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
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