An in-depth special focus on Asian real estate hot spots, as well as key interviews with important industry figures and analysis
In Depth: Lombok: Paradise found?
Jun 12, 2012
By Samantha Coomber.
2012 is shaping up to be a momentous year for Lombok, a stunning Indonesian island yet to reach its potential, but a new international airport may change all that.
The Indonesian government is finally waking up to Lombok’s huge potential. The island is blessed with spectacular natural beauty, its resources surprisingly under-utilised and its beaches considerably less crowded and more pristine and tranquil than those on its famous neighbour 32km to the west. Committed to opening up Lombok to international travellers and developing tourism, Indonesia’s central and provincial governments are actively promoting both Lombok and its neighbouring island Sumbawa in West Nusa Tenggara Province as Indonesia’s second tourism destination. An official ‘Visit Lombok & Sumbawa 2012′ campaign hopes to attain a goal of one million visitors in 2012 for Lombok- Sumbawa (the unofficial 2011 figures are 700,000 tourist arrivals), but the launch of Lombok International Airport (LIA) – or Bandara Internasional Lombok – on October 1, 2011 may be the real catalyst to Lombok’s tourism and economic development.
The price of arrivals
At an estimated cost of IRP946 billion (US$22.5million), the much delayed LIA is located in Lombok’s undeveloped central region, 40km south of provincial capital, Mataram. Five times the size of the island’s previous and now defunct airport, Selaparang, LIA marks a serious attempt to raise the island’s underachieving tourism industry. LIA is reportedly able to accommodate larger aircraft, such as the Boeing 747 and Airbus 320, and up to 3million passengers annually, Plans are already underway to extend the runway to attract direct international flights. “Hopefully the new airport can support the development of international tourism,” stated Indonesia’s President Bambang Yudhoyono at LIA’s official inauguration.
So far, only Garuda and Silk Air operate international flights to Lombok, but Malaysia’s low-cost carrier, Air Asia, plans to add Lombok to its destinations and Russian charter flights are also starting to arrive. In many ways, the new airport represents a typical ‘build-it-and- they’ll-come’ strategy, with officials assuming that international airlines will automatically start arriving. Much however, depends on market demand and whether Lombok can attract enough interest for international airlines to add it to their direct routes.
Overall, Lombok’s increased tourism development has prompted a trend in low-key but upscale boutique hotels, villas and resorts, but the island is also fast gaining interest from foreign real estate investors and individuals seeking an alternative to the increasingly saturated Bali market for property purchases. Lombok’s land prices are still very competitive with potential for extremely good returns, and local officials are attempting to reduce red tape and make investment procedures simpler.
LIA’s opening has also prompted infrastructure improvements and road upgrades, especially those connecting key tourist hubs such as Senggigi.
Tips for investors
1. Familiarise yourself with Indonesian land laws and foreign ownership structures.
2. The price of a certain piece of land may vary greatly depending on existing or planned infrastructure, so do the necessary research into future projects.
3. Unlike Bali, Lombok is a Muslim community so expect a more conservative social environment.
Development is still mainly concentrated along the north-west coastline, including on the famed Gili islands of Meno, Air and Trawangan – Lombok’s biggest assets to date and also the most popular destinations. However, many of Lombok’s untapped locations still have the potential for big investment and tourism development. The remote, spectacular southwest region is now experiencing an upsurge in investment, especially around Sekotong and its outlying islands – all tipped for major development and land sales. With LIA finally open, the long-delayed Sundancer Resort project in Sekotong is back on track, offering investment opportunities that range from luxury apartments, villas and exclusive estate retreats to commercial premises and with new infrastructure projects gradually opening up the area is slated for big development.
“A year ago, beachfront land here was going for about RP1(US$100) to RP2 million (Us$200) per Are (100 sqm), now it starts at RP15m (US$1,600),”said Callum Mackinnon, director of property development company, PT Lombok Solutions.
It is Lombok’s south coast, however, that will most likely reap the most benefit from LIA — an area unsuitable for agriculture, but boasting dazzling white beaches, Caribbean-hued bays and world-class surf. Currently, the sole tourist centre is Kuta, a low-key surfer’s hub, with the south coast’s only upscale resort being Novotel Lombok. With LIA now just 16km north-west of Kuta, the area is primed for rapid expansion, and increased awareness of a potential boom is igniting an investment frenzy. Not only will LIA make tourism in the south more accessible; the area is earmarked as a prime area for investment and tourism development, so government officials have vowed to invest heavily here in infrastructure and upgrades.
Lombok’s most ambitious project to date is Mandalika Resort Development (MRD), spanning a 1,175 ha section of the south coast, with 7.5km of pristine beaches stretching from Kuta to Gerupuk Bay.
Lombok south coast
Originally slated for a US$600m world- class resort project by U.A.E’s Emaar property company, global economic conditions forced them to withdraw in 2010. With an estimated US$3 bilion investment, the re-launched MRD is projected to become Indonesia’s new premier destination.
The state-owned Bali Tourism Development Corporation, responsible for Bali’s Nusa Dua complex, is appointed developer-manager and is working with several private construction companies. Development is projected to take up to10 years, opening in stages – the first, around 2015. Plans for this integrated resort development include high-end hotels, resorts and residences, integrated theme parks, a marina and a seaport, 18- hole Jack Nicklaus golf course, convention centre and F1 racing track, surrounded by a 3,000ha conservation zone. MRD is now also a designate National Tourism Special Economic Territory.
Kuta Heights Development is another project moving forward fast. The New Zealand-owned, residential investment property company also realises Kuta’s potential. “Our certified land is priced at less than a fifth of the cost in Kuta, Bali,”said Kuta Heights Rosalie Dobson. “The market started getting busy within the last year – the new airport seems to be bringing in huge investment to the south. We were selling plots around the US$25,000 mark in 2011. The cheapest is now double that and new ones will be up around US$75,000.”
Novotel Lombok, superior guest room
Such growth will certainly draw a whole new wave of investment interest in Lombok’s property market, as it is one of the region’s few resort destinations yet to peak in terms of price points for land and property. “The property market is definitely booming, with prices increasing dramatically in the last eight months,” added Mackinnon. “What Lombok can offer is affordable opportunity – purchasing beachfront land and building a nice retirement home for around US$400,000.”