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Malls in Kuala Lumpur city have recovered from a year ago with business picking up, especially in the last three months, for the likes of Suria KLCC, Pavilion Kuala Lumpur and Berjaya Time Square, says CB Richard Ellis (Malaysia) Sdn Bhd (CBRE) managing director Allan Soo.
Equally bullish about the retail outlook this year is managing director of Henry Butcher Retail Tan Hai Hsin who predicts the Malaysian retail industry to grow by 5% this year, based on the local and global economy. In comparison, the industry grew by a marginal 0.8% last year.
“With the completion of at least 20 retail centres this year, retail market share may dip among the players,” Tan says. “However, the negative impact will be regionalised and localised. For example, the retail market in Cheras will see more competition when at least five new retail centres enter the market this year.”
The occupancy rates of most prime malls in the Klang Valley have held steady so far. A CBRE Asia Market View report for 1Q2010 says the overall vacancy rate of selected prime shopping centres in the Klang Valley remained unchanged at 7.6% while the vacancy rate of prime shopping centres in the city centre dipped slightly by 0.1% to 11.7%.
Henry Butcher’s Tan says based on the company’s 2009 data, the average occupancy of shopping malls in the Klang Valley in 2009 is 86%, and he does not see it varying much in 2010.
For the popular malls in the Klang Valley, such as Suria KLCC, Mid Valley Megamall, BB Plaza, Pavilion KL, 1 Utama and Leisure Mall, all boast good occupancy rates of close to 100%, Tan says.
Rental rates for these malls vary. Henry Butcher Retail’s Tan says the gross ground floor monthly rates for 1 Utama range from RM14 to RM35 psf while at the Mid Valley Megamall, the range is from RM20 to RM40 psf.
According to Tan, average rental rates of Klang Valley shopping centres have not grown much. He says: “Since 2005, we have faced many economic and human crisis – like the severe acute respiratory syndrome outbreak, the H1N1 influenza epidemic and the fall of Lehman Brothers. These have sent our retail market on a roller coaster.”
Tan puts the average rental growth rate for Klang Valley shopping centres at only 1% in 2005, 3% in 2007 and 2% in 2008.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 812, June 28-July 4, 2010
