The recent market for diamonds in Singapore is growing rapidly and could reach the levels of some more developed gem markets within a decade, according to the head of a jewelry firm in the city-state.
Vihari Sheth, managing director of Vihari Jewels and a third-generation diamond trader, said the rising importance of Singapore to the diamond business was seen with the recent displaying in the city-state of the 110-carat Yellow Dragon diamond, valued at US$11 million to US$15 million.
Sheth said the diamond would normally have been showcased in only the more established diamond markets, such as Geneva, New York and London, but exhibiting it in Singapore was evidence of the increasing significance of the market.
"There's a lot more growth because it's such a small market in Singapore, and people who are coming in are becoming more aware of what's going on," Sheth says in comments cited by Reuters. "It's only going to double.
"There's always going to be demand for something which is this high-end and exclusive," she says of the yellow diamond. "The person has to find the diamond, the diamond doesn't find the person."
Sheth said that large diamonds of five to 20 carats, worth from US$500,000 to US$6 million, are selling well. She added that the majority of her clients are aged 40 to early 50s, and are permanent residents of Singapore, such as Indonesians, Indians and Chinese.
Singapore's ultra-high net worth (UHNW) population is believed to total more than 1,300 with estimated total wealth of US$155 billion, said Singapore-based intelligence provider Wealth-X. Asia overall has almost 43,000 ultra-rich individuals with a total wealth of nearly US$6.3 trillion.
And diamonds for the wealthy are both a status symbol and an investment vehicle that can provide strong returns, Mykolas Rambus, Chief Executive Officer of Wealth-X. He said that prices for three-carat diamonds have soared by 238 percent since 2001, while one-carat diamonds have posted price rises of 88.9 percent in the same period, Rambus said.
"UHNW luxury consumers tend to view diamonds, precious stones in general and precious metals as stores of value as well as modes of wealth preservation," he adds.
However, some members of the diamond trade said that Singapore will need to clear considerable obstacles to enable it to become a significant diamond market.
Its central location in Southeast Asia makes it convenient for people throughout the region to purchase diamonds and diamond jewelry, said Eliad Cohen, managing director of diamond manufacturing and trading company Novel Collection Asia.
However, the city-state does not have a top-drawer diamond trade show that would attract the diamond and jewelry industries' top companies, Cohen said.
UBM Asia held the inaugural edition of the Singapore Jewellery & Gem Fair in Singapore from October 12 to 15. Staged in association with Singapore Jewellers Association, the Diamond Exchange of Singapore, and Singapore International Jewellery, it featured exhibitors of diamonds, pearls, precious and semi-precious gemstones, fine jewelry and silver jewelry from all over the world.
Meanwhile, Cohen cited Singapore's 7 percent value-added tax (VAT), which is also payable on loose diamonds and jewelry, as another obstacle to its possible developmenty as a diamond market.
"Regardless of whether or not this VAT can be recovered by overseas purchasers, it clearly acts as a deterrent for tourists to buy in Singapore, and encourages locals to purchase in no-tax jurisdictions, like Hong Kong," he tells Reuters.