Phuket vs Bali: A Strategic Investors Perspective
A strategic assessment of investment opportunities, market structures, and brand positioning in two of Asia's premier resort real estate destinations
FROM THE VANA Desk | May 2025
Executive Summary
Robust Tourism Recovery: Both Phuket (Thailand) and Bali (Indonesia) have rebounded strongly from the pandemic, with 2023 foreign visitor numbers nearing pre-2019 peaks (Phuket ~8.4 million, Bali ~5.3 million). Phuket's tourism is slightly larger and more international, while Bali also benefits from a huge domestic market. Both destinations are refocusing on higher-spending, longer-staying tourists for sustainable growth.
Mature Resort Real Estate Markets: Phuket and Bali have 20–30 year histories as international resort property markets. Phuket saw large-scale integrated resorts (e.g. Laguna Phuket in the 1990s) and condominium developments, whereas Bali's growth was driven by boutique villa estates and organic private projects. Each has experienced cyclical booms and slowdowns but overall long-term capital appreciation has been positive. In 2023, Phuket's villa and condo demand surged back to 2019 levels, while Bali's villa prices have climbed ~50% above 2019 levels in prime areas.
Foreign Investment & Ownership: Thailand and Indonesia both restrict freehold land ownership by foreigners. In Phuket, foreigners can own condos (up to 49% of a building) and usually take 30-year renewable leases on villas/land or set up Thai majority companies for landholdings. In Bali, foreigners generally cannot own freehold land; they invest via long leaseholds (commonly 25–30 years + extensions) or through a PMA company. Recent reforms in Indonesia – like the Second Home Visa and "golden visa" for investors – aim to attract foreign capital and residents, but the fundamental ownership laws remain leasehold-based.
Hospitality & Brand Presence: Both islands are hotspots for global hotel and lifestyle brands. Phuket has long hosted luxury flags like Aman (since 1988), Banyan Tree, JW Marriott, Rosewood, and more, often in master-planned resort complexes. Bali is renowned for its eclectic mix of brands: ultra-luxury resorts, wellness retreats (COMO Shambhala), lifestyle hotels (W Bali, Potato Head Studios), and design-focused resorts. Branded residences are an emerging trend in both markets, commanding 25–35% price premiums over unbranded properties.
Real Estate Performance: High-end property prices in Phuket and Bali remain attractive relative to global peers. Phuket's prime properties average around $6,400 per m², roughly half the price of comparable resort real estate in Marbella or Miami, while Bali's luxury villas average $3,300–$3,500 per m² in hotspots like Canggu. Rental yields are strong (typically 5–10%+ annually); for instance, Laguna Phuket reports ~80% occupancy on residences and Bali villas often yield double-digit returns.
Infrastructure & Investment Climate: Phuket enjoys a more developed infrastructure network but faces congestion and capacity limits. A second airport is planned to open by 2031. Bali's infrastructure is comparatively strained in the south but has ambitious plans for North Bali development, including a new international airport, toll highway and rail link. Thailand ranks higher in ease of doing business, but Indonesia is increasingly open to FDI in real estate.
Strategic Outlook for Brands & Developers: Phuket presents a more institutionalized, liquid market with a track record of international investment and relatively transparent metrics, whereas Bali offers a dynamic, trend-setting environment that captures the imagination of lifestyle brands and yield-seeking investors. Long-term, both are poised to benefit from Asia's growing wealth and travel demand.
INTERNATIONAL TOURIST ARRIVALS
8.4 mil VS 5.3 mil
Phuket and Bali have rebounded close to pre-pandemic levels by 2023. Both markets now emphasize attracting higher-spending visitors.
LUXURY VILLA PRICE GROWTH
3.5% VS 47%
Phuket's moderate annual appreciation versus Bali's dramatic post-pandemic surge (2019-2023) in prime areas like Canggu.
THAILAND
8.4 Million
Phuket offers stable returns while Bali delivers higher-risk, higher-reward potential, particularly in villa rentals.
Market Evolution: Two Paths to Resort Prominence
Phuket and Bali have followed distinct trajectories to become Asia's premier resort real estate destinations. Where Phuket embraced organized development led by hospitality giants, Bali grew through boutique entrepreneurship and cultural magnetism.
The Institutional vs. The Organic
Phuket's modern tourism began in the 1970s-80s, transitioning from a tin mining economy to a tropical holiday destination. Pivotal early projects included the development of Patong Beach and the Laguna Phuket complex in the late 1980s (a 1,000-acre integrated resort with hotels like Banyan Tree, Sheraton, and Dusit Thani, built on reclaimed tin mines).
