This is an analysis of investment alternatives in Thailand, Vietnam and Indonesia.  For USD 100 million, an investment strategy of will mostly be allocated to mixed-sector property portfolio in Indonesia where 10% will be invested in a REIT or similar structure in Indonesia and Thailand.

 

Portfolio Management

Portfolio management is the process of dividing our money into various types of assets to spread risks and create opportunities to generate returns to best meet our investment goals.

Portfolio management will help:

1. Diversify our investments across a variety of assets, such as multiple mutual funds.

2. Reduce the risk of investing in a single asset, such as in the event of an unexpected event occurring in a particular fund.

3. Increase the opportunity to generate good returns for long-term success.

 

A good investment portfolio should be diversified across a variety of assets, each with different risk, liquidity, and return characteristics. Short-term, high-liquidity, low-return asset groups, such as savings deposits and money market funds.  In addition, income-generating assets group that gives fairly consistent returns include fixed deposits, bonds, debentures. Asset groups that increase investment value are high-risk investments but will increase investment value in the long term, such as stocks, mutual funds, and ETFs.

 

However, we will centre on investing in properties.  Therefore, in bonds and saving or some short-term investment will be skipped.  This presentation will centre around real estate or property alternatives only.

 

Figure 1: General Information of Vietnam, Thailand and Indonesia

 

The Country Selected

Actually, developed countries such as USA, Canada or Europe are quite attractive but they are located afar from Thailand with different in culture.  Middle-east countries, India and China might be too complicated for Thai investor.  in the ASEAN Region, there are 10 countries.  However, the two countries which should be selected are Indonesia and Vietnam.  Both are fast growing countries; whereas others might not be so interesting:

- Brunei: A too small country to invest

- Cambodia: Still a very emerging country.

- Laos: Too small country in population in terms of population

- Malaysia: Might not open much for non-Muslim investors

- Myanmar: A big mess after the coup

- the Philippines: Economic growth is not so significant

- Singapore: A small island state with little flexibility

 

Then, there are two major countries for consideration, Indonesia and Vietnam.  Both are very fast growing countries with stability.  However, we select Indonesia because of the huge number of population with a lot of purchasing power.

 

 

Eventually, we select Indonesia. The GDP per capita is still low (USD 4,920 per person) with a lot of growth in the future. Debt to % of GDP is still very low.  Corruption indect is lower than in Vietnam.  There are still high unemployment rate implying the large amount of labour forces.  Trade balance is quite high (good for further economic growth).  In addition, suicide and homicide rate is the lowest among three.  Yet crude oil production is the hightest as well.

 

 

Investing in Indonesian REIT

DIRE Ciptadana Properti Ritel Indonesia's main portfolio asset consists of Solo Grand Mall, a retail mall strategically located in Solo, one of the most attractive and densely populated cities in Indonesia with high population growth and easily accessible by many transportation routes. The DIRE is continuously evaluating other retail assets to enter. DIRE Ciptadana is also traded on the Indonesia Stock Exchange with the ticker code XCID.

 

Figure 2: Strong Performance of DIRE Ciptadana Properti Ritel

Source: https://ciptadana-am.com/ckeditor_assets/attachments/2361/02_ffs_dire_xcid_feb_2025.pdf

 

It was established in 1991 as an Investment Manager and has obtained a license from the Capital Market and Financial Institution Supervisory Agency. Having been active in the world of asset management for 28 years by building a business with clients in asset management and achieving client investment performance, CAM has received various awards by using experience, knowledge and comprehensive research, which are important roles for Investment Managers in making investment decisions. Exclusivity and a superior track record make Ciptadana Asset Management a reliable and trusted Investment Manager partner for clients to optimize investment capital and provide excellent results.

 

10% (USD 10) is the amount of investment on this option which is a large amount because of the security of this REIT.

 

Investing in Indonesian Listed Real Estate Public Companies

I will centre on the investment on Sinar Mas Land which is the largest property developer with the most diverse project diversification in Indonesia. The company is renowned for its wealth of experience that has been cultivated for more than 50 years in the property development sector.  Owning approximately 10,000 hectares of strategic land bank (as of 2011) and a number of city, township, residential, commercial, retail, industrial, and hotel property development projects, including property-related services, Sinar Mas Land ー Indonesia Operation is undoubtedly the largest property company with the most diverse project diversification in Indonesia. It has a market capitalization of more than US$2 billion.

