PETALING JAYA – IOI Properties Group Bhd has yet to set a new date for the commencement of the expansion of IOI City Mall, which was scheduled to start by the end of last year.
A check at the site did not show any construction work for the second phase of the mall, which was expected to cost RM500 million and to be completed in two to three years’ time.
In response to queries by SunBiz, IOI Properties said it is still in the conceptual planning stage and no date has been set for the expansion of the mall.
“All planning must be carefully thought through before any decisions are made to ensure that the outcome meets market expectations as IOI Properties is taking a long-term view on the mall’s contribution to the group’s revenue,” it noted.
Early last year, IOI Properties received the green light from its shareholders for the injection of chairman and founder Tan Sri Lee Shin Cheng’s private land into IOI Properties, which will pave the way for the expansion of IOI City Mall.
Phase 2 of the mall will add one million square feet of net lettable area over four storeys of retail space to the current 1.5 million square feet. Its occupancy rate currently stands at 97%.
An analyst who declined to be named said it is viable for IOI Properties to undertake the expansion of the mall as there are not many big shopping malls in the southern part of the Klang Valley.
“Based on my observation, the mall is crowded during weekends, but IOI Resort City is not fully developed yet. Perhaps they need more catchment to support the expansion and they have to wait for office space occupancy to reach a more optimum level, then only will be better to open the second phase,” he noted.
“Over the longer term, it will benefit the company, but at this time, we haven’t factored in the earnings contribution from the expansion,” he added.
IOI City Mall is located within the 788-acre IOI Resort City. So far 400 acres have been used, with the remaining 388 acres set for development over the next 10 years.
IOI City Mall
IOI Properties contends that construction costs are still manageable, despite the recent declining ringgit. “As we are still in the stage of conceptual planning, we are unable to state the estimated construction cost,” it noted.
Nevertheless, the group is considering purchasing locally manufactured materials for more cost-efficient budgeting, which is also in tandem with its commitment and support towards sustainability.
The retail industry has been seeing a slowdown lately, with independent consulting firm Retail Group Malaysia revising downwards the local retail industry’s sales growth rate for 2016 to 3.0% from 3.5% or to RM99.1 billion in value. It was the second revision for the year considering the poor sales performance in the third quarter of 2016.
There have also been postponements in the openings of a number of shopping malls, including MyTOWN, which has been rescheduled to March 16. MyTOWN is a 50:50 joint venture between Boustead Holdings Bhd and Ikano Pte Ltd.