Kuala Lumpur to see 13 new malls over the next three years

This translates to at least 8.9m sq ft of NLA, and more than half will be completed this year.

Total retail sales increased by 1.6% year-on-year (YoY) to RM134.92 billion in the first three months of 2021, according to the Department of Statistics Malaysia. Savills says the increase was mainly attributable to the retail sales of automotive fuel in specialized stores, household equipment and other goods in specialized stores such as clothing, footwear, and pharmaceuticals & medical goods.

This was driven by consumers’ extra disposable income derived from the Malaysian government’s financial assistance programmes, i-Sinar and i-Lestari. Compared to the first three months in 2019, which was before the first Movement Control Order (MCO), total retail sales showed a higher growth of 3.7% (YoY). 

Here’s more from Savills:

Since the lifting of the MCO in early of 2021, shopper traffic in major and suburban malls have returned to pre-pandemic levels. Cafes and restaurants experienced good crowds of dine-in customers. However, sales of all other retail categories still struggled due to the reduction in household incomes which resulted in lower purchasing power. The physical distancing laws also reduced entry capacity, which somewhat affected the retailers’ sales as well. 

Nevertheless, the continued increase in the number of COVID-19 cases recently forced the government to reimplement its third lockdown, now known as MCO 3.0. Malaysia was placed under the first phase of a full lockdown for the course of two weeks, from 1 to 14 June, 2021. During the period, all sectors are not allowed to operate except for essential economic and service sectors. Restrictions were also observed on operating hours, dine-ins, carload limitations and travel restrictions. 

This is expected to further affect the sales revenue of the retailers as many people have refrained from going to public places such as shopping malls. Retail segments that will continue to suffer would be the fashion and entertainment category that include cinemas and family indoor entertainment. With the ongoing restriction on dine-ins, F&B outlets are expected to be severely affected. 

Supply and stock

Setia City Mall Phase 2 in Shah Alam was completed in the first quarter of 2021, adding about 400,000 sq ft of retail space to the existing Setia City Mall, bringing it to a total of about 1.1 million sq ft. The anchor tenant, Lulu Hypermarket and Departmental stores from the Middle East, occupies about 150,000 sq ft of space across three floors. This was the only mall completed during 1H/2021 and brings the Greater KL total retail stock to a total of about 68.1 million sq ft of NLA. 

Within the next three years, Greater KL will see the completion of 13 new malls, adding at least 8.9 million sq ft of NLA to the market. More than half of it (54.3%) are to be completed this year and are located in the suburbs. Major upcoming completions include Pavilion Bukit Jalil at 1.8 million sq ft of NLA followed by IOI City Mall 2 at 1.0 million sq ft. Nevertheless, further delays in opening are likely because of continued uncertainties in the retail market.

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