197 malls in Kuala Lumpur by 2021. ‘Killing’ one another?

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Here’s a good read about malls in Greater Kuala Lumpur. According to an article in FreeMalaysiaToday, in three years time, the total number of malls in KL would reach 197. Currently there are already 170 and 27 more are coming. When these arrive, there would be a total of 86.2 million sq ft retail space. The upcoming names of these malls, according to Property consultancy firm Savills (Malaysia) Sdn Bhd deputy executive chairman Allan Soo include The Exchange Mall, Mitsui Shopping Park Lalaport, Merdeka PNB118 mall, Pavilion Damansara Heights, Pavilion Bukit Jalil, Tropicana Gardens Mall, CentralPlaza mall and Empire City mall. According to Soo, the average occupancy rate for retail space in greater Kuala Lumpur stood at 87.9% as at end 2017. With all these incoming supply of more retail spaces, what will happen to the rental charges then?

As per the article also for commercial offices, the National Property Information Centre reported that there would be an additional supply of about 20 million sq ft of shopping complexes and 22 million sq ft of purpose-built offices in the market this year. With all these, it will likely to result in lower occupancy rates, with rental charges decreasing further. Referring to Knight Frank Malaysia’s Skyscraper Index, contained in its Global Cities: The 2018 Report, which was released last October, Kuala Lumpur’s skyscraper rents offered the best value among commercial buildings over 30-storeys surveyed across 23 global cities. The article also quoted Rahim & Co International Sdn Bhd executive chairman Abdul Rahim Abdul Rahman as saying: “There is a worry that these spaces may not be occupied. The positive part of it is people who do business have choices and rentals may not be as high as before.” With regards to retail space, he said, “I don’t know the tipping point (for retail space) but I would be comfortable with an additional two million sq ft, not eight million sq ft or more.”

My personal take, as a shopper? Whether the rental for retail space would go up or down depends on the actual mall where it is based and not based on how much retail space are available. Three questions. Question one. Would we like to go to a new mall? Of course we may love to. I always go and visit new malls. Question two. If that new mall did not attract us enough, would we go again? Of course we won’t unless something new happens. Question three. When we stop visiting that new mall, would we stop visiting all malls or would we go back to the mall(s) that we love? I think the answer is a firm YES, we will continue to visit malls that we love. In other words, the malls we love would continue to be visited and if this mall continues to receive a lot of customer visits, then what are the chances for the rental to drop?

Please do not tell me that the shops would prefer to pay for a lower rental at some new malls without much traffic versus a popular mall with hundreds of thousands visitors every weekend? There are many malls which would not survive, definitely. There are many malls in strategic areas which will always be visited. There are many established ones which as long as they continue to do more to maintain their attractiveness, it would also do well. More retail spaces do not mean the whole market for retail lots would collapse. My view as a frequent shopper. On a yearly basis, I visit malls at least 100 times. Cheers.

written on 22 Feb 2018

Next suggested article: Malls? 50 percent (tough), 20 percent (close) and survivors 

2 thoughts on “197 malls in Kuala Lumpur by 2021. ‘Killing’ one another?”

  1. I do think that the overall performances of shopping malls would be affected with more new malls be opening in the same locality or for Greater KL as a whole.
    For example, IOI City Mall had managed to capture a lot of shoppers from the Southern part of Greater KL which most of them (before the opening of IOI City Mall) were usually visiting to somewhere else in KL/Selangor. The shoppers are actually dispersed. Due to this, the businesses are becoming tough for the retailers as their cost of doing businesses are actually increasing. they opening more stores but the number of businesses may not be increasing. This is why we notice a lot of retailers are actually closing for businesses.
    TBF, I also like to visit malls everywhere during the weekends, but I do not contribute much to retailers. the most I spend on are on food for my family. the rest are just for window-shopping.
    The businesses are becoming tougher year on year as many are not actually spending on stores now unless the bargains are there. when the retailers are not doing well, this will be affecting the rents of shopping malls. Many shopping malls are actually collecting rent based on the performances of retailers/stores. The more the retailers made, the more the rents they pay for the shopping malls. Unfortunately, it is not easy now as many competitors (shopping malls) in the market and they are actually offering the same things. New shopping malls, of course, will be tougher to attract retailers as no proof record of shoppers traffics. hence, they actually subsidise the CAPEX to the retailers. this translates zero rent for a certain period or meaning longer of the payback period. You can see the thing has happened in the Paradigm Mall in Kelana Jaya, retailers are moving out when the leasing term expires.
    the next coming megamall in Shah Alam in Icity – I would say this will attract shoppers from Klang and Shah Alam itself; then this will affect the shopper traffics in Mid valley further as I notice many Mid Valley Shoppers are from Shah Alam and Klang too.

    • Thank you Fong. You are quite right, on an overall basis, the retail number is not growing much. In fact I do see a lot more new retailers on the ‘better value’ focus. I think people are not going to pay RM189.90 for a new long sleeve shirts but they want an equally good one for below RM100. This is the trend I see. Even when it comes to food, it’s no longer ever more expensive but more on the ‘better value’ too. House brands are also getting more traction these days which is a good progress too. I think you may have read, GAP is not doing too well but it’s replaced by its sister brand, Old Navy which at this moment is still okay. Well, hopefully I am right. Even the supermarket scene is exciting with more new players and ever more choices too. Padini also has a sister brand, Brands Outlet which is quite okay too. Where prices are concerned, you can buy a different branded jeans for 40-50% lower. I think everything is changing and the retailers better be changing too. Cheers!


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