Bali: An island to fall in love with

The backpackers' paradise of Bali also offers some of Asia's most stylish and affordable property

Its very name conjures up images of ice-white beaches and swaying palms, and anyone who's visited this part of Indonesia will know that the "island of the gods" has it all.

Hordes of backpackers have put the island on the tourist trail, but today's visitors are often seeking something more - they are coming here to buy.

Sadly, in recent years Bali has attracted attention for the wrong reasons. Two terrorist attacks have devastated tourism and seriously dented Bali's image as a peaceful island.

Australians have always formed the mainstay of visitors, earning Bali the rather unfortunate tag "the Australian Costa del Sol". Antipodean visitor figures have plummeted, but Brits are more stoic, says Ian Macaulay of the estate agency Elite Havens: "The British are less inclined to follow travel warnings. Europeans generally take everything in their stride."

Macaulay tires of people asking whether Bali is safe. "I wouldn't live here if it wasn't. I worry more about the traffic than about getting blown up."

Born to British parents, Macaulay lived all over the world before he came to Bali in the 1990s. "I don't think there's anywhere in the world where you can still find such a distinct cultural identity, yet with all modern amenities. It sounds cheesy, but it really does touch the soul."

Macaulay finds that buyers usually discover the island while backpacking in younger days or working in the Far East. "Many have been based in Hong Kong, and they start looking around and find Bali." He believes that the 13-hour flight to Singapore plus a three-hour connection requires "a certain dedication" to buy here, but most British buyers are unfazed, exploiting flights costing as little as £400. "They are comfortable with overseas ownership, and the community here is strong."

Two other factors seem to attract buyers. Balinese style and architecture draw heavily on its culture, and many homes are built with a focus on indoor/outdoor living. Compared with its rival Thailand, Macaulay believes Bali wins easily on style and price. "I'd estimate that prices are typically 40 per cent lower than Thailand. Here, you have access to much better local craftsmen, and the great climate allows you to do more fanciful things."

Most agents report that buyers typically want serviced villas with all the amenities of a hotel. Prices, even for homes with staff, are attractive. A Thai villa could cost US$600,000 (£330,000) or so, but a comparable villa in Bali can be had for less than $350,000.

In association with Knight Frank, Elite Havens is selling Livbali Villas in Jimbaran Bay, Bali's "golden mile", where properties with private pools start from $285,000.

A resale villa in Pererenan, 40 minutes from the airport, has thatched roofs and a pool overlooking rice paddies and jungle; it's for sale at $425,000. FX Property is selling Jegeg Bali Villas, on a quiet site near the famed Kudeta Restaurant (serviced, with private pool) for $300,000.

New hotspots are emerging. The Bukit, a peninsula in the south, has been overlooked as it lacks infrastructure, yet its potential is attracting investors. Its west coast draws surfers to a scenic coastline where the surf crashes in; its eastern side has clear waters protected by coral reefs, making it perfect for children. Bukit won't be a secret much longer; the renowned Bulgari Hotel will open here this autumn; the Banyan Tree is planning a project and two new golf courses are on the way.

Erna Low has just launched Alila Villas at Uluwatu on the Bukit. They are not yet built, but the designs (above) are stunning.

Renowned for its stylish boutique hotels, Alila aims to provide full hotel services at this small collection of privately owned villas designed by the award-winning Singapore architects WOHA. Each open-plan villa features infinity pools and cabanas where you can sleep under the sky. Owners enjoy amenities such as personal butler service, restaurant and cliff-top bar. Prices range from $400,000 for one-bedroom villas up to $1.35m for three bedrooms, guaranteeing owners 30 days' use annually and rental returns of 6 per cent for two years.

Foreigners can buy property leasehold, with automatic renewal after 30 years, or set up a company, which gives a more permanent form of ownership and which enables them to take out mortgages.

Many buyers are finding that the island also offers business opportunities. A British fund-manager based in the UK has bought the Istana, a collection of villas in Uluwatu, which he intends using himself and renting out.

"I know the Far East very well, but I'm attracted to the beauty of this place; it's much more culturally interesting than Thailand and the Balinese were very kind to me."

Elite Havens: 00 62 361 731 074; www.elitehavens.com

FX Property: 0700 593 1006; www.fxproperty.co.uk

Alila Villas through Erna Low Property: 020-7590 1624; www.ernalowproperty.co.uk www.alilavillasuluwatu.com