 

Figure 3: Promising Performance of Sinarmas Land during the Past Year

Source: Yahoo Finance. https://lnkd.in/g_jQCnkz

 

The are in 5 countries, 26 cities.  They built 4 cities & townships with 21 residential properties, 16

hotels, resorts & golf courses, 18 commercial properties, 21 retail & trade centers and 3 industrial Properties (https://lnkd.in/gHaKyB5v)

 

In addition, the share would be bought for other leading listed companies in Indonesia as well, namely (https://lnkd.in/ggE2VB9V)

1. Agung Podomoro Group. In terms of total floorspace built, this is the largest property developer in Indonesia and headquartered in Jakarta (IDX Ticker: APLN)

2. Lippo Karawaci. Headquartered in Tangerang, Lippo Karawaci is the largest listed property company in Indonesia by total assets and revenue (IDX Ticker: LPKR).

3. Agung Sedayu Group. This property developer is among the major agents within the industry.

4. Ciputra Development. Headquartered in Jakarta, this top house developer specializes in large-scale development above all (IDX Stock Ticker: CTRA).

 

40% (USD 40) is the amount of investment on this option of shares of the five largest real estate developers in Indonesia.

 

Investing in Indonesian Owner-Occupied Apartment Markets

According to Colliers Indonesia, despite the election, the market remains "uncertain" for 2024. 66% of transactions are concentrated in existing units. This change in buyer preferences (from buying under-construction units to buying completed units) has been visible since the government introduced a VAT incentive in 2021 that prioritizes completed apartments. Demand for existing units is expected to remain stable next year. However, public enthusiasm may start to wane as the program is repeatedly extended (https://lnkd.in/gxJPtTNR)

 

Table 2: Real Estate Costs of Living: Bangkok and Jakarta

Source: https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=Thailand&city1=Bangkok&country2=Indonesia&city2=Jakarta

 

However, we would like to invest to these second handed apartments in Jakarta with the following reasons:

1. The prices and rents are somewhat cheaper than in Bangkok with lower risk although during the past 12 months the prices and rents were not substantial increased.  They  will increase due to the betterment of country’s economy.

2. Capitalization rate is quite higher.  According to my friends who are valuers in Jakarta, the return on investment is around 6-7%; whereas, it is only 4-5% in Bangkok.

 

50% (USD 50) is the amount of investment on this option of buying first-class apartments for rent in Jakarta.

 

Investing in Thailand

Before investing in real estate in Thailand, let’s explore the capitalization rate of different property types as follows:

1. According to the table below, hotels in Bangkok, warehouses and rental factories, as well as shopping malls were performing well.  Therefore, we will centre on these developments.

2. For other like, serviced apartments and rental apartments, the returns were not going up.  Perhaps, we may consider later.

3. However, in the case of office buildings, the return was lower; Therefore, we will not consider for investment at this moment.  This is because of the fact of oversupplies in the near future.

 

In Thailand, REITs are one of the groups that have shown remarkable growth due to several supporting factors, including increased demand for storage and logistics space following the growth of e-commerce and data center groups, and the revival of the hotel and retail groups following the recovery of the tourism sector.  In addition, the downward trend in interest rates and the average dividend rate of 4-6% per year, which is higher than the returns from many types of investment assets at present, further increase the attractiveness of the REITs group.

 

Table 3: Real Estate Capitalization Rate in Thailand

Source: Thai Appraisal & Estate Agents Foundation: https://www.thaiappraisal.org/english/standard/index.php

 

Hence the proportion of investment in Thailand will be as follows:

1. REIT related to warehouses and rental factories as well as hotels in Bangkok.  This would account for 10% (USD 10 million).

2. Real estate shares of listed companies related to warehouses and rental factories as well as hotels in Bangkok will be for 40% (USD 40 million)

3. In addition, we will buy hotels in Phuket as the first in the priority, Pattaya and Chiang Mai respectively for another 50% or USD 50 million.  This will be some medium size hotel.

 

Remarks

This is my allocation of wealth for consideration which will be on REITs for only 10% The rest would be for listed companies in selected sectors in Thailand and in real estate in general in Indonesia.  In addition, buying of properties for return on investment and return of investment in Indonesia and Thailand (particularly hotels and warehouses) are major investment.

 

Note: No short-term investment on bonds and other short-term investments.