Bali’s Governor, I Wayan Koster, has announced a significant policy shift in the island’s land use regulations. The conversion of productive farmland, especially rice fields, into commercial or tourism projects will no longer be permitted. The decision follows last week’s deadly floods that claimed 17 lives, highlighting how rapid development and the loss of natural water absorption areas have left Bali increasingly vulnerable to environmental disasters.
For Bali’s property market, this new regulation is more than an environmental policy—it’s a development that could reshape the landscape for investors, developers, and property buyers.
Why the Ban Was Introduced
Governor Koster linked the floods directly to poor spatial planning and farmland loss. Over the past decade, hundreds of hectares of farmland and forest have been converted into villas, hotels, and housing complexes. These changes reduced natural drainage and flood resilience.
Now, the government is taking decisive action: no new permits will be issued for converting productive farmland into commercial developments. A new spatial plan and strategic environmental review will also be prepared to strengthen land-use governance.
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Implications for the Real Estate Market
- Scarcity of Legal Development Land
With farmland conversions halted, the pool of land legally available for new projects will shrink. This scarcity is likely to increase demand—and potentially prices—for plots already zoned for commercial or residential use. For investors holding land with proper zoning and permits, this policy could enhance long-term value. - Due Diligence is Now Critical
Buyers and developers must pay closer attention to zoning status and permit validity before committing to a purchase. A plot that appears attractive but sits on productive farmland may no longer be developable. This makes working with experienced agents, notaries, and legal consultants essential. - Boost for Sustainable and Legal Projects
The government’s stance also means that developments aligned with sustainability, such as eco-resorts or residential projects on already-zoned land, may gain stronger support. Projects that demonstrate compliance with environmental standards are likely to stand out in the permitting process. - Impact on Rental Market and Tourism
Restricting new hotel and villa developments may limit future supply in Bali’s tourism hotspots. In the medium to long term, this could strengthen the rental market, as existing villas and hospitality properties face less competition from new builds.
Balancing Growth and Sustainability
For decades, Bali’s property market has been fueled by tourism-driven development. But as the floods have shown, unregulated expansion carries risks. The farmland conversion ban reflects a shift toward sustainable growth, aiming to protect both residents and investors from the costs of environmental degradation.
This is not the first time Bali has introduced land-use restrictions, but it may be the most decisive. If enforced consistently, it could stabilize the market by curbing oversupply, ensuring that future growth aligns with long-term environmental resilience.
What Investors Should Do Now
- Review Existing Land Assets: If you own land, verify its zoning and permits. Land already designated for tourism or residential use may gain value in light of new restrictions.
- Act Cautiously on New Purchases: Avoid speculative buys on farmland that could be locked out of development. Conduct thorough legal checks before committing.
- Focus on Compliance: Projects that respect zoning laws and environmental guidelines will be safer and more attractive in the long run.
- Consider Secondary Markets: With limited new supply, completed villas and properties with proven rental history may become even more appealing to investors seeking stable returns.
Read also: Administrative Essentials to Bali Property Every Homebuyer Should Know
The ban on farmland conversion marks a pivotal moment for Bali’s real estate sector. While it introduces stricter rules and may slow the pace of new projects, it also protects long-term property values by ensuring development is more sustainable and resilient.
For investors and developers, the key takeaway is clear: zoning compliance and environmental responsibility are no longer optional—they are central to successful investment in Bali. Those who adapt early and align with the island’s new direction stand to benefit from a more stable and sustainable property market.
