More malls consolidation expected this year

KUALA LUMPUR (Feb 10): Property consultancy firm Rahim & Co highlights the possibility of more consolidation of the Klang Valley's retail space this year as more malls are launched, contributing to a growing glut in the sector.

According to Rahim & Co’s “Property Market Review 2015/2016” report, there are currently 28.02 million sq ft of retail space in Kuala Lumpur.  

“There are about seven to eight million sq ft of retail space in the pipeline in Kuala Lumpur, not to mention another nine million sq ft incoming supply in Selangor. In fact, we already have substantial supply now,” said research and strategic planning director Sulaiman Akhmady (pictured).

In Kuala Lumpur, the total retail space supply increased by 6.2% from 26.4 million sq ft in 1H2014 to 28 million sq ft in 1H2015, but have held its average occupancy rate at 86.5%, while in Selangor, an 8.3% increase was observed to 32.5% million sq ft in 1H2015.

“Last year, retail sales have reportedly been very slow with some retailers reporting a drop in sales as a result of a multitude of factors. This include the implementation of the Goods and Services Tax and the weakening ringgit driving up cost, which reduced the purchasing power of Malaysian consumers,” Sulaiman noted.

Nevertheless, he expected rental level to be stable for the established malls in good locations, especially those within integrated developments with transport links, while others are expected to see some consolidation this year.

“Good rentals and better performance can be achieve for retail spaces with good tenant mix, location, convenience accessibility and public transport,” Sulaiman suggested.

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Newly completed/refurbished malls in Kuala Lumpur (2015)