KUALA LUMPUR – Property consultancy firm Savills (Malaysia) Sdn Bhd expects the retail space market to remain challenging with 27 new malls anticipated to enter the market in Greater Kuala Lumpur (KL) by 2021.
Speaking at the 11th Malaysian Property Summit 2018 (11MPS) today, Savills deputy executive chairman Allan Soo said the firm estimates that Greater KL will have 197 malls in the next three years, with a total of 86.2 million sq ft retail space, from 170 malls currently with a total of 62 million sq ft retail space in the market.
This year alone, National Property Information Centre (Napic) reported, there will be an additional supply of about 20 million sq ft of shopping complexes and 22 million sq ft of purpose-built office (PBO) in the market.
The additional space will definitely increase the total supply available in both sectors which may result in lower occupancy rates if not supported by market demand.
Nevertheless, Soo noted that the average occupancy rate of retail space in the Greater KL stood at 87.9% as of end-2017, which he said is “not that alarming”.
Soo cited Suria KLCC, Pavilion KL, Mid Valley Megamall, Sunway Pyramid and 1Utama Shopping Centre as examples of the top performing malls in Greater KL, with an occupancy rate of more than 90% for each mall.
According to him, the incoming megamalls in the region include The Exchange Mall, Mitsui Shopping Park Lalaport, Merdeka PNB118 mall, Pavilion Damansara Heights, Pavilion Bukit Jalil, Tropicana Gardens Mall, CentralPlaza mall and Empire City mall.
Commenting on the transformative effect of e-commerce on the retail industry, Soo said the retail market will experience a changing landscape in the longer term, as malls react to the millennium crowd and e-commerce’s disruptions.
Knight Frank Malaysia Sdn Bhd managing director Sarkunan Subramaniam said he expects the Klang Valley office market to become even more competitive with the additional space of 22 million sq ft of PBO anticipated to enter the market this year.
“There will be more pressure on rent,” he said, noting that the office occupancy rate and average rental in Klang Valley are expected to continue their downtrend this year.
Asked whether the government’s move to freeze approvals of new applications to build shopping centres, offices, serviced apartments and luxury condominiums in the city centre is sufficient to reduce the oversupply of properties in the market, Sarkunan said “there is no reason for a freeze”.
“The freeze is totally unwarranted. Let the market dictate through lending and financing,” he added.
The annual property summit was organised by the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia.