The Value of Seminyak

Discerning investors in vacation properties know the key rule in real estate: location, location, location! Seminyak is considered to be the most sought after area of Bali, its value originating from a mix of elements unparalleled by other locations on the island. Over the past five years Seminyak, and the Oberoi area in particular, have seen a dramatic growth unmatched by any other location in Bali. The Layar lies right in the heart of Oberoi, and within a few minutes walk are the undisputed best beach bars, refined restaurants and boutiques of the island. The offer is complemented by a countless number of popular restaurants, spas, art galleries, home décor galleries, bars and clubs. Even the best gourmet shops are here. And then there's the ocean, with the famous Legian beach, which is ideally suited for entertaining small children as well as surfers and hosting the most frequented sunset gatherings of the island on a daily basis.

The value of Seminyak lies in what it has to offer as much as in its privileged position on the island. Bali is famous for countless activities and attractions on offer to its visitors, and Seminyak is the ideal location to easily access and enjoy all facets of Bali. Almost any attraction in Bali can be easily reached within 30 to 45 minutes drive thanks to the proximity of the newly completed Sunset road: the white beaches of the Bukit, whether you long for a quite day in the calm waters of Nusa Dua, or the spectacular waves of Dreamland or Uluwatu; golf courses, with the Nirwana Bali Golf Club in Tanah Lot, the Bali Golf & Country Club in Nusa Dua, or the Handara Kosaido Country Club in Bedugul; Jimbaran for a sunset fish barbeque; Ubud with its art and craft market, art galleries, river rafting, and relaxed atmosphere; rice field vistas, volcanoes, lakes, temples, thematic parks, water park, bungee jumping, mountain biking . it is all within easy reach, even Bali's premier sport's club, The Canggu Club is only 10 minutes away.

The combination of attractions and a superb location have been the engine for recent dramatic growth and will be the key factor for Seminyak to retain its role as THE number one holiday destination in Bali. Limited land left for development in Oberoi means capital growth is more than an opportunity; and 90 years of lease secured in your personal name means not only you but also your children will enjoy its returns. The land acquired by The Layar has already increased 20% in the past 18 months and is predicted to keep rising over the next years.

Neighbouring land is already fully developed with one storey residential developments (Hotel Villa Lumbung, Sentosa, The Kunja); which means no construction will disturb your peace in the future, no surprises will appear next door, and the whole area will assume the status of an upmarket residential enclave that will contribute to its capital increase.

The Value of The Layar

Seminyak has attracted several players in the higher segment of the hospitality industry; early comers have established first class ocean front hotels that have become landmarks for Seminyak itself, like The Legian and The Oberoi. Most recent years have witnessed a trend towards "villa hotels", compounds of independent villas, one, two or three bedrooms, fully serviced like hotels, that have filled a hole in the market, providing a private environment similar to the private villas Bali has become famous for, yet with the services of a hotel and of a size that makes them comfortable for couples and families as well as small groups of friends. The Seminyak/Oberoi area is now dotted with these kinds of resort, like The Villas, Alu Bali, The Ahimsa, The Dusun and Villa Air Bali, which have proved that villa hotels are definitely a winning concept. They have the size to enjoy economies of scale in the management and gain access to the wholesale distribution market, unlike isolated private villas which are distributed through a plethora of rental agencies, but cannot access wider distribution channels.

The latest of these resorts have been developed as managed properties: the developer rather than keep ownership of the whole compound, sells each villa to an individual owner/investor, keeping the right to manage the villas while not occupied by the owners. This has proved to be a win-win concept: for investors willing to own their dream house in Bali, while at the same time making a sound investment with rapid pay-back thanks to rental revenues, and enjoying a hassle free property in the Island of the Gods; for developers willing to leverage financially the capital buyers invest in their home. Most well known examples of this concept are developments like The Kunja, Sentosa and C151.

The Layar represents the latest addition to this segment. Like in any industry, first comers have the advantage of building a position in the market with relatively limited competition, while the followers can build on other's experiences, avoiding pitfalls, and positioning themselves ahead of existing competition. The developers of The Layar have carefully studied the existing offer, client needs as well as ongoing projects, and have developed a five star estate that clearly stands out among the competition. Several of The Layar's features constitute real competitive advantages that will ensure a premier position in the rental market:

• Generous spaces: The Layar's villas have plot sizes among the largest in Seminyak
• Open views: the large park-like environment at the heart of the estate together with GM's careful design provides a sense of space and openness unrivalled in Seminyak
• Sophisticated design: the unique rooflines combined with the custom made interiors make The Layar, without any doubt, the most sophisticated development design-wise in Seminyak
• Uniqueness: with four prototype designs to start with and numerous opportunities to personalise, each villa will look different from the others. This will make rental clients feel they are in a unique villa with its own spirit rather than in an industrialised concept, adding a personal touch to the whole holiday experience

Ownership

The Layar is being delivered with a 90 years lease, offered in two packages:

• 10 villas have 50 years of lease paid upfront with a secured option of 40 years.
• 12 villas have 50 years of lease paid upfront plus two secured consecutive options of 20 years.

