Talks of Retail Glut Slammed by SHAREDA President
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Owning and operating a mall is an endearing task. It entails managing the tenant mix, ensuring the property keeps up with trends, offering promotions, and ensuring a good footfall.
The economic downturn is another contributing factor preventing the realisation of grandiose development ideas. Sometimes, the death of a mall is simply due to bad urban planning and mall management.
In response to the article, "Kota Kinabalu Hit by Oversupply in Retail Space" posted by Free Malaysia Today on 28 August, we sat with Director of Grand Merdeka Development Sdn Bhd cum SHAREDA President, Mr Chew Sang Hai and his daughter, Ms Chew Fei Sean, General Manager of Grand Merdeka Development Sdn Bhd.
When asked about his opinion regarding the matter, Chew simply said, "You can't be too quick to say the world will end because there's an oversupply in the retail industry and the property market is bad, because that's a poor exaggeration", commented Chew.
"There are only one or two commercial real estate projects launched from now until 2018. I believe that there won't be any more commercial developments in the years to come" he said.
"The glut is not only in Kota Kinabalu, but everywhere" Chew said. "It is a challenging industry to be in now. Developers must be in the industry for long-term, not short-term, gain. They need to have strong sustainability to overcome adverse market conditions and be competent.
"People always talk about the lack of demand but never the resilience of the malls."
Chew shared that the "super boom" of the real estate industry that happened between 2009 and 2014, had encouraged developments to sprout over the years and a popular segment was the shopping mall niche. He added that we are currently facing a "market problemâ€ and not so much of a crisis similar to that in 1998. He explained that demand will pick up sooner rather than later as there will be no influx of retail space in the coming future which will in turn spike demand.
"Demand can change overnight, supply cannot," says Mr Chew in a firm manner.
When asked, Fei Sean said, "The city has enough going on that's why we decided to move out and cater for the niche marketâ€, before adding that places like Australia and the United Kingdom cater to those living in the suburban areas by building shopping malls, convenient stores etc. She explains that it is unfair to paint everyone with the same brush as there are a lot of factors that differentiate one from another.
"We know that the market is resilient, that's why we have our rent-free period to attract the potential tenants to come. I don't think any developers have done this but we chose to do it because we want to gain our tenants' (and potential tenants') trustsâ€, she said.
"We're not going to compete with the big brands established in KK City. We want to cater for the lower income earners because if we don't help them, who will. And of course, by creating and expanding in the outskirts, you'll have less competition and your focus will mainly be directed to the community that surrounds your developmentâ€, she added.
Her optimism also stems from the future development plans for the integrated Grand Merdeka project which will include the first elevated water theme park in the state.
She believes the superstore, retail warehouses and fast food drive-through scheduled for completion next year will further lure visitors.
Moving away from the clichÃ©
In a statement made in Focus Malaysia by CH William, Talhar & Wong's Director (Sabah) Cornelius Koh, he agrees that the growing number of malls in Kota Kinabalu is a cause for concern, but he says that "property is not built overnight.â€
"While economic sentiments may be dampened right now, it will definitely recover in future.
"If developers were to wait for the market to be up and running to start building, they will lag behind competitors" he says.
Grand Merdeka holds all sorts of activities every weekend since their opening in June 2017. There is, indeed, a lot of shopping malls around Kota Kinabalu but these pockets of development will take time to boom, given the current subdued market. There is no doubt that in the years to come, with the people's confidence in mind and staying their course, Grand Merdeka Mall can be successful.
As Mr Chew said, "it's all about mall management and survival of the fittest. If you have the capital and you're threading your business carefully, of course, you can succeed because by doing things right, you're gaining the public's confidence. And that's a very important thing, public confidence."
Keep your eyes and ears peeled for our December issue for more information and deeper understanding of mall management and malls' performances in Kota Kinabalu. Plus, an extended version of this interview with Mr Chew and Ms Fei Sean as they explain the nuances of management and malls in general.
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