The stock market in Thailand is down 46 percent from five years ago. We are among the worst performing markets in the world. How does this reflect on real estate? Take Italian Thai Development PLC as an example: trading at between 24-25 satang compared to slightly over THB 3 per share in 2021.
If you study our main bourse (stock market), the likes of Ananda PLC, Sansiri PLC, Raimon Land PLC, and many others are basically trading penny stocks. Apart from our Blue-Chip top 100, the rest of our bourse is a catastrophe.
If you take just one stock from the New York Stock Exchange (NYSE), for example, Nvidia—it was going for USD 9 five years ago. And today? Trading at USD150. So, how does this affect your real estate portfolio?Currently, some of you enjoy returns of up to five to eight percent on your portfolio, but unless you are totally focused on three or four of your assets, your portfolio will average two to four percent on an NPV (net present value) on your property. The masters of this trade, who spend their time on rent maximisation, can achieve five or seven percent, rarely more. My experience with the highest per square metre rents has focused on Siam Square,MBK Center, and Sukhumvit Soi 3/1.
There is a positive correlation between footfall and rent. Generally, the higher the footfall, the higher the rents. For those of you looking for passive income, the general rule is as follows:
• THB 1 million to THB 10 million offers you three to four percent
• THB 10 million to THB 50 million offers you four to five percent
• THB 50 million to THB 100 million offers you six to seven percent
Who will be the winners and losers in this game moving forward? Land-denominated speculators. I recently sold a commercial plot of 800 sqm. After the completion of the sale, we have an offer that is 25 percent higher than the transacted price. This does not ever happen in residential areas, but it can happen in commercial and retail lots. As an example, El Gaucho Steakhouse pays premium rent for premium locations. They can achieve revenue of over THB 10,000 to THB 20,000 per square metre each month, which means they can afford to pay a rent of up to THB 1,800 to THB 2,500 per square metre each month. Rent is directly correlated to your revenue and your prohibited. In some cases, a foreign exchange dealer can take up a ‘super prime’ within an airport arrival lounge, paying up to THB 10,000 per square metre a month because they could possibly do a TSR (Total Shareholder Return) of THB 2 million to THB 5 million per day at the airport.
For the rest of us with more modest capacity and funding, apart from limited opportunities in Phuket, Samui, and Krabi, Bangkok will offer modest returns in all segments. The best upside I see is in Phrom Phong, where I believe prices will average nothing less than THB 1 million per wa by 2030. The worst performance I see is markets like Pratunam and Sampheng where valuations will fall about 25 to 35 percent by 2027/28. The revenue of trading at between THB 10 million to THB 100 million per shophouse per year will be replaced by spoiled coffee operators doing average revenues of THB 2 million to THB 5 million/annum on a plot that their fathers own, valued at THB 30 million to THB 40 million. The net take-home on the tea and coffee retailers will be under two percent/annum of the value of the underlying asset.
To sum it up, we are in a market of asset deflation outside Sukhumvit Soi 1 to 63. Everything else will be down 10 to 30 percent in the next two years. Hopefully, we reach parity by 2027 and come back in 2028. We need good government and sound policies.
I apologise for my cynical outlook for 2026 to 2028, but I see brighter skies in Dubai, Abu Dhabi, and Riyadh, where investors are putting big money behind big projects. Our consumer debt is a vicious cycle taking us nowhere, and unless we are a technology-led economy, we will be a massage-led economy, one compression at a time.
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