At MMI-Advisors, our expertise in investment management spans complex structuring, real estate advisory services, financial services, real estate strategies, portfolio, and asset management. We cater to a diverse clientele, including hoteliers, private real estate investors, and corporate advisory services. Today, let's delve into the burgeoning property market in Lombok and its evolution as a promising investment destination.

Lombok is rapidly emerging as one of Indonesia’s top five super-priority destinations. This strategic initiative by the Indonesian government aims to alleviate the tourism burden on Bali while showcasing Indonesia’s diverse attractions. With its pristine beaches and stunning natural landscapes, Lombok is undoubtedly becoming a must-visit destination for global travelers.

A key driver of Lombok’s development is the Mandalika Project, which spans over 1,175 hectares and encompasses three beautiful bays: The Kuta Mandalika Bay, Tanjung Aan, and Gerupuk. This ambitious project includes a variety of developments in advanced discussions such as a horsetainment estate, padel tennis venue, watersport station in Kuta Bay, a golf course in Bukit Merese, concert and entertainment venues, a wakeboard park, and the well-known operating MotoGP international circuit. These amenities are set to significantly enhance Lombok’s appeal as a premier tourist destination.

Recent discussions with the Indonesia Tourism Development Corporation (ITDC) suggest that the global infrastructure program for Mandalika is expected to achieve over 75% completion by 2035. This timeline is closely tied to the development of hospitality, services, and entertainment facilities within the masterplan, with intensive communication to attract international and national investors.

South Lombok has shown promising key performance indicators (KPIs) for real estate investment, driven by private developers alongside ITDC's efforts. Notable projects include Tampah Hills, Samara, Selong Selo, and Nagaindo. As a former asset and portfolio manager in the investment banking industry, I recommend focusing on hotspots in South Lombok such as Kuta, Tanjung Aan, Gerupuk, and the emerging area of Ekas to the east. Additionally, western areas like Are Guling, Selong Belanak, Serangan, Torok, and Pengantap are poised for rapid growth.

From our perspective, Nagaindo's Twin Peaks deploys an optimal real estate strategy, spanning over 10 hectares and featuring anchor businesses such as Segara Boutique Hotel and Boni Beach Hotel, alongside private villa development within a gated and fully serviced community cluster. Meanwhile, Tampah Hills is one of the most iconic developments in Indonesia, covering over 100 hectares with large plots of land and signature architect villa developments. With its turnkey real estate solutions, Tampah Hills is set for success.

Kuta sets the tone for Lombok's commercial activity, with a dynamic market attracting expatriates interested in developing operated villa clusters, boutique hotels, F&B outlets and recently the opening of Ocean View retail venue sets a dynamic commercial trend. This market is seconded by the Selong Belanak area. The investor persona often has a background in entrepreneurship,  hospitality or investment banking for mid to large-sized real estate developments. For smaller developments in Kuta or Selong Belanak, it is commonly expatriates from diverse backgrounds, who have fallen in love with the island and decided to either live here or develop a secondary residence, usually with a ticket size between $500,000 and $3,000,000 seeking to enter the property or hospitality market in South Lombok.

While some may refer to Lombok as "the new Bali," we at MMI-Advisors see this as an oversimplification. Lombok and Bali differ significantly in culture and landscape. Unlike Bali, which is in Asia, Lombok is in Oceania. Lombok's infrastructure planning anticipates substantial tourist influxes, positioning it as a unique destination rather than a replica of Bali.

Another key point to emphasize is the accessibility of Lombok. The airport can accommodate large planes and is set to expand connections to the Middle East (with Qatar Airways under negotiation) and Australia (Perth and potentially Darwin with Lion Air Group). Improved connectivity with Singapore and Kuala Lumpur has been positive, though pricing between Bali and Lombok remains a challenge. Enhancing flight access is crucial for Lombok’s growth, and we anticipate significant improvements in 2024 and beyond, thanks to the involvement of the Lombok government and the efforts of Angkasapura.

Current tourist numbers in Lombok show a mix of international and domestic visitors. Enhanced accessibility could substantially increase these numbers over the next two years. Accurate tourist counts are complicated by transit through Bali and Gili stopovers, but for 2024, the objective is to attain four million tourists for Lombok, with the split between local and foreign tourism being roughly 50-50.

Lombok’s commercial real estate sector is evolving, particularly in villa management. Investment returns on standalone properties can range from 10% to 20% ROI based on rental income, influenced by location, collaborator quality, and market positioning. Property management companies usually charge a fixed fee per bedroom ranging from $100 to $200, and a marketing fee calculated on the gross or net rental income depending on the corporation, ranging between 10% and 20%. Investors need to evaluate their financial planning extensively, accounting for OTA fees (Online Travel Agencies), direct marketing budgets if any, and the recruitment of human resources for tasks such as housekeeping, gardening, and pool maintenance.

We advise all clients to conduct thorough due diligence, whether developing independently or partnering with established developers. Verify certificates and contract contents with qualified professionals, certified builders, and trustworthy managers to ensure a successful investment. Additionally, proper ownership structuring and company incorporation are essential for sustainable and secure investments.

Lombok’s property market is on an upward trajectory, supported by government initiatives, strategic infrastructure developments, and private investment. With careful planning and professional advice, investors can capitalize on the opportunities in this burgeoning market. At MMI-Advisors, we are committed to guiding our clients through every step of their investment journey in Lombok.

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