These laid the groundwork for Phuket's high-end villa market – for example, Amanpuri (opened 1988 as Aman's first resort worldwide) put Phuket on the map for ultra-luxury travel and residential villas. Bali's tourism took off slightly earlier, in the 1960s-70s, initially centered around the backpacker and surf culture of Kuta and Sanur.
"While Phuket established itself through master-planned developments often financed by Thai conglomerates, Bali's magic emerged through the thousands of individual villas that foreigners built, each capturing a piece of its cultural essence."
The Indonesian government, with World Bank support, established the Nusa Dua tourism enclave in the 1970s–80s, bringing in international hotels in a planned area. However, Bali's luxury real estate truly gained traction in the 1990s with boutique resorts in Ubud and Jimbaran (e.g. Four Seasons, Amanresorts) and a wave of expatriates building private villas in Seminyak and beyond.
Resilience Through Market Cycles
Both markets have seen boom-bust cycles aligned with global and regional trends. Phuket experienced a sharp rise in property development in the 2000s, fueled by foreign buyers (notably European and Australian retirees and holiday-home seekers) and buoyant tourism.
The 1997 Asian Financial Crisis temporarily stalled projects, but recovery was swift in the early 2000s. Another dip occurred around the 2008 Global Financial Crisis, and a localized slump followed the 2014 Thai political coup and ruble crash (as Russian buyers/tourists temporarily waned). Each time, Phuket rebounded with new demand sources – e.g. a surge of Chinese investors/tourists in the late 2010s filled the gap left by Europeans.
Bali similarly saw rapid growth in the 2000s; after political turbulence in late 90s Indonesia, Bali rebounded by mid-2000s with strong Australian and European demand for villas. The island experienced an oversupply in some areas by mid-2010s (especially in hotel rooms in South Bali, prompting a local moratorium on new hotel permits around 2015). Still, values held steady due to limited land in prime spots and ever-increasing tourism interest.
Both markets were hit hard by COVID-19 in 2020–2021, effectively freezing tourism and sales. Notably, domestic buyers took advantage of depressed prices (especially in Bali, where Indonesians scooped up distressed assets). By 2022–2023, a strong recovery was underway. Knight Frank reports that Phuket's villa and condo sales in 2023 matched 2019 levels after growing 126% year-on-year from 2022. In Bali, prices in desirable areas like Canggu exceeded their 2019 highs by 40–50% as of 2023, reflecting the post-pandemic influx of foreign "workcation" residents and investors.
PERPECTIVE
Which model aligns better with your investment thesis—Phuket's more institutionalized approach with clearer governance structures, or Bali's entrepreneurial dynamism?
Resilience Through Market Cycles
Both markets have seen boom-bust cycles aligned with global and regional trends. Phuket experienced a sharp rise in property development in the 2000s, fueled by foreign buyers (notably European and Australian retirees and holiday-home seekers) and buoyant tourism.
The 1997 Asian Financial Crisis temporarily stalled projects, but recovery was swift in the early 2000s. Another dip occurred around the 2008 Global Financial Crisis, and a localized slump followed the 2014 Thai political coup and ruble crash (as Russian buyers/tourists temporarily waned). Each time, Phuket rebounded with new demand sources – e.g. a surge of Chinese investors/tourists in the late 2010s filled the gap left by Europeans.
Bali similarly saw rapid growth in the 2000s; after political turbulence in late 90s Indonesia, Bali rebounded by mid-2000s with strong Australian and European demand for villas. The island experienced an oversupply in some areas by mid-2010s (especially in hotel rooms in South Bali, prompting a local moratorium on new hotel permits around 2015). Still, values held steady due to limited land in prime spots and ever-increasing tourism interest.
Both markets were hit hard by COVID-19 in 2020–2021, effectively freezing tourism and sales. Notably, domestic buyers took advantage of depressed prices (especially in Bali, where Indonesians scooped up distressed assets). By 2022–2023, a strong recovery was underway. Knight Frank reports that Phuket's villa and condo sales in 2023 matched 2019 levels after growing 126% year-on-year from 2022. In Bali, prices in desirable areas like Canggu exceeded their 2019 highs by 40–50% as of 2023, reflecting the post-pandemic influx of foreign "workcation" residents and investors.
PERPECTIVE
Which model aligns better with your investment thesis—Phuket's more institutionalized approach with clearer governance structures, or Bali's entrepreneurial dynamism?
Legal Frameworks: Navigating Ownership Structures
The legal frameworks in Thailand and Indonesia impose significant restrictions on foreign ownership, shaping how deals are structured and influencing long-term investment security. Understanding these nuances is critical for capital preservation and exit strategies.
The Ownership Conundrum
In Thailand, the Land Code prohibits foreign individuals from owning freehold land, except in rare cases. There is no general provision for foreigners to own landed houses. However, foreigners can own buildings separate from land, and crucially, under the Condominium Act, non-Thais may own up to 49% of the units (by area) in a condominium project.