The options have been secured in all details, and will be exercisable during the last year of paid lease, at the market price of the land un-built.

Leasehold is the only legal way for a foreigner to own a land in Indonesia, and lease agreements will be registered directly in buyers name without the need of an Indonesian nominee.

All lease agreements and legal documentation have been prepared, and due diligence carried out, by Austrindo Law Office, an Australian owned and managed law firm with several years of experience in Bali and Indonesia.

Management Program

For those who decide not to reside in their villa, The Layar offers a comprehensive and flexible management and rental program. Management services include all those that can be expected in a world class five star resort, from twice a day cleaning of the villa, garden and pool, to reception, butler and concierge service, shuttle limousine within the Seminyak area, golf buggy service within the estate, around the clock room service, private chef upon request, and 24hr security service. A total staff of 84 people is planned to provide attentive service under the supervision of an experienced General Manager.

The rental program has been carefully studied in order to maximise and balance returns among the owners and the developer. The Villas Rental Revenues are pooled together, and distributed among owners through a simple formula that takes into account the nights in which the villa is available for rent, the number of bedrooms in the villa, and the published rental rate of the villa. In this way, the intrinsic differences among each villa are taken into consideration when distributing the revenues, ensuring no owner is either penalised or advantaged. The Villas Rental Revenues are calculated and accounted every day, and distributed to owners on a monthly basis.

The costs that an owner must sustain when participating to the rental pool are grouped in two families:

• A fixed Estate Fee . This is an annual fee that covers the costs incurred by the Estate Manager in providing all the common services, and a management charge for the provision of the services and the use of the facilities owned by the Estate Manager. Services include the cleaning and maintenance of all common areas like garden, pathways, water features; 24 hr reception, security and shuttle service; the distribution of water, electricity (including back-up generator), internet and satellite TV, and sewage systems; all administrative and legal expenses to run the estate including insurance, relationships with the local community and daily offerings. All these cost are budgeted annually and paid for in advance. For the first year they have been calculated as 4,000 USD for a two bedroom villa, and 6,000 USD for a three bedroom villa. In case of surpluses at year end, these are carried over to diminish the cost of the following year. This is the only fixed cost an owner must pay.
• A variable Marketing Fee . This is a monthly fee equal to 45% of the Villas Rental Revenues. This fee covers all the operational costs to run the villa and rewards the management company for its expenses and success in marketing the villa. No other hidden costs are present.

This system of distributing revenues and charging costs have been studied by The Layar's developer and marketing team using the experience honed in years of work in business developments across a variety of industries around the world as well as in the hospitality business in Bali, and after having studied the real economics laying behind the management of a villa complex. There are several advantages of such a system including:

• Estate Manager's and owners' profits are linked together. This ensures that owners' interests and developer's interests are aligned towards a common objective: the increase of rental revenues.
• Operational costs to run the villas are the sole responsibility of the Estate Manager. Several systems adopted in Bali by other developments charge the operational costs to owners while the Estate Manager is the one who is actually in control of these costs. These systems might lead to situations in which the Estate Manager is motivated to increase rental revenues but not to control operational costs, whose burden is borne solely by the owners.
• Transparency in accounting: rental revenues are electronically registered daily and once these are determined owners know what their income is.

The villas will be distributed through a multitude of channels and markets, and marketed using the most advanced techniques. The developers and marketing team, thanks to their experience in Bali, already have access to a network of over 100 booking agents specialising in private villas in Bali. This will constitute just a small piece of a larger mosaic. Most important for a large development like The Layar has access to the wholesale market, made of tour operators, travel agencies, airlines, and Internet booking/holiday portals. Main players in the most important markets have already been identified and distribution agreements will be finalised in advance before the official opening, planned in first half of 2009. With the show room unit completed by end of 2007, top quality marketing material will be prepared in advance and visits by operators organised. Finally direct marketing will be heavily pursued, through local advertisements, specialised press overseas in the most relevant markets and internet campaigns.

Please contact us to receive financials projections for The Layar.