Investment Feasibility of Luxury Villa Development in Canggu, Bali: A Financial and Sustainability Perspective

This study evaluates the financial and operational feasibility of developing a luxury villa project in Canggu, Bali, by analyzing three investment scenarios: 15, 20, and 25 villas. A financial assessment is conducted using key investment metrics, including Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, and Profitability Index (PI), to determine the most viable development scale. Additionally, this study examines the impact of sustainability considerations on long-term investment performance, focusing on cost efficiencies and market competitiveness. A sensitivity analysis assesses the effect of occupancy rate fluctuations on financial returns, highlighting the importance of risk-adjusted decision-making in real estate investment. The findings indicate that the 25-villa scenario yields the highest IRR at 13.69% and the shortest payback period of 6.7 years, making it the most attractive option in terms of returns. However, the 20-villa scenario offers the highest NPV at IDR 50.80 billion, providing a balanced approach between profitability and investment risk. The sensitivity analysis demonstrates that a 5% decrease in occupancy significantly reduces NPV, reinforcing the need for strategic pricing and operational flexibility. This study contributes to real estate investment feasibility analysis by integrating financial performance, sustainability considerations, and risk assessment, providing valuable insights for investors and developers in Bali’s luxury hospitality sector.