This condo allowance is the main avenue for foreign freehold ownership in Phuket – overseas buyers often purchase luxury sea-view condos or apartments, obtaining a Chanote title (deed) in their own name for the condo unit.
For land or villas, the common workaround in Phuket is a long-term lease: Thai law permits leases of up to 30 years (registrable at the land office), and this lease can have options to renew (30+30+30 years is a typical structure, though only the first 30 is guaranteed upfront).
The distinction between Phuket's legal clearance for foreign condominium ownership versus Bali's strictly leasehold model creates fundamentally different investment approaches. In Phuket, the condominium segment offers true ownership—a rarity in Southeast Asian resort destinations—whereas Bali's investment thesis relies more on capturing rental yields and capital appreciation within a fixed timeframe.
In Indonesia, land law is governed by the Basic Agrarian Law which recognizes different land rights. Freehold (Hak Milik) is only available to Indonesian citizens (or entities entirely Indonesian-owned). Foreigners cannot hold Hak Milik. Instead, a foreigner domiciled in Indonesia (with a residence permit) may acquire a Right of Use (Hak Pakai) on land or an apartment, or a company can acquire a Right to Build (Hak Guna Bangunan, HGB).
Practically, an individual foreigner in Bali will typically do one of two things: (a) enter a long-term lease agreement with a landowner – for example, a 25-year lease plus an optional 20-year extension, paid upfront or periodically. This lease can be registered as Hak Pakai if the foreigner has a KITAS permit. Or (b) incorporate a PMA company (Penanaman Modal Asing – a foreign investment company) in Indonesia, which can legally hold HGB title on land (HGB is granted for 30 years, extendable 20 + 30 years, effectively up to 80 years).
Market Structure Implications
Both Phuket and Bali hence have parallel markets – freehold (mostly available to locals/companies) and leasehold (open to all). In Phuket, almost all condo sales to foreigners are freehold; villas, if targeting foreigners, are often leasehold, whereas villas targeting Thai or long-term foreign residents might offer freehold (via Thai spouse or company).
In Bali, the leasehold villa market is very common – listings usually specify "Leasehold X years" or "Freehold" (freehold meaning an Indonesian buyer or a nominee structure). Interestingly, the high yields in Bali make even leaseholds attractive: as one industry expert noted, even a 25–30 year lease can be profitable, with many Bali property investments "paying back" in ~6–7 years via rental income.
Recent Policy Shifts
Indonesia's Omnibus Law (Job Creation Law 11/2020) simplified some land categories and removed the old "Negative Investment List" restrictions on property development (now 100% foreign companies can develop real estate). Also, Indonesia in 2022 introduced the Second Home Visa (a 5-10 year visa for those investing at least approx. USD 130,000 in property or keeping Rp2 billion in Indonesian banks).
In late 2023, Indonesia launched a Golden Visa program granting 5-10 year stay permits for large investors (including property investors who invest upwards of ~$350,000). While these visas ease residency, they do not change ownership rules directly, but they signal a more welcoming stance.
The distinction in leasehold versus freehold markets creates different risk profiles. Phuket's freehold condos offer security of title with no expiration, making them attractive for capital preservation. However, the limited supply of freehold-eligible properties (49% quota) can create premium pricing and sometimes liquidity constraints.
Bali's leasehold market introduces time risk—as leases approach expiration, their value diminishes unless extensions are secured. However, the high rental yields frequently justify the limited-term investment, with many investors viewing the arrangement as essentially "prepaying rent" while capturing strong cash flow and potential appreciation.
PERPECTIVE
Would your capital deployment strategy prioritize freehold ownership with potentially moderate yields, or accept leasehold constraints in exchange for potentially higher returns?
Hospitality & Brand Penetration: A Brand Landscape Analysis
Phuket and Bali represent two of Asia's most brand-dense hospitality environments, each offering distinctive positioning opportunities for luxury and lifestyle flags. The evolution of each destination reveals key insights for brand expansion and positioning strategies.
Brand Ecosystem Evolution
Phuket and Bali are arguably the two most brand-saturated resort destinations in the Asia-Pacific region (outside of big cities), hosting a who's who of luxury and lifestyle hotel brands. In Phuket, major international hotel groups present include Marriott (with multiple properties – JW Marriott, Renaissance, Le Meridien, etc.), Accor (Pullman, Novotel, Sofitel in development), IHG (InterContinental, Holiday Inn resorts), Hyatt (Regency Phuket, and new Andaz planned), and Minor/Anantara group.
