Magazines Archives - 2008 September

Malaysian market favours tenants
Story 6 - Focus

While the mall scene in Malaysia is active with building and renovations, global economic slowdown is beginning to dampen shopping spend and turning the retailspace situation into a tenants’ market. But mall owners are getting creative with sweeteners to boost occupancy, reports Eu Hooi Khaw from Kuala Lumpur.

Mall developers in Malaysia are taking the construction of retail centres to suburban areas while retaining their hold in major cities by refurbishing existing assets as well as taking over competitors’ space.

As at end-2007, two million sqf of retail space came on stream with the opening of Pavilion Kuala Lumpur, Gardens and Sunway Pyramid 2. This year, the first half alone saw four medium-sized malls opening in Klang Valley, with six more scheduled to open in the latter half.

By next year, the same location will see 36 projects under way. These include the KLCC extension, Parkson Retail Mall in Setapak, KL Sentral Main Plaza, The Heritage Shopping Centre in Seri Kembangan, Four Seasons KLCC, Vision City, 1 Mont Kiara, Paradigm in PJ, Axis Atrium, Millenia Mall in Puchong, Giant Kota Damansara, Brem Mall and Wangsa Walk Mall.

However, Malaysia’s dynamic retail-space segment is not spared from shifts in the global and domestic economic and political landscapes. Currently, the mall proliferation in the country is facing the prospects of sluggish consumer spending in light of the global economic downturn.

Although the latest Malaysia Retail Industry report placed the total retail expenditure last year at nearly RM67.1 billion (US$20.207 billion), 12.8% higher than in the year before, there are doubts over meeting the RM71.8-billion target this year, given recent political and economic developments.

Already, inflation and high petrol prices have weighed on consumer spending, and subsequently retail space takeup, says James Wong, director of consultancy firm VPC Alliance (KL) Sdn Bhd and VPC Realtors (KL).

As expectations of consumer spending continuing to soften this year persist, the retail-space segment is turning into a tenants’ market and retailers are taking the opportunity to negotiate with landlords for more attractive rentals.

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