The Malaysian retail sector is slowly recovering with the MIER Consumer Sentiments Index (CSI) improving to record at 108.9 points in 1Q2022, surpassing the 100-point optimism threshold.
The positive index in the review quarter was driven by consumers’ optimism for better income and employment opportunities, Knight Frank Malaysia Group Deputy Managing Director Keith Ooi (pic) said.
He added the cumulative supply of retail space in Klang Valley stands at circa 66.09 million sq ft as of 1H2022, following completion of Mitsui Shopping Park Lalaport and Malaysia Grand Bazaar.
While Lalaport BBCC brings with it an authentic Japanese shopping experience by introducing a throng of first-to-market brands, including NITORI, Nojima, RIKU, Shin’Labo, Matcha Eight and Tamaruya.
Keith added Malaysia Grand Bazaar is the city’s first artisanal mall and seeks to become an incubator of local entrepreneurs catering to a wider customer base.
“Incoming retail supply include the KSL Esplanade Mall in Klang, IOI City Mall Phase 2 in Putrajaya, Retail Component of Datum Jelatek in Taman Keramat as well as EcoHill Walk in Semenyih.”
Alongside refurbishments, the obvious shift in consumer behaviour due to the pandemic, coupled with the acceleration in digital transformation have encouraged retailers and mall operators to increasingly adopt omnichannel strategies to increase sales and improve engagement.
Knight Frank Property Director for Mall Management Yuen May Chee said explained that mall operators have been persistently continuing to personalise retail experiences to cater to consumers’ preferences as well as to address the health and concerns of shoppers through AEIs.
While some have turned to installing air purifying systems in all of their retail premises, others have delved into social commerce, offering shoppable live streams and collaborations to introduce personal shopping services, as well as creating online platforms to provide affordable retail spaces for small businesses.
There is also a rise of green initiatives as shown by hypermarket chain Lotus’s Malaysia’s rooftop solar photovoltaic (PV) project at 12 stores and one distribution centre; offsetting over 6,600 tonnes of carbon emission annually.
Occupancy rates of shopping centres were stable during the review period, with improvement of revenue for mall operators.
Malls like Suria KLCC, Pavilion Kuala Lumpur, Mid Valley Megamall and Sunway Pyramid continue to retain solid crowd pulls and have stable occupancy rates.
Similarly, as of 1Q2022, the cumulative supply of retail space in Johor Bahru was at 20.4 million sq ft with overall occupancy rate at 71.6%, according to Lih Ru, with two retail malls with total space of about 0.5 million sq ft scheduled for completion in the near future, namely SKS City Mall Larkin and Persada Annexe.
The reopening of the country’s borders with Singapore is positive for the gradual recovery of the tourism and retail-related markets – a high number of visitors enter Johor daily through the Singapore – Malaysia Causeway, one of the busiest border crossings in the world or via the Tuas Second Link.
Knight Frank Sabah Executive Director Alexel Chen concurred that the same is taking place in Kota Kinabalu.
According to NAPIC, the total retail space within shopping complexes in Kota Kinabalu stood at 5.78 million sq ft as at the end of 2021, with an average occupancy rate of approximately 76.7%.
However, mature and well-performing retail malls in the city, like Imago Mall, Suria Sabah Shopping Mall, Centre Point Sabah, Karamunsing and City Mall continue to record healthy occupancies in the region of 80% to 90% with monthly asking rental rates ranging between RM2.00 and RM25.00 per sq ft.
Amid improving consumer sentiment, there was a healthy return of footfall to the malls especially during weekends and public holidays.
Outlook
The retail sector, with the resumption of all economic activities signifies a better outlook in terms of better employment opportunities and improvement in consumers’ disposable income.
Moreover, following the unpredictable and unprecedented periods of lockdown, pent-up demand is anticipated to drive consumer spending.
Locally, the sector is in for a better year ahead following reopening of the economy and international borders supported by the country’s high vaccination rate.
However, with the Overnight Policy Rate (OPR) hike to 2.25% in July 2022 coupled with further potential hikes later in the year amid rising domestic and global inflationary pressures and on-going geopolitical tensions this growth momentum may derailed.
But all markers seem to show that the Malaysia’s economy is expected to continue improving moving into 2H2022.