Iconic luxury brands have flagship resorts: Amanpuri (ultra-luxury, standalone), Banyan Tree Phuket (the original Banyan Tree resort, opened 1994, which also pioneered the villa-with-pool concept), Six Senses Yao Noi (on an isle off Phuket's coast) and Rosewood Phuket (opened 2017).
In Bali, the hotel landscape is diverse: global luxury flags such as Four Seasons (at Jimbaran Bay and Sayan/Ubud), Aman (three resorts: Amandari, Amankila, Amanusa— the latter now operated as Aman Villas at Nusa Dua), Rosewood (recently opened in Ubud), Six Senses (clifftop Uluwatu), W Hotels (W Bali Seminyak has been a marquee lifestyle resort since 2011), St. Regis and Ritz-Carlton (in Nusa Dua), Bulgari Resort (Uluwatu) and Mandarin Oriental (announced for 2025 in South Bali).
Asian boutique brands like Alila (started in Bali with Alila Ubud and Alila Manggis, later adding the famed Alila Villas Uluwatu), COMO (COMO Shambhala Estate, Uma Ubud, Uma Canggu), and Capella (Capella Ubud, named best hotel in the world by some surveys) all have a strong presence, reflecting Bali's pull for experiential luxury.
"While Phuket cultivates a hospitality landscape of polished international standards with Thai cultural influences, Bali fosters an environment where brands are expected to respond to and integrate with a living cultural ecosystem."
PHUKET BRAND PROFILE
44,400+
Hotel rooms in Phuket (2023), with many under international flags. Growth of ~1-2% annually indicates market maturity.
BALI BRAND PROFILE
38,000+
Formal hotel rooms in Bali, supplemented by thousands of private villas operating via platforms like Airbnb.
The Rise of Branded Residences
A noticeable trend is the rise of Branded Residences attached to hospitality in both locations. In Phuket, this model has been active for some time: buyers can purchase a managed villa or condo that is branded and serviced by the hotel operator, often with some rental program.
Examples include Four Seasons Private Residences (though Four Seasons doesn't yet have a resort in Phuket, there was a project using the brand in development), MontAzure residences with hotel services, Banyan Tree and Angsana villas in Laguna, and new ones like InterContinental Residences Phuket (adjacent to InterContinental resort Kamala).
These typically command premium pricing but sell on the promise of hassle-free ownership and hotel amenities. Knight Frank's global research indicates buyers are willing to pay ~30% premium for branded residences for the service and quality assurance.
In Bali, branded residences are now taking off: Six Senses Uluwatu sold some of its cliff villas to private owners, Aman Villas Nusa Dua sold multi-bedroom villas under leasehold, Mandarin Oriental Bali is expected to include residences, and even mid-market condotels (e.g. Citadines Berawa or local brands) sell units to investors with guaranteed yields.
Case Study: COMO Uma Canggu
Opened in 2018, this resort brought a luxury brand (COMO) to Canggu, an area known for hip cafes and surfing. It combined COMO's wellness ethos with a surf club and beach bar, effectively capturing the "luxury bohemian" market.
Its success showed that even non-traditional locations (for luxury) can work if the brand taps into the lifestyle of the area. This strategic alignment between brand positioning and location character has become increasingly important in both markets.
The divergent brand strategies in these markets offer a window into broader investment approaches. Phuket tends to reward brands that emphasize physical product quality, professional service delivery, and seamless resort experiences. Bali, meanwhile, offers greater potential for brands that create cultural narratives, lifestyle communities, and aesthetic differentiation. This distinction—between operational excellence and experiential innovation—should inform not just hospitality investments but property development positioning as well.
PERPECTIVE
Does your brand thrive on consistency and refined luxury experiences (potentially better suited to Phuket), or does it excel when immersed in creative energy and cultural context (potentially better suited to Bali)?
Tourism Dynamics: The Demand Engine
Tourism patterns form the foundation of resort real estate performance. Both destinations show strong post-pandemic recovery, but with distinct visitor profiles, seasonality patterns, and spending behaviors that inform strategic investment decisions.
Recovery Trajectories
In 2019 (pre-pandemic benchmark), Phuket recorded around 9.7 million international tourist arrivals (out of ~13 million total visitors when including domestic). Bali in 2019 welcomed roughly 6.3 million international visitors (plus an even larger number of domestic tourists, ~10 million, as Bali is a top vacation spot for Indonesians).
By 2023, recovery was substantial: Phuket received 8.38 million foreign arrivals (about 85% of 2019's level), and Bali about 5.4 million foreign arrivals (roughly 85% of 2019 as well). Both expect further growth in 2024 and 2025. Indeed, Bali hit a new record 6.3 million international tourists in 2024, and is targeting 6.5 million in 2025. Thai tourism officials predicted Phuket's total visitors in 2024 could reach 13–14 million (comparable to 2019).
