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recent study by property consultant Cushman & Wakefield has found that the absorption rate of condominium hotels or '€œcondotels'€ in Bali is expected to decline this year on the back of a significant increase in supply.

Arief Rahardjo, Cushman & Wakefield'€™s head of research said that within the next three years, the island would see around 8,000 units of new condotels, in addition to the total of 5,000 units as of June 2014.

Data from the firm released on Wednesday showed that in 2011, the rate of condotel sales reached around 95 percent before they slowed to an average of 90 percent over the past years.

'€œThe decrease, however, will not be very severe this year. We have predicted that the sales rate for the existing projects will ease to 87 percent by the end of this year from the current 91 percent,'€ Arief said on Thursday.

Condotel is a real estate concept that sees hotels selling units to function as vacation homes to the public. When not in use by the owner, the units are rented as hotel rooms.

Arief said the hotel occupancy rate in Bali, including condotels, had been decreasing to an average of 70 percent as of 2013. Data from the firm shows that the occupancy level reached more than 80 percent in 2010.

'€œThe occupancy rate is decreasing particularly because of the increasing number of new hotels entering the market, creating tighter competition,'€ Arief said.

However, the firm said that the strong growth of both foreign and domestic and foreign tourism, which reached 13 percent per year would likely help boost hotel occupancy levels.

'€œWithin the overall hotel industry, demand levels in excess of 60 percent are still considered to be healthy. So even though we see a decline, it is still within a healthy level,'€ David Cheadle, the firm'€™s managing director said.

'€œWe actually don'€™t see too much pressure on the property supply perspective compared to the fact that it is still supported by the 12-13 percent per annum growth in passengers arrivals,'€ he continued.

According to the firm, most of the condotels in Bali are concentrated in the most popular tourist destinations, such as Kuta and Seminyak, with several projects proposed in the southern part of Bali, particularly in Ungasan, Nusa Dua, Tanjung Benoa and Pecatu.

In terms of location, of the 5,000 existing units as of June, 28 percent were in Pecatu and Ungasan, Kuta and Tuban had 27 percent, and Legian and Seminyak had 26 percent.

Out of the 8,000 projected units, most will be centered in Legian and Seminyak (29 percent), Jimbaran (24 percent) and Nusa Dua and Tanjung Benoa (14 percent).

Prices offered for the marketed projects start from around Rp 30 million (US$2,567) per square meter to $6,000 per square meter.

Examples of the existing condotel projects in Bali include the Alila Seminyak, Tamansari Jineng, Swiss-Belhotel Kuta, Horison Seminyak and Harris Nusa Dua.