Sari Club landowners agree to sell site for Bali bombing memorial

The threat of the Sari Club bombing site in Bali being turned into a restaurant complex may have been averted, with the owners saying they're willing to sell.

A tourist takes a picture at the former site of the Sari Club. Source: AAP

The site of the Sari Club, where 88 Australians died in the 2002 Bali bombings, could yet be saved for a peace park after the land owners agreed to sell rather than develop the site.

But the owners are asking for $A4.9 million for the site and it's unclear who would come up with the money.

The owners' offer to sell the land, rather than go ahead with a restaurant development, was made after a meeting in Bali with members of the Bali Peace Park Association, the ABC reported on Monday.

The site in Kuta has remained vacant for most of the 17 years since a car bomb destroyed the Sari Club in October 2002, minutes after another bomb exploded at the nearby Paddy's Bar, with 202 people killed in total.

The land owners say they want compensation for loss of future business on top of the sale of the site, the ABC reported.

A Bali Peace Park Association spokesperson said he was disappointed and "not optimistic". The Australia-based association represents survivors of the bombings.

Pictures of 2002 Bali bomb victims are attached on a fence at the former site of the Sari Club. Source: AAP

Bali Governor Wayan Koster had offered the land owners an alternative site about 1.5km away in exchange for the Sari Club plot, allowing it to be turned into a long-planned memorial park.

The governor's offer was to Sukamto Tjia, who has owned the site in Kuta since 1997.

He said he had been open to selling the land to the Bali Peace Park Association but years of talks went nowhere and he had decided to develop the site.

Australian Prime Minister Scott Morrison has criticised the decision by Indonesian authorities to approve the five-storey development, describing it as "deeply distressing".

He said the Australian government had provided support and funding to establish a peace park on the site.

"The Australian Government will continue to work with the Indonesian authorities to seek to resolve this issue and ensure the memories and families of all those who were murdered in that shocking terrorist attack are properly respected," Morrison tweeted.