VISITOR MIX: PHUKET
75-80%
International visitors (predominantly Russian, Chinese, Indian, Australian, and European markets)
VISITOR MIX: BALI
40%
Formal hotel rooms in Bali, supplemented by thousands of private villas operating via platforms like Airbnb.
Spending Patterns & Length of Stay
Both locales aim not just for volume, but high spending tourists. Phuket's tourism revenue in H1 2023 was reported at THB 246 billion, on track to hit ~THB 500 billion for the year (which would exceed 2019 even with a bit fewer visitors, implying higher per-capita spend).
This reflects more "quality tourists" in Phuket – possibly because early in reopening mostly long-haul and higher-end travelers returned, and because Russians (staying longer during winter) spend more per trip.
"The critical shift in both destinations is the strategic pivot from visitor volume to visitor value—attracting travelers who stay longer, spend more, and connect more deeply with the destination."
In Phuket, many international tourists come for one week packages (especially Europeans on winter holiday) or shorter stays if regional. The average stay might be around 4–5 days for foreign tourists. In Bali, there is a split – traditional tourists might stay ~5 days, but there's a significant segment of long-stay travelers (remote workers, etc.) who might stay weeks or months in villas.
The push from officials is to increase the average length of stay and spending. Bali's data from Nov 2024 shows foreign guests in starred hotels stayed 3.01 nights on average – a slight increase which they attribute to efforts to encourage longer stays (e.g. digital nomad visas, etc.). Longer stays benefit the real estate rental market significantly.
Seasonality & Rental Implications
Phuket's peak season is traditionally Nov–April (dry, pleasant weather), when hotels often run at 85–90% occupancy and charge peak rates, whereas off-season (May–Oct monsoon) occupancy can drop into the 50-60% range.
Bali's seasonality is less extreme (being equatorial, though it has a dry season Apr–Oct and a wetter Nov–Mar). Bali's hotel occupancy tends to peak around August and year-end holidays (Christmas/New Year), but even "low" season (say February) still sees decent tourist flow.
This seasonal pattern directly impacts rental yields and operating strategies for property investors. Bali's more consistent year-round occupancy can provide steadier cash flow, while Phuket properties often generate most of their annual income during the 5-month high season.
Emerging Visitor Trends
Forward-looking, both Phuket and Bali are benefitting from trends like "work from anywhere" and "revenge travel" after the pandemic. Digital nomads and semi-residents boost the long-stay occupancy of villas/condos. MasterCard's 2024 index projected Bangkok, Phuket, and Bali all in the top 10 Asia-Pacific destinations by spend and arrivals as travel fully normalizes.
One thing to watch is Chinese outbound tourism: Chinese travelers were a huge component (especially on the budget and mid-end) pre-2020. Their return in full force could strain capacity again in peak seasons and also possibly moderate the average spend (as many Chinese tour groups focus on package deals).
However, both destinations are now consciously managing toward the higher end of the market, partly by diversifying source markets (not relying too much on any single country) and marketing niche attractions (wellness, sports, culture) to attract travelers who are likely to spend more and respect the local environment.
The tourism dynamics reveal crucial insights for investment: Phuket's higher concentration of international visitors creates greater exposure to global travel patterns, both positive and negative. Bali's substantial domestic tourism base provides a resilient foundation that can buffer international downturns. This distinction suggests different risk profiles—Phuket might deliver stronger performance during global travel booms but potentially greater volatility during disruptions, while Bali offers a more balanced demand profile that may smooth performance across cycles.
PERPECTIVE
How would your investment or brand position itself to capture emergent high-value segments like "workations" and multi-week stays, rather than traditional holiday patterns?
Performance Metrics: The Investment Equation
From land values to rental yields, the property performance metrics of Phuket and Bali reveal compelling but distinct investment narratives—one of steady appreciation and liquidity, the other of higher growth potential coupled with structural considerations.
Price Points & Valuations
Property prices in Phuket and Bali can vary significantly by location and property type, but some averages and benchmarks illustrate the landscape. In Phuket, top quality resort condos range from ฿100,000 to ฿180,000 per m² (roughly $3,000–$5,400 per m²). This is for new builds in good locations (sea view, branded or with amenities).
There are cheaper condos further from the beach or of older stock that can be ฿70k/m² ($2,100). For example, a 100 m² seaview 2-bedroom might list for ฿12 million ($340k) in Kamala or Kata.
In Bali, true condominiums are few; there are apartment projects (often marketed with prices in total rather than per m²). Rough calculations show some new Bali apartments near the beach selling for around $2,000–$3,000 per m², which is lower than Phuket's top condo rates.
