Is Thailand turning a corner? The government installed by a military coup in 2014 has been at pains to point this out to the world, and evidence is mounting to suggest it may be correct.
Political instability and economic malaise in the past couple of years had a chokehold on growth and the capital Bangkok endured the brunt of this. But June figures from the World Bank’s Thailand Economic Monitor show growth expected at around 3.5 percent for 2015, up from 0.9 percent the previous year.
Domestic demand has lifted, visitor figures in the first quarter are at their highest ever at 7.88 million, and overall public spending is up. Out of 189 economies, Thailand now sits 26th for ease of doing business, up from 28th a year ago, says the World Bank.
There’s more evidence from hotel solutions provider HRS; it finds Bangkok saw a massive 46.3 percent spike in room rates in the second quarter of 2015 compared to 2014. “With a more stabilized environment, people are more confident traveling back to Bangkok,” says HRS managing director for Asia-Pacific, Todd Arthur.
“TCEB [Thailand Convention and Exhibition Bureau] has been actively working toward rebuilding meeting planner confidence, and has launched three campaigns to highlight three of the country’s key unique features as a business events host. With these campaigns the country can expect to welcome more business events visitors. The multiple-entry visa is also likely to be a trade boon, making it easier for business travelers to visit often and attracting longer-stay tourists to the country,” Arthur adds.
Still, security problems and instability linger, with an ongoing insurgency in the south and a bitter political polarization pruned by a military coup.
“It’s frustrating when economically our country was on a positive trajectory,” acknowledges Country Group CEO Ben Taechaubol, one of the city’s biggest stakeholders. “Nonetheless, I believe this will only have an interim impact on Thailand and our economy, as our people have time and time again shown spirit, unification and resilience. Furthermore, our outlook will remain positive as our nation continues to show strong core fundamentals and economical potential.”
If history is any guide Taechaubol is right. Fundamentals are strong, and the tide that may yet turn the capital’s fortunes, figuratively and literally, is the rejuvenation of Bangkok’s enduring waterway, the Chao Phraya River.
Down by the River
After a decades-long hiatus from development, the big brands and the bigger developers have descended with a splash on the riverfront. Like squares on a chessboard they border the River of Kings as it flows through Bangkok’s heart, multi-billion-dollar developments that have sprung up as if preparing for a high-end battle for corporate dollars, retail and travel spend, and luxury hotel and residential investment.
David Robinson, spokesman for Bangkok River Partners, a group formed to market and attract local and international business and tourism to Chao Phraya, explains some history. “There’s been a couple of attempts at marketing the river as a destination, but this is the one that’s had the longest run,” he says.
“It was started by the luxury hotels here, between the Hilton and Sheraton down to the Anantara. So that includes Millennium Hilton, Royal Orchid Sheraton, Mandarin Oriental, Peninsula Bangkok, Shangri-La Bangkok, Chatrium Hotel Riverside, Ramada Plaza Bangkok Menam Riverside, and Anantara Bangkok Riverside. They started the project about two-and-a-half years ago, and at that time the ambition was to promote the destination for the MICE industry. I advised them to broaden that out to make it a wider destination for leisure and tourism.”
Bigger projects have kicked in. Country Group’s $1 billion Chao Phraya Estate project has three properties – Capella Hotel Bangkok, Four Seasons Hotel Bangkok and Four Seasons Private Residences – on 14.2 acres at Soi Charoen Krung, the oldest and first road in Bangkok, an area steeped in history and cultural significance, the Crown Property Bureau’s last remaining ‘golden site’ on the river.
“It’s very exciting to have the space in the city to do this development. Bangkok’s got a piece of the city that hasn’t been touched for 30 years and it’s moving that way now,” says Richard Scott-Wilson, director of Hamiltons International, master planners for the project. Coincidentally, for many years his mentor was British architect Sir Norman Foster, whose work he can admire within sight of his own project, just down the river in the form of the massive Iconsiam project.
Within Chao Phraya Estate, the Four Seasons hotel has 312 guest rooms and boasts the largest suites in the market, along with a 15,000-square-foot ballroom on 650 feet of prime river frontage. The Four Seasons 73-story residential tower is designed so that all 355 units are corner units with sweeping views of the river and city. The Capella offers 101 guestrooms and river villas all focused on the waterfront. Country Group’s Ben Taechaubol was educated in Australia but has the demeanor of Thai gentry – quietly spoken, polite and very determined that his first massive project for the family business will succeed. “A project like this is really the opportunity of a lifetime,” he says. “This piece of land, anyone in Thailand will attest that you simply can’t find something like this, and so when we first saw it immediately the instinct was to acquire it.”
Taechaubol says more than 300 individual title negotiations took place over four years just to get the land required. His company is backed by Chinese investment, mainly via the Export-Import Bank of China and sealed in a 2013 ceremony overseen by none other than Chinese premier Li Keqiang and former Thai prime minister Yingluck Shinawatra.
