Bali real estate has undergone a dramatic transformation due to the rise of Airbnb, which democratized short-term rentals. From 2011 to 2023, Airbnb’s global search popularity surged by 1,200%, outpacing traditional platforms like Expedia. This growth spurred a construction boom in popular tourist areas such as Seminyak and Ubud, with developers converting leasehold properties into luxury villas marketed as passive income opportunities. However, the lack of regulatory caps on new developments has led to a market oversaturation, with over 30,000 registered vacation properties now competing for travelers. This glut forces owners to cut prices during off-peak seasons, with the average daily rates for two-bedroom villas dropping 22% in 2024 compared to developer projections.
The saturation is further exacerbated by Airbnb’s algorithmic prioritization of high-occupancy listings. This incentivizes property owners to accept lower rates to maintain visibility. For example, a 2024 study of Canggu properties revealed that villas offering discounts of 15–20% below market rates achieved 68% occupancy, while those sticking to developer-recommended rates struggled to exceed 45%. This “race to the bottom” negatively impacts profit margins and contradicts the stable returns originally promised by developers.
As a result, investors who bought properties during Bali real estate 2022–2023 boom now face diminished equity. Appraisals increasingly reflect the operational realities of a saturated market, rather than the aspirational projections that once dominated sales pitches.