LUXURY VILL PRICE: PHUKET
$6,415/m²
Average prime price for high-end villas in prime locations
LUXURY VILL PRICE: BALI
$3,300/m²
Average for premium furnished villas in Canggu/Seminyak
Land Values & Development Economics
In Phuket, raw land is priced in Thai baht per wah² or rai (1 rai = 1600 m²). In popular west coast areas like Kamala, Surin, Bang Tao, sea-view land can fetch THB 20–30 million per rai (approximately $700k–$1M), which translates to about THB 12,500–18,750 per m².
Less prime inland plots or east coast land might be THB 5–10 million/rai. A property site survey put the average price for land in Kamala at ฿16,623 per m² (฿26.6M/rai), underscoring how expensive Phuket's prime land has become.
In Bali, land is often measured per are (100 m²). Prices in the Canggu/Seminyak area for freehold land skyrocketed from roughly IDR 1 billion per are in 2019 to IDR 1.5 billion per are in 2023 ($100k per are, or $1,000 per m²) – a 50% increase fueled by high demand. That means a typical 5-are (500 m²) plot in Canggu could cost $500k freehold.
Construction Economics
For developers, cost environment matters. Phuket's construction costs are moderately high for Thailand (labor costs a bit higher on the island, materials often imported from Bangkok or abroad). A luxury villa might cost THB 25,000–40,000/m² ($750-$1,200/m²) to build depending on specs.
Bali's construction costs were historically lower due to cheaper labor, but that gap is closing. Building costs rose from IDR 9 million/m² in 2019 to IDR 12 million/m² in 2023 for good quality (that's ~$800 to $850 per m² at current rates) – similar to Thai costs now.
Rental Yields & Return Profiles
Rental yields are a major draw especially in Bali. The OXO Living/Bisnis report highlighted Bali's remarkably high yields of 11% to 15% in villa rentals. They gave an example: a Rp 3 billion villa ($200k) rented at Rp 5 million per day ($330) at 50% occupancy yields ~12% annually.
Indeed, short-term holiday rentals in Bali can be very lucrative in peak times, though one must account for management costs and seasonality. Phuket's rental yields can also be strong – the Sunway Estates article noted Phuket's rental market "booming" with returns over 10% in 2024.
Generally, well-managed Phuket properties yield 5–8% net in normal times, and maybe touching 10%+ in this extraordinary period of high tourism rebound. Differences: Phuket has more condotel setups offering guaranteed yields (some promise 6-7% for a few years). Bali's market is more DIY or through villa rental agencies, which often results in high gross yields but also higher operational overhead.
"The investment equation isn't simply about purchase price or yield, but the intricate balance of capital appreciation potential, structural security, operational complexity, and exit liquidity. Phuket and Bali each present a different formula for these variables."
Capital Appreciation Trends
Historically, Phuket's capital appreciation for prime properties has been steady in the single-digit percentages annually, with some spikes during boom years. Knight Frank's data showed Phuket condo prices rose ~4.8% in 2023, and villa prices by ~3.5%, recovering to near 2019 levels.
Bali's capital growth has been more volatile: huge rises in land and villa prices from 2010-2014 (some areas doubled as Bali's popularity exploded), then a plateau or slight dip 2015-2017 due to oversupply, then modest growth up to 2019.
Post-Covid, as cited, prime villas jumped ~47% in price from 2019 to 2023 in Canggu. Island-wide average property price increase in Bali was around 15% in 2023 vs 2022, according to one estimate. This suggests Bali is in a strong upswing cycle currently.
Value metrics underscore the fundamentally different investment approaches these markets demand. Phuket requires a more institutionalized mindset—analyzing market comparables, engaging established brokerages, and considering conventional metrics like price per square meter. Bali demands a more entrepreneurial approach—identifying emerging areas before infrastructure arrives, valuing properties based on rental potential rather than comps, and recognizing that the formal "market" data often lags behind actual transaction values in this fast-moving environment.
PERPECTIVE
How would your investment model balance the security of Phuket's more stable returns against the high-yield but potentially more volatile opportunity set in Bali?
Infrastructure & Investment Environment: Foundation for Growth
Beyond the properties themselves, the surrounding infrastructure and investment climate form the critical foundation for long-term asset performance. In this dimension, Phuket and Bali present distinctly different development trajectories.
Transport Networks & Accessibility
Phuket benefits from relatively advanced infrastructure for a resort island. The primary gateway, Phuket International Airport, is in the north of the island and was expanded in 2016, raising capacity to about 12–15 million passengers/year. By 2019 it was congested, spurring plans for a second airport.
Now the project for a Phang Nga airport (Andaman International Airport) about ~20 km north of the Phuket airport is underway. The Thai government, through Airports of Thailand (AOT), has stated this second airport will serve long-haul flights and expand combined capacity to 18 million+ passengers/year by 2031.
