Malay Mail Online, Photo Credit to Malay Mail Online
clock 25-09-2017
hit 3,288

Are Malls Dying? Not Yet, but Some Beginning to Struggle

Greater Kuala Lumpur has over 120 malls and at least 10 more are set to open or launch soon.


The number is at odds with the recent exits of retail brands such as Bulgogi Brothers, Tim Ho Wan and Tous Les Jours, which cited economic challenges for their decisions.

According to JLL property management, malls remain largely resilient, citing the opening of the Starling Mall, Sunway Velocity Mall, MyTOWN Shopping Centre and Melawati Mall in the past 12 months.

But the property firm said this did not necessarily mean the retail industry was thriving.

A study by JLL showed that the private consumption of Malaysian shoppers dropped to 6.3 per cent in the fourth quarter of 2016 from 9 per cent in the first quarter of 2015.

"In certain situations, some of the malls that we track in the suburban areas may have dropped their rentals by 0.7 per cent year-on-year" JLL said.

While rates are generally confidential, it is understood that rentals for ground floor outlets at malls in Kuala Lumpur range from RM10,000 to RM20,000 depending on the size and location.

Suburban malls charge about 20 to 25 per cent less for the same.

JLL noted that many retail centres and malls within Greater KL were struggling due to the growing density. In some areas, multiple malls are located within a 10km radius.

For example, Suria KLCC is located just across Jalan Ampang from Avenue K.

In the suburban segment, Atria Mall is located just 5km from The Starling in Damansara Utama, and less than three kilometres from Tropicana City Mall. Also in the vicinity is the 1Utama mall.

Suburban malls not doing too well

The secondary malls or malls in suburban areas, JLL said, were now registering daily footfall that is down by up to 25 per cent, especially on weekends.

Household consumption has also not recovered to levels prior to the 2015 implementation of the goods and services tax (GST), the firm said.

While there was a slight uptick in the country's economy performance in the first half of 2017, JLL pointed that shoppers' overall sentiment remained weak but was slowly improving.

"Although the consumer sentiment index has inched up by 4.1 points in the second quarter of 2017, it still hovers at about 80 points, which is below the desired mark of 100 points" it said.

From the fear of price hikes to job security, JLL pointed the reasons for the weak consumer sentiment varied.

"In rural and semi-urban areas, the rising cost of living hits this area harder because the rate of wage rises and options for employment are much lower compared to the urban areas" it said.

The success of malls, JLL said, mostly depends on the management's willingness to inject funds every few years to revive and renew operations.

"It is also more difficult for strata malls which are operated by different owners to do a complete revamp to remain relevant and attract footfalls. Hence, there can be deterioration in the facade and upkeep of the mall" it said.

Despite the growing competition, malls were paradoxically less willing to discount as heavily as they once did.

Business owners told Malay Mail Online that they had been offered six months of free rental and utilities in 2012, but this was no longer the case.

"At the most, we get three months' free advertising and promotion from the mall's in-house advertising tools" said a marketing manager who only wanted to be known as Sofia.

Premier malls still doing well

Popular malls such as Suria KLCC, Pavilion, and Mid Valley were still performing well despite the competition, with JLL saying these were able to increase rentals by approximately 0.4 per cent year-on-year.

City Centre malls and some suburban ones, it said, have enjoyed success largely due to the ability to attract visitors, including tourists.

JLL pointed that some factors that determine performances of a mall, among others, include location, tenant mix, amenities, refurbishment and ambience.

From 2020 onwards, JLL predicts for at least three new large retail centres to come up in the City Centre.

"The retail centres are The Exchange Mall, Mitsui Shopping Park Lalaport KL and also the extension of Suria KLCC will be expected to fuel the competitiveness of retail market within the City Centre" it said.

MIDF Amanah Investment Bank Bhd (MIDF Research) property analyst Jessica Low also expects established malls like Pavilion shopping mall, Mid Valley megamall, Sunway Pyramid and Suria KLCC will continue to do well.

"Overall, the rental rates for the malls listed above are on rising trend, albeit at a marginal level as these malls have good connectivity and are in prime locations" she said.

Given this, Low said suburban malls may be at the losing end as they would have to face the challenges from the large incoming supply of retail spaces in time to come.




WHAT DO YOU FEEL ABOUT THIS?

0
LOVE
0
HAPPY
0
SURPRISED
0
SAD
0
ANGRY


COMMENTS
Use a Facebook account to add a comment, subject to Facebook's Terms of Service and Privacy Policy. Your Facebook name, photo & other personal information you make public on Facebook will appear with your comment.

SIGN UP NEWSLETTER

logo
Monthly Column
The staple of your property-related materials. It's all about being ahead of the game and with The Column, you get carefully selected information that will keep you informed and running with the pack. The best news, articles and properties on the market from the Property Hunter portal, conveniently wrapped and ready, just for you.

logo
Weekly Window
Your weekly dose of what's hot and what's not in property. The window is your view into the realm of real estate in Malaysia, curated from our portal based on the most popular pieces over the week. For those who just can't get enough, this is for you. Ain't nobody got time for dailies anymore, weekly is the new daily.