The shaman inhaled the incense smoke and flicked flower petals into the tropical air. My husband and I were sitting on a patch of earth on the Indonesian island of Bali as the local priest, Ida Bagus Putu Wija, communed with the resident spirits about our vague plans to build a holiday home there. Eventually, the Balinese wise man gave us the news that would literally determine the shape of our future villa. In the parallel spirit world of this devoutly Hindu island, our peaceful stretch of riverbank was actually a bustling spirit town, far bigger than the nearby human village.
What exactly did this spirit city possess, I inquired? The shaman replied: on the lower part of our terraced land, near a rustling stand of bamboo, the spirits had built their own pharmacy, auto-body-repair shop and even a food stall that served fried rice. No infinity-edge swimming pool would be going there, lest we flood the otherworldly denizens picking up a prescription or delivering a motorcycle for a tune-up. We also would need to leave a section of riverbank undeveloped because a local demigod traversed the land on his daily pilgrimage to a volcano up north. My husband and I eyed each other. We'd been prepared for the Bali property market to throw up a challenge or two. But a hopping spirit metropolis and a commuting demigod weren't exactly what we had expected.
Who, sitting at a computer all day, hasn't imagined owning a personal slice of paradise, lush with bougainvillea and frangipani, perhaps a sea breeze carrying the scent of exotic herbs and barbecued delights? Southeast Asia abounds with such dream locales, but two destinations trump all others: Bali and the southern Thai island of Phuket. It is on these two chunks of land, a mere 2,400 square miles (6,200 sq km) combined, that thousands of expatriates have bought tropical vacation homes. Indeed, a global real estate slump notwithstanding, Bali and Phuket's residential sectors are still booming, in part because most of the foreign-owned property on these two islands isn't bank-financed. In Bali, despite a pair of terrorist bombings in 2002 and '05, land prices have increased by at least 20% annually over the past three years, with some prime beachfront land going for double what it did a year ago. In Phuket, which suffered a devastating tsunami in 2004 followed by political jitters because of a 2006 coup, prices for sea-view property on the island's west coast jumped upward of 30%, year on year, in July.
But is there only one heaven on earth? As the holiday-home market has taken off in Asia, Phuket and Bali have nurtured a healthy rivalry with each other, trading off the honor of being listed as Asia's best island in travel magazines. Phuket aficionados talk loftily of the Thai island's superior beaches and cheap but professional hospitals, while Bali fans boast of the island's volcanoes and great surfing spots. Nevertheless, the business of vacation villas isn't a zero-sum game, largely because the members of the international jet set who dig Phuket are a breed apart from the culture vultures who flock to the Indonesian island. "People are usually either Bali people or Phuket people," says Dominique Gallmann, the Swiss-born director of Exotiq Real Estate, which has offices in both Thailand and Indonesia. "They attract different crowds, so the idea of the two islands fighting over the second-home market isn't really true."
Despite the seeming similarities balmy islands in Southeast Asia with international airports, abundant marine life and plenty of cafés serving espresso and freshly baked croissants Bali and Phuket offer vastly different real estate experiences. First off, Bali is much cheaper than Phuket. Because the Indonesian island is so much larger than its Thai counterpart, Bali offers a wider diversity in terms of topography: verdant rice paddies, soaring volcanoes and several distinctive urban centers. The Indonesian island cherishes its deep cultural roots, with traditions interwoven into daily life, not manufactured for some cheesy ethnic show at a beach resort. But because of these bountiful customs, Bali teems with taboos that can trip up even veteran expatriates. By contrast, Phuket's real estate market is simpler to negotiate with several top international property agencies open for business. Buying a condominium is so straightforward that an increasing number of people particularly from Hong Kong, Singapore and the Middle East are purchasing for investment purposes. Yet all that ease, along with better roads and telecommunications, comes at prices that are roughly 40% higher than those in Bali. And for potential buyers who are concerned about cultural authenticity, Phuket underwhelms. Much of the island's vacation-property development follows an anodyne architectural style that could just as easily be in southern California or the Costa del Sol. Phuket may be in Thailand, but large swaths of it don't feel very Thai.
My husband and I chose Bali because we like things a little messy. We're both journalists who enjoy chatting with the shaman, exploring bumpy back-country lanes and trying spicy stews at the open-air restaurant a few rice paddies away from our land. But I recognize that not everyone finds charming the idea of a spirit tax a contribution to the village partly based on how many spirits reside on your land, and a calculation, mind you, that can only be made by the village elders. Indeed, if you're looking for a stress-free condominium with access to yacht marinas and golf courses, Phuket is the right choice as long as you have the cash to afford it. "There's a strange situation in Phuket," says Risinee Sarikaputra, head of research for property consultant Colliers International in Thailand. "You have low-end residential units that are bought by Thais, and you have luxury units that are bought by foreigners. But there's no real middle-class level. It's either low or high."