This will be crucial for Phuket's growth, ensuring it can receive more direct flights from Europe, Middle East, etc. without bottlenecks. As of 2024, that project is in planning/early construction stage.
Bali's Ambitious Northern Development
The ambitious plan for a North Bali Airport in Buleleng aims to decentralize tourism. The plan describes a 900-hectare reclaimed island shaped like a turtle for the airport, complete with two runways including one for A380s.
Additionally, it mentions a 60 km toll road and 100 km railway linking north and south. If realized, this would be transformative: tourists could land in the north and reach south Bali faster, and the north itself (which is beautiful but underdeveloped) would open up for hotels.
However, as of early 2025, this plan faces hurdles – land acquisition, environmental clearances (reclaiming sea in Bali is controversial), and funding. There's talk of Chinese investment of $3 billion for it, and government support at high levels, but a realistic timeline might be 5-7 years before operation.
Business Environment & Foreign Direct Investment
Both Thailand and Indonesia welcome foreign direct investment (FDI) in tourism and real estate, but their processes differ. Thailand generally ranks high in Ease of Doing Business (before the World Bank index was discontinued, Thailand was around 21st globally).
It has an established legal framework for foreign investors, e.g. you can set up a Thai Limited Company relatively quickly, and if you get BOI (Board of Investment) incentives for a hotel or large project, you might get perks like tax holidays or even land ownership rights for the project.
Phuket, in particular, has seen substantial FDI in hotel projects (often via joint ventures – e.g., foreign fund partners with a Thai developer). Indonesia historically was more restrictive (with a Negative Investment List capping foreign ownership in certain sectors), but the Omnibus Law in 2020 liberalized many sectors including real estate development – now a foreign company can do real estate 100%.
CURRENCY RISK: THAILAND
Lower
The Thai Baht has been relatively strong historically (it fluctuates but Thailand has low inflation and substantial FX reserves)
CURRENCY RISK: INDONESIA
Higher
The Indonesian Rupiah tends to steadily depreciate long-term (higher inflation environment)
Environmental Sustainability & Carrying Capacity
Each location has some risks to consider. Natural risks: Phuket faces occasional typhoons (rare direct hits) and heavy monsoon flooding some years. It also had the 2004 tsunami on the west coast. Bali is in the Ring of Fire – volcanic eruptions (Mount Agung's eruption scare in 2017 caused airport closures and dip in arrivals), and occasional earthquakes.
Developers mitigate these by building above tsunami zones where possible and adhering to quake-resistant designs. Climate change could affect both (rising sea levels eroding beaches, coral bleaching affecting dive tourism).
Unchecked growth in Bali has led to water shortages, pollution in rivers/sea – the government is now focusing on sustainable tourism (e.g., banning single-use plastics, promoting "zero waste" resorts). Phuket has also had issues with wastewater treatment and encroachment on national parks; there's a push for greener development (some new projects are integrating solar power, etc.).
"The infrastructure race between these destinations isn't merely about concrete and steel, but about creating sustainable carrying capacity that preserves the very qualities that make each place desirable. Investors must recognize that environmental degradation poses perhaps the greatest long-term risk to asset values."
Thailand's infrastructure development plan includes improved airports, roads, and possibly cruise terminals in Phuket (to tap the cruise tourism market). Indonesia's government named "10 New Balis" in a past initiative (developing other destinations like Mandalika, Labuan Bajo) – this shows a desire to spread tourism, but also indirectly it means Bali itself might face more competition or at least get more central funds to stay ahead.
The new Indonesian capital being built in Borneo (Nusantara) is something to watch – it could divert some national budget, but Bali being a proven cash cow will likely still receive investment.
The infrastructure equation must be central to long-term investment strategy. Phuket's more developed networks provide immediate operational efficiency and accessibility advantages. However, Bali's ambitious infrastructure pipeline—if executed successfully—could unlock entirely new development regions and potentially deliver superior capital appreciation for early movers. The calculated bet involves weighing Phuket's certainty against Bali's transformative potential.
PERPECTIVE
Does your investment horizon align better with Phuket's established infrastructure advantages, or can you position capital to anticipate and capitalize on Bali's infrastructure transformation?
Strategic Implications: Brand Positioning & Capital Deployment
Given the comparative analysis across market structures, legal frameworks, brand landscapes, tourism patterns, performance metrics, and infrastructure, what strategic conclusions can sophisticated investors and brand owners draw?
Market Suitability: Brand Seeding vs Long-Term Investment
For a hospitality or lifestyle brand looking to establish presence, the choice may depend on whether the goal is immediate brand visibility or long-term financial investment. Phuket is ideal for "brand seeding" in Asia – it has year-round global traffic, a stable business environment, and an existing luxury circuit.
