Arithmetic

Compare 2 Bali Listings in 60 Seconds: Price Per Year of Use

You have two Bali listings open and no way to rank them. They are within a few percent on price, both quote a rental return, both look the same in the photographs. One has forty-five years left on its lease. The other has nineteen.

This is a procedure for that moment. It takes one division, it needs no tool, and it is the only step that puts two listings on the same axis before you start arguing about pools and sunsets.

The method

Divide the asking price by the number of years you can actually use it.

That is the whole thing. The result is the cost of one year of use, and it is the number two listings can be compared on when the headline price cannot.

Step 1 — get the years, as a date

For a lease this is the remaining term, and it is not the number in the listing. Ask for the commencement date and the term, then subtract. A listing saying “25 years leasehold” is frequently quoting the original grant of a lease signed years ago.

For hak pakai or HGB it is 80 years — 30 initially, extendable by 20 and renewable by 30 under PP 18/2021 articles 52(1) and 37(1). Use the full ladder only if you intend to make those applications; use the initial 30 if you are being conservative.

Step 2 — divide

Price ÷ years. Do it for both listings.

Step 3 — compare the two results, not the two prices

Within about fifteen percent of each other, the term is not what separates those properties and you can go back to comparing them on everything else. If one is double the other, you have found the difference that matters, and it is larger than every transfer cost in the transaction put together.

That is the procedure. The rest of this page is what it produces and what it leaves out.

What the division produces

Start with the pair above. Both at USD 300,000, both producing USD 24,000 a year after operating costs, both held for ten years.

The yield line is the one to notice. On the number every listing quotes, the two are identical: 8% either way. On the number nobody quotes, one costs two and a third times what the other does per year of use, and finishes the decade with thirty points less of your capital intact.

Those figures are produced by the same code that runs the calculator, and the build fails if the two ever disagree.

The same division across a range

The point is not the pair. It is the shape. At a constant price of USD 300,000:

Two listings at the same price are the same purchase only if the third column matches. Nothing in a listing tells you whether it does.

Where a registered right lands on the same scale

Run hak pakai through the identical division and it produces USD 3,750 a year on the 80-year ladder, or USD 10,000 on the initial 30 years alone. That is the honest range, and which end you use depends entirely on how confident you are about extension and renewal applications you will make in 2056.

Why the effect is so large

Because it is hyperbolic rather than linear. Halve the remaining years at a constant price and the cost per year of use doubles. Halve it again and it doubles again. Below fifteen years the curve is close to vertical, which is the region where a property is sometimes marketed hardest — the seller can see the curve too.

There is a second effect stacked on the first, and it is the one that catches people on exit. The term keeps shortening while you own it. Buy nineteen years, hold eight, and you are trying to sell eleven into a market that will apply exactly the reasoning you applied to the seller. Short leases get less liquid as they shorten, and the effect accelerates.

Why there is no cap to protect you

Because Indonesian law does not set one. Articles 44 and 45 of the Basic Agrarian Law define hak sewa and say who may hold it, and neither mentions duration. PP 18/2021, which sets terms for HGU, HGB, hak pakai and strata title, does not regulate hak sewa at all.

So a lease term is whatever two parties wrote down, and the resale remainder is whatever is left of it. That is why you will see fifteen years, thirty years and eighty years advertised in the same week in the same village, at prices that do not obviously reflect the difference.

Compare that with the registered rights, both capped to the same ladder: 30 years, extendable by up to 20, renewable by up to 30, at articles 52(1) and 37(1). Those numbers are in a regulation. A lease term is in a negotiation.

Four things this method deliberately cannot tell you

A one-line division earns its keep by being checkable. It also has hard limits, and using it past them is worse than not using it.

It does not price the extension

If the asking price assumes a second term, the division assumes it too — and whether anyone is obliged to grant it is a drafting question, not an arithmetic one. There are three grades of extension clause and they are indistinguishable in a listing. Which grade you have is the separate question to settle before you trust the years you put into step 1.

It does not check the rent

Advertised returns in this market are usually gross: no management, no maintenance, no vacancy, no platform commission, no tax. The division does not care what you enter, which means a rent figure you took from a listing produces a confident-looking number built on somebody else’s projection.

It does not know whether the building is legal

Two plots with identical arithmetic are not identical if one carries a structure that does not match what was approved. The approval regime changed in 2021 and the documents have different names now — PBG, SLF and SBKBG.

It does not tell you whether you can hold the right at all

The most expensive failure available here is not a bad price per year. It is buying a right a foreign buyer cannot hold. If the certificate says hak milik, the arithmetic is irrelevant until that question is resolved, and the answer changes which years go into step 1 anyway, because the right converts on completion.

The arithmetic you can do before you call anyone

Divide the price by the years remaining. Do it for both listings. If the two numbers are within about fifteen percent, the term is not what separates those properties and you can go back to arguing about the pool. If one is double the other, you have found the real difference, and it is larger than every transfer cost in the transaction put together.

It takes ten seconds and it is the single most useful thing you can do with a Bali listing.

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