Some Thai-Indians have spent a generation or two in Singapore. Some moved in the 1940s and 50s, and others around the 1970s and 80s, and a few more recently moved to Singapore to look for new opportunities. Properties in Singapore have simple rules when compared to Bangkok:
• Condos outside the Central Business District (CBD) are 4x the value
• Condos inside the CBD are 5x
• Houses outside the CBD are 6x
• Houses inside the CBD are 7-12x
For an island about 720 sq. km, Singapore offers the most expensive real estate in Asia and possibly only behind New York, Tokyo, London, and Switzerland. So, let’s do a quick comparison based on the last transaction.
Take hotel sales, for example. The Duxton Reserve, a hotel managed by Marriott’s Autograph Collection, sold 49 keys for 62 years at THB 2 billion. One key for one year at THB 659,000 (leasehold). A recent recorded transaction in Chinatown for a five-star property was for 17 keys for 30 years for THB 33 million. One key for one year for THB 64,000 (leasehold). In this particular category, the price in Singapore is times 10.
Why does Singapore record such high prices?
Demand exceeds supply. With a land area about 8 percent the size of Bangkok, Singapore has much less to offer in land to build on. Secondly, regulations. Singaporean laws in financial services attract big money. In the last five years post-COVID, Singapore has attracted big money looking for a place to invest. A stable currency with a stable government that attracts money without asking too many questions. Money does not like to be asked too many questions because not all money is made 100% legally. Sometimes there are more questions than answers. And Singapore does not ask too many questions in this regard, not from military juntas in foreign lands nor any other sources.
So, Singapore attracts money looking for assets. As rental returns drive itself from five percent to one percent, Singapore calls itself a place to park your money. This drives real estate up for people not looking in particular for appreciation but instead looking for a place to lock in their riches. The likes of Eduardo Saverin at Facebook, or James Dyson of Dyson Consumer Products, and Li Xiting of Shenzhen Mindray Bio-Medical Electronics, have all decided to buy a home in Singapore to preserve wealth, not to grow wealth.
Then, there is the 10-year freeze. Post-COVID, Thailand has not seen real appreciation in land and asset value except for Phuket and Khao Lak. Bangkok has seen a relatively stagnant market since 2020 and will go through a turbulent Q4 2025 to Q2 2026 when billions worth of real estate bonds come due. Perfect Property PCL is trading at THB 0.11 per share, a shadow of THB 0.60 per share in 2022. Ananda Development is trading at THB 0.43 per share, again seeing a high of THB 2.43 per share. This is a loss of about 82 percent of its value since 2021. Imagine losing 82 percent of your value!
In order to solve Thailand’s economic problems, we need to look at its macroeconomics:
• Weak political governance;
• Low tertiary education levels;
• High household debts.
Thailand seems to be ailing on all fronts. The tourism economy seems to be the only sector that holds water.
But can we survive on one sector without manufacturing and service? These shares losing 80 percent of their value is a testament to weak governance. And unless some changes are made to the structural infrastructure of our economy, allowing outright foreign ownership of some critical assets, Thailand will be unable to attract the minimum quantum of foreign investment necessary for sustainable growth.
We need both financial capital and talent to bring back this economy. So far, the government and civil society still lack the necessary skillsets. Until we solve some critical parts of our economy, only high-end products like Scope and branded residences like Kempinski and Dusit Residences will be able to maintain value. The rest will be stagnant at least until 2028. When will we see a turnaround? When our leaders learn from neighbouring countries that transact real estate at 10 times what we do. 10 times.
Vimol Kogar, your advisor for big moves in Real Estate. For a talk, call 0816165987.