A new hotel or club in Phuket can quickly gain international attention simply by being in Phuket (e.g., Rosewood's opening in Phuket was widely covered). It's an environment where a brand can plug into established luxury networks (partnerships with Phuket yacht shows, wellness festivals, etc.).
However, because Phuket is mature, a brand might face fiercer competition and slightly less novelty factor. Bali, conversely, offers a trendier image – establishing a property or venue in Bali often carries a certain cultural cachet, aligning the brand with Bali's "creative, spiritual, hip" reputation.
Brand-Destination Alignment by Segment
Wellness & Spiritual Retreats: Bali's Ubud region is practically synonymous with yoga retreats, meditation, and holistic wellness. Brands in this segment (like COMO Shambhala, Six Senses) find Bali's cultural and natural setting ideal for comprehensive wellness programming.
Lifestyle & Nightlife: For trendy lifestyle hotels (like W, EDITION, etc.) that bank on a vibrant social scene, Seminyak/Canggu in Bali is hard to beat – beach clubs, music events, art, surfing subculture, all combine to attract the "creative class" travelers.
Family and Integrated Resorts: Phuket has an advantage for family-oriented brands (like Club Med, Beaches, etc.) given its integrated resort infrastructure (Laguna Phuket is a self-contained family paradise with golf, kids clubs, etc.).
Creative & Entrepreneurial Community: Bali, especially post-Covid, has become a base for remote entrepreneurs, designers, and artists. Co-living brands, creative campuses, and wellness communities have sprouted.
Capital Preservation vs Growth Trade-offs
If an investor's priority is capital preservation, Phuket might have the edge. The property rights are more secure (one can hold a title deed in perpetuity for a condo or via a Thai company for land), and the Thai baht is a relatively stable currency.
Phuket's market has steady demand from multiple nationalities, providing a cushion – even when one segment dips, another rises (as seen when Chinese travel fell in 2020 but Russians filled part of that void in 2022–23). So a Phuket asset is somewhat resilient; for example, high-end villas in Phuket largely held their value through the pandemic, with only minor discounting, and are now in high demand again.
For growth-focused investors, Bali might offer more upside. Bali's international stature is still growing (the Indonesian government actively promotes it, and international accolades roll in every year for Bali as "best island" etc.).
"The strategic choice between Phuket and Bali often reflects a deeper investment philosophy: Phuket represents the institutionalization of resort real estate—sophisticated, liquid, and professionally managed. Bali embodies the entrepreneurial frontier—higher barriers to entry but potentially greater rewards for operational excellence and vision."
There's a sense that Bali's real estate values have not yet fully caught up to its brand appeal – which suggests room for significant appreciation, especially if any positive legal changes occur. The risk, of course, is higher volatility and less liquidity on short notice.
One can also think of segments: Ultra-high-net-worth individuals (UHNWIs) might buy trophy assets in either location less for yield and more as legacy or lifestyle. They might lean towards Bali if they seek something unique (like an estate amid rice terraces, or a cliff mansion) which has a different vibe than say a villa in a managed estate in Phuket.
Long-Term Outlook & Exit Strategies
Investors and developers should also plan for the long term. Phuket's relatively transparent secondary market means assets can be resold or exited with relative ease – e.g. a foreign-owned condo can be sold to another foreign buyer, or a hotel can be sold to a REIT or Thai developer.
Bali's exit strategies require more nuance: a leasehold villa's value declines as the lease term diminishes (unless extended), so investors often need to sell well before the lease gets short or negotiate extensions. Freehold assets in Bali (held via local entities) can be sold to other Indonesians or structured in share sales, but appeal to international buyers is narrower due to legal hoops.
Thus, those investing in Bali should either have a longer holding horizon or structure projects in a way (e.g. using PMA companies) that they can sell equity in the company rather than the land itself. The improving regulatory climate (e.g. talk of 50-year lease rights, and more flexible Hak Pakai rules) could enhance Bali exit options in the future.
Beyond financial calculations, the strategic positioning of these markets in global hospitality architecture should influence investment decisions. Phuket has established itself as Asia's definitive luxury beach destination—a known quantity that delivers reliable returns but with potentially limited upside surprise. Bali continues to evolve as a global creative hub with an experiential edge that attracts cultural tastemakers—offering potentially greater growth but requiring deeper market engagement. The sophisticated investor might view these not as competing destinations but as complementary portfolio elements serving different strategic purposes.
PERPECTIVE
Does your investment strategy demand the security and institutionalized frameworks of Phuket, or is it better served by the growth potential and creative energy of Bali? Or might a balanced exposure to both markets provide the optimal risk-return profile?