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Malls, malls, malls everywhere, rate of survival?

Slightly earlier, I read a report saying that 50 new malls are coming into Klang Valley next year. Well, according to one latest article quoting the Sunway Group, there are a total of 40 malls entering Klang Valley next year. There is little need to guess. Most of these malls are the neighbourhood ones or the integrated to your high-rise units type. Why are there so many malls? Well, according to many, this is following the lifestyle of the high-rise and better off. You finish work at 6pm, arrive home, take a shower and from your door to the mall in 5 minutes are you are already in a restaurant of choice. Alternatively, in a nice pub with a group of friends for a happy hour. Cool, right?
According to Sunway Group, these new malls marks an “extremely competitive” time ahead. Out of these, a dozen would have a net lettable area (NLA) of about one million sq ft and above. This is bigger than a mall like Paradigm Mall which has a NLA of 700,000sf. Read some latest news about them here: If 53 tenants decided not to renew, time to worry? Malls of this size would have a bigger impact to other smaller neigbourhood malls. The competitive situation has caused many malls to open with just 50% occupancy too. I think many of us can name a few of these, especially those with really nothing special and has the same brands with everyone else.
My comments remain the same as that I shared with my colleagues when Quill City mall opened last year. The developer behind the mall is very important. Without right expertise or even a deeper pocket to get the tenants in first before thinking about longer term profits, most of these new malls would fail. For a new entrepreneur, opening a new outlet is already a huge gamble. Thus, many would welcome better rental rates or they may choose not to open new ones and just stick to their existing ones instead. A friend has closed one of her outlet which has been operating for many years just to consolidate her business and not be exposed to too much risk under current slowdown.
Well, many are still opening new businesses and I learnt that a close friend is opening a new shop selling baking ingredients! I think this is the time to get a very good deal and for competitive businesses to gain even more market share as others are closing or scaling back. In times of uncertainty is where there are lots of opportunities. I hope I am right too by still believing that there’s a difference between investing right and stop investing totally. Happy visiting malls to keep them alive.
written on 9 Sept 2015
Next suggested article: Setia City Mall, a mall I like, more than Paradigm Mall

Property Investment always start with knowledge. Equip ourselves with more here.

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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