What are the real risks of buying off-plan in Bali?

Off-plan is sold on a discount to completed stock and a projected yield. Both are real. So is the fact that you are funding construction against promises.

"The permits are coming"

This is the single most common sentence in Bali off-plan, and it is not a status.

PBG is the building approval. SLF confirms the building is fit for use once complete. A developer telling you these will be processed later is describing an intention, not an approval.

Ask for the application receipt and the permit numbers. An application that has been submitted has a paper trail. One that has not been submitted does not.

What to establish before any money moves:

• Has a PBG actually been issued, or merely applied for?
• Does the approved design match what is being marketed to you?
• Is the plot's zoning consistent with the completed building's intended use?
• If it is an existing structure being extended, does the existing part have its own PBG?

A completed building is not proof of a legal building. An unbuilt one is not even that.

The licence risk that is new

Since 22 July 2026, several accommodation classifications are closed to new foreign-owned companies in Bali, villa and homestay among them.

That matters enormously off-plan. A project marketed in 2025 on the basis that buyers would operate nightly rentals through their own PT PMA may no longer have a route to do so. The building can complete exactly as promised and the income model still fail.

Ask which classification the operating entity will use, and whether it is open for new registration today.

Who holds the land while you wait

Establish what you actually acquire and when:

• Is the land held by the developer's company, or by a third party?
• What happens to your money if the developer becomes insolvent before completion?
• Are payments staged against verified construction milestones, or against dates?
• Is your interest registered anywhere, or is it purely contractual?

If your only protection is a contract with a company that owns nothing, that is the risk in one sentence.

The completion promise

Bali construction timelines slip. Assume they will and ask what happens when they do:

• Is there a longstop date after which you can walk away with your money?
• Are there penalties on the developer, and are they meaningful relative to your deposit?
• Who carries the cost if permits force a design change?
• What specification is guaranteed, and what is "or similar"?

The yield projection

Every off-plan sale comes with one. Put it through the calculator with your own occupancy assumption and the actual lease term.

Projections routinely omit platform commission, PB1, refurbishment reserve, and, on leasehold, the amortisation of the premium. A projection that cannot survive being typed into a spreadsheet was not built to.

The order of operations

Land → owner → agreement → zoning → permitted use → classification → PBG → SLF → operating licence.

Off-plan asks you to pay at the start of that chain and trust the rest. That can be a reasonable trade at the right discount, with the right developer, on a plot where the chain demonstrably works. It is not reasonable on assurances.

What you are actually signing

Off-plan means paying today for a building that does not exist, on land you do not control, on the strength of a contract with an entity whose capacity to perform you may not have verified.

Every risk in Bali property is present, plus construction risk, plus counterparty risk. It is the highest-risk configuration available in this market, and it is marketed as the most attractive.

The failure modes

Guaranteed returns deserve particular scepticism

A guaranteed yield is only as good as the entity guaranteeing it. If that entity is a special purpose company formed for this project, with no assets beyond the project itself, the guarantee is worth what the company is worth when the guarantee is called.

Ask who is guaranteeing it, what they hold, and what happens if the project underperforms. If the answer is that the developer will cover shortfalls from other projects, ask to see those projects.

Diligence that actually helps

• Confirm the land title exists and is held by the entity you are contracting with, before any deposit
• Confirm PBG has been issued for the design being sold
• Look at what the developer has completed before, under the same company name, and visit it
• Speak to buyers from a previous project the developer did not select for you
• Check who the shareholders and directors actually are

Structure the payments

Tie every tranche to an independently inspected construction milestone, verified by someone you appointed and pay. Not by the developer's own project manager, and not by photographs.

Front-loaded payment schedules transfer your leverage to the developer at the start. Once they hold most of the money, your ability to compel completion is whatever the contract gives you against a company that may hold nothing.

The honest position

Off-plan works when the developer is established, the land and permits are verified, and payments follow inspected progress. It fails when buyers pay for renders on the strength of a brochure and a promise.