So you want to invest in Island property offering high yield, strong capital appreciation and offers lifestyle benefit? We can’t blame you. It’s an attractive idea. As you browse through the many promising investment opportunities with the critical eye of a shrude investor, focusing your gaze on the world’s largest archipelago, Indonesia, you will come across many developer advertised projects with the headline “investment of a lifetime”. And most certainly there will be some that are. But also, many that aren’t.
Success all round is attainable – if you do your correct due diligence. Otherwise you may invest in the right thematic, but with the wrong developer. Don’t be drawn in by the pretty websites and the views, make sure your chosen developer has the track record, the financial backing and able to deliver your dream holiday investment.
We are shedding the light on this topic because it’s timely to help educate potential buyers, so we asked our development team what questions to ask developers when considering investing in Indonesia.
1. What have they executed – What is their track record?
Buyers carrying out their due diligence should have this question at the top of their list. Investigating a developer’s previous projects will give clear indication on quality & delivery execution.
Look at their track record, the quality of finish and check out their reviews on line to see if there are any complaints. If you can visit their completed developments and stay in them. This is always true test of quality and if you like it.
2. Can they provide proof of irrevocable road access legal agreements?
It is important to confirm unrestricted legal road access to the property is available. You are entitled to ask to see these.
If you can visit, ask for photos of the site and request to see documentation to prove they have the right legal permits. Given COVID-19, if you can’t visit ask for clear photos and video as well of the access.
3. Can they provide legal verification of land boundaries?
A developer must provide land title certification verifying this information within contract of sale.
This should be part of the sale contract and the land boundaries should be highlighted with a topographical study and approved subdivision shown. As a potential buyer you should request to look at both the onshore and offshore contracts ahead of purchasing. For most projects in Indonesia it will be necessary to have both. This is essential to familiarise yourself with through the DD period and ask any questions before you settle. It is also worth asking if the contract has already been reviewed and vetted by an independent onshore and offshore lawyer of repute.
4. Do they have all of their environmental licenses already in place?
Government approvals are required to meet various regulations.
5. Have they secured building permits for the land?
Make sure formal approvals in place prior to building commencement. Check the land has planning and all the correct permits.
6. Are there any known land disputes relating to the land they are selling?
In places like Indonesia you can’t just check online for land ownership and pop into the local council. You need to check the land ownership, how the developer is selling the land to you and then you then own it once purchased. If unsure get legal advice and ask a lawyer to check out the proposed structure of ownership.
For more information on investing in Indonesia, refer to our article recently shared on Investing in Indonesia – It’s now much simpler thank you think!
7. Have the developers themselves settled on the land they are on-selling to you? Can they provide legally binding signed settlement statements from the original landowners stating that they have been paid in full for the land, to prevent future claims?
Complete thorough land titleship research to avoid this. We recommend you seek expert legal advice on existing title ownership or ensure the developer gives adequate proof prior to purchase to avoid incurring potential future financial claims.
8. Can they provide proof of ownership?
Developer must provide legal title documentation under its contractual obligations. This must be in your contract of sale and get your lawyer to confirm the ownership. Do not buy anything if the developer does not own the land or can’t prove they have the right to sell.
9. Do they offer a full guarantee on your title?
We recommend instructing your lawyer to include this within contract negotiations.
10. What happens at the end of completion?
Prior to final settlement and receiving keys to the property, purchasers should be entitled to a final inspection before paying their last instalment. If settling on a villa do a final inspection and agreed on any snagging items, ensure you agree when these will be completed. Most developers should have the final payment due only after the villa has been completed and thoroughly inspected.
If a land only investment, gaining a clear understanding on how you can coordinate your villa construction when you are ready to break ground is essential. Picking the wrong contractor to build your villa can turn a dream into a nightmare. Walk through the site, understand what you can and can’t build before you settle
Investing in your dream holiday home is meant to be pain and hassle free. If you do the right due diligence, buy through the right developer you can be enjoying your investment quickly and easily. Always seek legal guidance if un sure or if you feel something is not right, it is better to be safe than sorry.
In summary, use these 4 quick tips to help you choose the right developer:
- Track record and delivered on other projects.
- A developer that has already started on construction and put the infrastructure in.
- That can provide all the right legal documents and contract of sale for you to review before you purchase.
- Has a structured payment plan, in line with the land and villa development, not asking for all funds up front.
About Selo Group
Selo Group are well known for their flagship, Selong Selo Resort & Residences, a community of ocean view villas within a fully managed resort – https://www.selongselo.com/. Selo’s experienced and award-winning international team who oversee the areas of Design, Property Sales & Marketing, Construction, and Hotel and Resort Operations, position them well to offer not only deliver on their promise, but exceed expectations. With a proven track record of building quality award-winning luxury resorts and villas to the highest international standards, it is known for delivering on time and on budget with over 100 land &/or villa packages sold, 30 villas completed, state of the art facilities and a large pipeline of builds in the coming years.
Selo Group provides a holistic offering across development, construction, operations and management services, overseeing projects from beginning to end with a strong commitment to sustainability. Selo’s green technology and design goes beyond typical motherhood statements and green marketing, demonstrating a commitment to sustainability principles in construction methods, internal operations and engagement with local communities and the natural environment.
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For more information, or interview/photo requests, please contact:
Head of Marketing
Phone: +61 0424 186 756