An Interview With Azmi & Co Sabah's CK Wong on Retail and the Mall by the Ocean
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Oceanus Shopping Mall was touted as the new epicentre of the city when it opened in at the tail end of 2014 with its strategic waterfront location offering gorgeous vistas of the ocean and Kota Kinabalu's iconic sunset. However, it has only seen tides rising since as it struggled to fill its spaces with tenants and maintain constant foot traffic. That is set to be corrected with the appointment of Azmi & Co as the new management of the commercial centre, officially taking the helm on 1 September 2017.
There is now as sense of excitement and for some, nervousness as the tenure of new management rolls in bringing in hopes of a new lease in life for Oceanus. With that, we took the opportunity to speak to Azmi & Co Sabah's Managing Director, Mr CK Wong to question on how things will change and what the future looks like for â€˜the mall by the ocean'.
PH: What kind of expertise does Azmi & Co bring to the management of Oceanus Shopping Mall?
CK: We provide a full range of property services as we are an established firm of property consultants, property managers and registered estate agents with nationwide branches. I was a shareholder in Smiths Gore Sabah before setting up Azmi & Co Sabah. I am a registered valuer with 35 years of working experience in the Sabah property market.
At the moment, we are the largest estate agency team in Sabah and can therefore provide deep market distribution and exposure to property owners including developers. We have also been appointed as the outsource agents by PR1MA Homes. This is a feather in our cap which we are proud of and of course we have to live up to this challenge. We are pleased to say that in a short 6-week period we have manage to sell more than 150 PR1MA homes. This is a small role in assisting PR1MA and fulfilling the ordinary folks' dreams of owning a house. We hope to similarly assist the owners of Oceanus Mall in this regard.
Mr Sani Javed leads our team of property managers. He has more than 30 years' experience in this field. We are ex-colleagues even before this and have managed Wisma Merdeka, Warisan Square, Menara Jubili, Wisma Perkasa and several other residential projects.
PH: What kind of potential do you see in Oceanus Shopping Mall?
CK: The mall has great potential as it is right in the City Centre and enjoys a prime waterfront position. As we are enjoying strong tourist arrivals, we are positioning it as a â€˜Tourist Destination Mall' with a huge F&B component. The rest of the space shall be for souvenirs and local products for tourists and elements of high end or luxury goods. Hopefully, we can achieve it within a relatively short time frame.
PH: How is Oceanus unique and how do you plan to use it to the mall's advantage?
CK: Oceanus is unique in a sense that it is the only development currently that has a wide and lengthy boardwalk, apart from its location at the heart of the CBD. We intend to leverage on this by organising events complementing the F&B outlets and the overall tourism theme. Being right in the City Centre, with several high-end hotels nearby is, in itself a great advantage for Oceanus.
PH: The waterfront stretch is a location with an array of entertainment spots. Will you be looking to fit Oceanus into this scheme?
CK: I don't think we have to try very hard to replicate the feel of the existing waterfront, as the extension of this stretch's entertainment scene to the mall should be a natural thing given its position and its boardwalk. As mentioned, the tourism industry will drive demand apart from natural demand (generated by economic and population growth) for retail space in the City Centre. Therefore, we should try and attract or create an entertainment scene that will appeal to these visitors. Because of the mall's low occupancy status presently we will have to provide attractive leasing packages for a short period as an incentive. We believe that this is a great opportunity that enterprising entrepreneurs should take advantage of as there are nice lots within the mall still available.
PH: What are the main challenges you see in turning Oceanus into a vibrant commercial centre?
CK: First, is the mall's present low occupancy status and the slower economic environment putting downward pressure on rentals. Potential tenants are naturally worried about the trading potential of the mall. So, we have advised owners to provide concessions to improve its occupancy status.
Secondly, this is a subsidiary titled complex. Different owners have different expectations and we have to manage that. It is not an easy task to get everyone to have the same vision and pull in the same direction, although they are all in the same boat.
Lastly, is the lack of large anchor tenants, although this is not a must-have. Wisma Merdeka is a good example.
PH: Finally, we'd like to get your take on a heated subject. Do you see a commercial glut in the Sabah Market? What is your opinion on this?
CK: From recent media news, there is a general perception that there is a glut in the retail market i.e. shopping malls. This view must be qualified, as quite often comments are in a general context which do not reflect actual dynamics and locational circumstances. To go into this will require a fairly lengthy discourse and for which I charge hefty fees.
Anyway, I say that shopping malls are very location-centric, more so than say residential or industrial, and are also dependent upon a good layout and design, again more so than other real estate types.
A recent news article concluded that retail space is at 14.6 sqft per person based on KK's population of half a million and the present and incoming supply of about 7.3 million sqft, comparing this to Klang Valley's ratio of 8 sqft per person. This may not present a genuine picture as KK is a capital city that serves the west coast region with a population that is definitely more than a million, in fact about 1.4 to 1.5 million. Also, tourism arrivals will increase retail expenditure and thus supporting spatial requirements for retail space.
So, that article provided facts that are not accurate and neglects an important driver of demand which is tourism. The population was quoted at 500,000, which is for KK District only and ignores its immediate surrounding districts like Penampang, Putatan and Tuaran. In fact, Putatan and Penampang districts were formerly under Jesselton Rural District Council and part of Kota Kinabalu. To me, we should include these 3 districts, which can also be referred to as Greater KK, for want of a better description. Accordingly, we are looking at a catchment of about a million. If we include districts within an hour's drive up to Kota Belud and Papar, it would be around 1.5 million. This adds up to a rate of about 7 sqft per person which is lower than the rate of 8 sqft in the Klang Valley.