The retail space market is expected to remain challenging, with Greater Kuala Lumpur (KL) set to witness the rise of 27 new malls by 2021, said Savills Deputy Executive Chairman Allan Soo at the 11th Malaysian Property Summit 2018 (11MPS).

Among the incoming malls within the region are Mitsui Shopping Park Lalaport, The Exchange Mall, Pavilion Damansara Heights, Merdeka PNB118 mall, Tropicana Gardens Mall, Pavilion Bukit Jalil, Empire City mall and CentralPlaza mall.

With this, the number of malls in Greater KL will increase from 170 to 197 over the next three years, bringing total retail space at 86.2 million sq ft.

Notably, about 20 million sq ft of shopping complexes and 22 million sq ft of purpose-built office (PBO) are expected to enter the market this year, said National Property Information Centre (Napic).

The increased supply available in both sectors may lead to lower occupancy rate if it is not supported by market demand.

Soo, however, believes that the average occupancy rate of retail space within the region is still "not that alarming” at 87.9 percent as at end-2017.

He cited Pavilion KL, Suria KLCC, Sunway Pyramid, 1Utama Shopping Centre and Mid Valley Megamall as examples of top performing malls within Greater KL, with an average occupancy rate of over 90 percent each.

Meanwhile, Knight Frank Malaysia Sdn Bhd managing director Sarkunan Subramaniam expects the office market in Klang Valley to become more competitive with the anticipated entry of 22 million sq ft of PBO this year.

Despite more pressure on rent, office occupancy rate and average rent in Klang Valley are still expected to fall this year, he said.

When asked if the government's freeze order on approvals for new shopping centres, offices, luxury condos and serviced apartments is sufficient to lower the oversupply of properties within the market, Sarkunan replied that "there is no reason for a freeze”.

"The freeze is totally unwarranted. Let the market dictate through lending and financing" he added.