As property surges in Hong Kong, investors are seeing the value in high-end projects, especially on a weak baht. And residential offerings collaborated on by top-tier design consultants Hamiltons International and interior design firm BAMO’s Gerry Jue, a man familiar with the Four Seasons brand, seem to be successfully luring Hong Kong and Chinese money.
At the front of Chao Phraya Estate, a riverfront park and public walkway is being planned and designed by the Urban Design and Development Centre with Chulalongkorn University. This kind of public space on the Chao Phraya is a first for Bangkok, and Country Group has supported the move.
Known as the Yannawa Riverfront project, Bangkok’s first river promenade will extend three-quarters of a mile from in front of the Country Group site to the Saphan Taksin BTS Skytrain station on one of the river’s most spectacular reaches. With walking and biking trails, shaded areas and art installations planned, Taechaubol says the project is “on a par with icons like the High Line in New York,” a 1.45-mile park on a disused railroad spur in Manhattan.
Across the river lies massive competitor Iconsiam, a $1.54 billion initiative – the largest amount ever invested by the private sector in a property endeavor in Thailand – from partners Siam Piwat, Magnolia Quality Development Corporation and Charoen Pokphand Group.
Covering 20 acres and due for completion in 2018, the project features The Residences Mandarin Oriental Bangkok, the brand’s first residence project in Southeast Asia with 146 waterfront residences on 52 floors. Also included is the 70-story Magnolia Waterfront Residences, two high-end retail complexes on 130 acres, and other attractions including a cultural museum.
“If you look at the riverfront from the south, it’s mostly industrial with warehouses and so on. When you get closer in, there are more condominiums. But when you pass the Sathorn Taksin bridge, these are the most prime riverfront locations. Then you get into the old city, temples, the palace … mostly restricted to commercial development,” says Magnolia International Corporation managing director Thanawan Chaiwatana.
“So to me this is the prime location, and when you focus here you see the Mandarin Oriental, Shangri-La, Peninsula, all the luxury hotels.” Both of these large-scale developments will have facilities for yachts and water transport.
“There’s certainly been an increase in interest in the river. It’s palpable,” Robinson adds.
Can Infrastructure Keep Up?
So, the river renaissance has begun, but how successful these plans are and how many visitors will come, stay, shop and maybe even invest may largely depend on practical solutions to well-entrenched infrastructure problems.
Logistically, the city’s airport facilities are inhibiting Bangkok’s growth, no small problem considering the Tourism Authority of Thailand (TAT) forecasts 28.8 million visitors this year spending an estimated THB1.4 trillion ($40 billion). Throughput at the facilities is more than twice that number.
The government has announced an upgrade of Suvarnabhumi Airport, also called Bangkok International Airport – which is operating well in excess of its design capacity of 45 million passengers a year – with a third runway and two new passenger terminals. With the runway undergoing an environmental health assessment and one of the terminals awaiting government approval, timeframes are sketchy.
Don Mueang, Bangkok’s low-cost carrier airport and the nation’s second-largest with a capacity of 18.5 million, will also have its Terminal 2 and other facilities upgraded so that both facilities can cope with 120 million passengers a year by 2021, according to Airports of Thailand, with capacities of 80 million and 30 million, respectively.
Away from the airport congestion, another stumbling block is the eternal headache of getting around. Bangkok traffic is legend, and although much improved due to mass transport initiatives, getting from A to B on the roads can still take hours.
The government’s transport plan – part of a $90 billion infrastructure investment for 2015-22, announced last October,—includes the airport revamps, and is in essence, a patchwork of blueprints from previous democratically elected governments – plus an upgrade for the Airport Rail Link network.
The mass transit railway system for the city and vicinity will be extended substantially with the acceleration of four new lines under construction and at least seven more lines either in the bidding process or awaiting approval – routes that in all traverse more than 150 miles of the city. A switch to a double-track system for high-speed trains connecting the city with the rest of the country is also a priority.
Funding for these projects is largely via public-private partnerships and, like Country Group’s project, a substantial portion is coming from China, although Japan and other European entities are reportedly showing interest. Road construction will also receive a THB100 billion ($2.8 billion) boost this year.
With these best-laid plans, private investment and support is still key, as well as the government’s budget disbursement for its own initiatives, as deputy prime minister Pridiyathorn Devakula has admitted. So what do the big developers think?
“I think in respect to large infrastructure projects [the government] needs to take examples from overseas. There is plenty of private money willing to fund this and capable of funding this,” says Taechaubol. “If you wanted to expand eight to 20 lines in one go without spending the government budget you could very easily do that, with controls to ensure concessions.”
Thanawan sees stability as the key component for the city. “For the major destinations, the mass transit planning is well covered. It is only a question of how fast we can do it. The issue with me is the politics rather than the capital. If the political stability is quite high, then the plans have a high probability to be executed.”
Whether a caretaker government can successfully steer through an evolutionary transport plan and guide the city into its next phase is in question. Perhaps listening to the developers and other stakeholders that are making progress in areas like Bangkok’s riverfront may be the key.