BANGKOK — Recent antigovernment protests and last month’s military coup have hurt Thailand’s retailers but are not expected to have any long-term impact as the industry pursues plans to be the retail hub of Southeast Asia.

“Now times are tough, but Thailand has been called the Teflon economy,” said James Pitchon, executive director of the Bangkok office of C.B. Richard Ellis, a Los Angeles-based land developer and leasing agent. He noted that the retail sales index in Thailand has fallen 10 percent in the past year, primarily stemming from political protests that have harmed tourism and consumer confidence.

While Thailand’s political problems are hurting business in the short term, long-term projects are expected to advance.

More than $9 billion in new shopping centers are in the pipeline for two major retail developers, and a $6 billion, eight-story luxury shopping center in the heart of Bangkok’s retail district opened just days before the military coup. In addition to pursuing the luxury market that appeals largely to Thailand’s visitors, retail developers are eyeing Bangkok’s suburbs and other parts of the country as they plot their growth.

“Developers look at the long term and they have to be optimistic that Thailand will come out of its political problems,” Pitchon said.

Since the Thai military declared martial law and subsequently staged a takeover of the government on May 22, retail has been hurt because of a drop in tourism and a hesitancy among Thai shoppers to open their wallets.


Hotels report that occupancy rates have declined from a healthy 80 percent to as low as 40 percent. Tourism was lagging even before the coup, as the Bank of Thailand reports that April tourism was down 1.7 percent from April 2013. This followed a March drop of 9.4 percent over the previous year.

Government forecasts early in 2014 of 28 million international arrivals have been downgraded to 25.8 million because of the political unrest.

In addition, the private consumption index was down by 1.6 percent in the first quarter of this year as sporadic antigovernment protests stalled traffic on major highways and interrupted business.

“Domestically the country is just exhausted after six months of protests in Bangkok,” Pitchon said. “People are just enjoying a bit of a rest right now. Things are peaceful. They aren’t living with the daily stress of blocked roads and public rallies.”

At least one major retail developer, The Mall Group, said up to 40 percent of its sales volume derives from the tourist trade, with studies showing that new groups of tourists pass through Bangkok twice a week.

In recognition of the cost of the country’s political instability, the Tourism Authority of Thailand is preparing a three-month strategy to boost travel to the country and is asking the government for more money for its campaign. The midnight-to-4 a.m. curfew has been relaxed in beach towns and a push is on to end it countrywide. Retail developers say they also intend to help their tenants with lower rents and increased sale promotions through the end of the year.

“The second half of this year and next year the economy will improve,” said Suttatip Peerasub, a retail analyst at Kim Eng Securities. She also expects tourism to rebound in the second half, with visitors from the region returning first before Western, European and Middle Eastern visitors make the trip.

China is Thailand’s fastest growing retail market, and trips by Chinese increased by more than 100 percent in 2013, with 4.6 million Chinese visitors. In 2012, less than 1 million Chinese visited Thailand. Other major retail customers come from Hong Kong, Russia and Southeast Asia.

The Ratchaprasong Square Trade Association, which includes retailers with locations in Bangkok’s main shopping district that lines the Skytrain, is already reporting a slight uptick in shopping receipts, said Pacheewee Charoensuk, a spokeswoman for the group. “Things will return to normal soon,” she said.

Three malls that are members of the trade association — the luxury center Gaysorn, Amarin and Ekamai — agreed to shutter on a recent Sunday when police and the Thai army suspected an antigovernment protest was about to occur. Protesters instead gathered outside another mall, Terminal 21, further down one of Bangkok’s main arteries, Sukhumvit, which was subsequently shut by the army for the rest of the day.

While these short-term closures have impacted receipts, Pacheewee said businesses expect a return to normal before the end of the year.

Pitchon predicted that within 10 years Bangkok will eclipse Singapore and Hong Kong as Southeast Asia’s primary shopping designation.

“Brands are investing in Thailand for the long term,” he said. “They aren’t operating through distributors. The key to retail is the range of product offered, and that is what will make Bangkok better than Hong Kong or Singapore.”

The Mall Group, which was first in Bangkok to open a luxury center nine years ago with Siam Paragon, last month revealed plans to spend $1.53 billion on six shopping centers throughout Thailand. Plans include a 7 million-square-foot expansion of The Emporium, a luxury mall on the opposite end of Sukhumvit from Siam Paragon.

Other luxury shopping centers planned by The Mall Group are in the beach-front town of Hua Hin, within a few hours drive of Bangkok; the resort of Phuket, and in Bangna-Trad, on the outskirts of Bangkok.

Central Retail Group, which opened its first luxury mall, Central Embassy, days before the military coup, also is expanding and has unveiled plans to spend $5 billion on shopping mall investments over the long term. Meanwhile, a $1.2 billion, 1.5 billion-square-foot Central mall is going up in the eastern suburbs of Bangkok. While Central executives have acknowledged that protests and political instability in the first quarter of 2014 were bad for business, they predict an upturn. The largest retail group in Thailand, with 24 shopping complexes and 18 department stores nationwide, Central has experimented in markets abroad. It recently cancelled expansion plans in China, and instead is eyeing the European market.

The global property consultancy Knight Frank LLP, based in London, has projected that the southwestern suburbs of Bangkok are ripe for shopping-center development as the area is growing as a residential area and shopping there is limited.


“Retail competition is pretty fierce in Thailand,” Pitchon said. “The quality of shopping has got to be good. The economy will come back if Thailand can stop shooting itself in the foot. If tourists want to eat and shop, Thailand has a lot to offer people over many countries.”

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