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Seriously, when there are just too many malls….

In an article in The Star by Reuters, it painted a bleak picture for the malls in Shanghai. It gave many examples of empty malls and one dress shop owner said that she could not even sell one dress per day! According to official data, the retails sales have shown a sharp rebound but the vacancy rates are rising and rents are plummeting in many Chinese malls. Some of the reasons include rising online competition and many poorly managed properties. Due to the low number of visitors, cash flow of mall owners and developers are suffering and this is a risk to the economy which is already growing at its slowest pace in decades.
Some major malls are undergoing restructuring including Dalian Wanda who said it will close or restructure 30 retail venues. Our familiar Parson which operates more than 70 department stores in China has already closed several of its stores in northern China last year after a 58 percent drop in net profits from China in 2013. Just last week, China has cut interest rates for the sixth time in less than a year. (Yes, this has also caused Ringgit to drop further) Not all are dropping. According to statistics, movie ticket sales hit a new record of nearly US$300 million during one single holiday week in October and this is up 60 percent compared to last year. CBRE said that many of the new malls being built is not likely to product good returns to their investors. According to a joint report by the China Chain Store Association and Deloitte the total number of China’s new malls is projected to reach 4,000 by end of 2015 and this represents a 40 percent jump from 2011.
According to many recent reports, there are huge numbers of malls coming up within Klang Valley alone. Read here: Malls, malls, malls everywhere, rate of survival? How many can survive if the consumption from the shoppers do not increase? The bigger and established ones would continue to do better than newer and smaller ones simply because of existing visitors and also the reluctance of some owners in expanding under current negative sentiment. Not many would want to share the risks with the new mall owners. Already businesses are not easy. Read here: Tough to do business these days; malls are too many Of course, if there is a regional mall around your area, it is important to give it support. Else, when it closes, it will also reduce the premium in our area too. Happy visiting malls.
written on 26 Oct 2015
Next suggested article: Malls, household debts and bankruptcy?

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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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0 Responses

  1. Hi Charles,
    I do think the local authority should put a control and limited the number of malls according to their locality demand. They can’t just approve malls to open in return to their taxation/fees income. There are more negative impacts to the society rather than benefits if too many malls opened in the same surrounding area. Sometimes I thought that opening a mall and put up a rental shops is a very profitable business. Furthermore, the mall value will appreciates over time and then they can sell it off. It’s a five to ten years income only.. It seems like to take the money from the rentee’s hand and ran away when it’s not profitable anymore.

    1. Hi im, it’s not easy to control from the authority side. They are definitely not the best to decide which mall is allowed n which mall is not.

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