rights of the property to the Foreign Investor. The Foreign Investor is then able to build on the property, onward sell or lease the property and transfer the property to their next of kin. Additionally it is possible to specify that if the laws in Indonesia change allowing

Foreigners to own land, that the titles will automatically be transferred into the Foreign Investor’s name.

There are four contractual documents which are registered at the notary’s office when purchasing Hak Milik (freehold). These documents are registered in Indonesian with English notarised translations;

1. Loan Agreement – this shows that the foreign buyer has a charge over the land title, making it impossible for the nominee to sell the property regardless.

2. Power of Attorney – the foreigner will hold pre-signed POAs which means he/she can sell or transfer the property at any time and without having to contact the nominee.

3. Right to Sell – this entitles the foreigner to sell the property without the permission of the nominee.

4. Land Title Transfer – on the actual land title document which is registered at the land office the foreigners name is stated as having a controlling charge on the property. This makes it impossible for the nominee to state ownership.

FAQs on property ownership in Bali;

Do I need to be in Bali to complete on my property?

Ideally yes, as you can inspect the quality of the finish at the same time, but legally no. The purchase can be completed using POAs.

Are contracts in Indonesian?

Yes but they are all translated into English and stamped and approved by a notary (as in Spain)

What taxation is there in Bali when buying new property?

All together taxation and costs amount to approximately 10% of the property price. This includes stamp duty, local taxes, building tax, nominee fees, donations to the province and notary fees.

Can I re-assign my contract prior to completion?

Yes this is no problem.

What happens to the titles whilst I am still paying off the finance?

The titles are held in trust by the notary until the loan is paid off.

What happens if I default on the finance repayments?

You may default for a maximum of 4 months. During this time if a financial difficultly is apparent, you may sell the property on or sell on your ongoing responsibilities for making the loan repayments. If after 4 months no finance repayments have been made, Sahaja Villas Ltd maintain the right to take back the property and to refund 40% of funds so far paid. This response to defaulting owners exactly follows Indonesian law.

What tax is there on rental income?

Taxation on rental income is seldom collected but is between 5% and 11% of the net income.

Is there any ground rent or any local ongoing tax to pay?

There is a fixed fee of 120 Euros per year which is payable annually in advance and goes towards the local provincial council. This is the only fixed contribution payable and is similar to a community charge.

Management

Sahaja and Sawah will be fully managed as a resort. There will be a fully optimised website launched 5 months before completion for pre-bookings and the resort will also be marketed through all major Bali holiday villa and resort portals. The resort will also be heavily marketed through partner companies in Singapore and Hong Kong were a substantial proportion of Bali visitors are based.

For a table stating net projected income based on very conservative assumptions, including just 30% resort occupancy, high agency and portal fees (20%) and modest rack rates. Please Enquire Here

Sahaja and Sawah Bali Site Report, June 2008

All information contained herein is believed to be correct by International Horizons. Interested parties should always seek independent advice before making property purchases