The View From the Beach

Groundbreaking for the LIV Bali property development on beautiful Jimbaran Bay was held this last Sunday.

With a mixed crowd of local dignitaries, foreign nationals, buyers and prospects on hand, the ceremonies began bright and early and proceeded through midday. Live entertainment followed the formal ceremonies where the local template blessed the site and the endeavor. Local media was also out in force for the event, with coverage from both print publications and local Television.

The LIV project is a milestone for the re-development of Jimbaran Bay. The project launch follows fresh on the heels of the completion of the first stage of the renovation of Jimbaran Bay and the re-opening of the first of the seafood restaurants on the bay - located just across the street from LIV. Next round of development will see the creation of a local communtiy and arts center and the renovation of the fish markets further down the Bay.

LIV features 29 units and a variety of facilities, including Jimbaran Bay’s first beach club. Project pre-sales exceeded 60% in advance of the launch. The project will be managed by BHM and the Head Sales Agency is held by Elite Havens. You can learn more about the project online at www.LIVBali.com.

The last several years have witnessed a significant increase in development, particularly relating to vacation villa housing. The trend continues and indeed is strengthening. Some commentators have speculated that there are as many as 40 multi-unit villa developments on the books which will add hundreds of bedrooms to the inventory on the market. Now add to that number, probably by a factor of 2x or 3x, the stand-alone villas under construction and you start to get a good idea of the feeding frenzy we’re seeing at this moment.

When is enough? How much is too much? People are starting to ask these questions, but I have to wonder whether the are even the right questions…

Initially let’s take a crack at the validity of the numbers. While the property marketeers are out there flogging at least 40 developments, the reality of the situation sees perhaps only 2 dozen viable projects. Of those two dozen, only a portion actually have spades in the dirt. The development game loves to sell off the plan, when at all possible. That invariably means some plans never materialize due to changing market conditions, lack of interest, etc. The point being: Don’t let the commercial multi-unit developments number fool you. We’re not anywhere near the lunacy one observes in places like Phuket.

Next, let’s factor out the hotels who have jumped on the villa bandwagon and are constructing villa-type accommodations under their hotel brands. These units just don’t come into this analysis — these are hotels, people! The hotel market is a thing unto itself with market characteristics that are distinct from the villa business. (Arguably some of the multi-unit complexes passing themselves off as villas are hotels, too, but that is a topic for another post!)

On the subject of the individual villas under construction, one must keep in mind that this is not a coherent market. Individual villa construction is driven by private owners who exhibit a wide range of motivations, from pure investment to pure whimsy. Generalizing about the individual villa market is fraught with peril. About the best one can safely say is that some of these villas will enter the commercial market — and that’s a slim reed from which to hang any meaningful trend analysis. Their impact on the market long-term, in other words, is extremely hard to predict.

The potential for over-development is a threat primarily in two key areas: burden on infrastructure and the environment, and impact on the market. In the next couple of posts I will take a look at both these topics.

Stay tuned…