Malaysia’s REIT sector is staging a strong comeback, outperforming the broader market with a 3.7% gain in the first half of 2025 (1H25), even as the FBM KLCI declined 6.6%. Renewed investor interest in defensive assets — fuelled by robust foreign inflows and Bank Negara Malaysia’s recent 25-basis-point OPR cut — has brought fresh momentum to the sector.
Retail and hospitality REITs are poised to lead this momentum in 2H25. Despite a growing supply of retail space in the Klang Valley, premium malls continue to perform well, with occupancy rates above 90% and steady footfall driven by their established locations.
Chief among these is Suria KLCC, the iconic retail destination in the heart of Kuala Lumpur. Managed by KLCC Property Holdings Bhd, Suria KLCC sees an average of 45 million visitors annually. It is the crown jewel in the group’s RM15.8 billion market-cap Stapled Group, which holds assets worth over RM18.7 billion. Alongside Suria, KLCCP Stapled Group manages Grade-A office towers and the Mandarin Oriental Kuala Lumpur.
In an exclusive interview with BusinessToday, Datuk Sr Mohd Salem Kailany, Chief Executive Officer of the KLCCP Stapled Group, shared insights into the group’s consolidation strategy, asset enhancements and future growth roadmap.
Balanced Portfolio with a Long-Term View
Appointed CEO in November 2024, Datuk Salem described KLCC Holdings as a diversified group comprising the listed KLCCP Stapled Group, Putrajaya Holdings and other units within the KLCC Group. The KLCCP Stapled Group maintains a well-balanced portfolio, with each segment — retail, office and hospitality — each contributing roughly one-third to the business.
“Our diversification allows us to ride through market cycles with stability, while capitalising on growth where opportunities emerge,” he explained.
Elevating the Jewel
A pivotal move for the group has been the full consolidation of Suria KLCC, previously held under a 60:40 joint venture. KLCCP Stapled Group now holds full ownership, enabling faster and more cohesive execution of transformation plans.
The group has adopted a strategy of maximising asset returns by enhancing visitor experience, refreshing tenancy mixes, and hosting regular events. A recent example was the reconfiguration of retail space vacated by Parkson into multiple smaller outlets, leading to stronger revenue generation.
New F&B and fashion tenants, introduced based on visitor feedback, have contributed to a 4%–5% rise in footfall over the past year. Despite being a market leader, Datuk Salem believes Suria KLCC has more value to unlock. Inspired by peers in Singapore and Bangkok, KLCCP Stapled Group is working closely with luxury brands for exclusive launches to keep customer engagement high.
“We remain one of the top choices for retailers due to our consistent sales performance and strong customer numbers,” he said. Upgrades such as escalator replacements and restroom refurbishments are part of KLCCP Stapled Group’s long-term plan to maintain Suria KLCC’s appeal.
The upcoming Ombak KLCC, a new 400,000 sq ft retail and lifestyle space adjacent to the MRT station, is expected to complement Suria and increase visitor draw to the precinct.
Disciplined on Acquisitions, Strong on Fundamentals
When asked about new asset acquisitions, Datuk Salem said there are no immediate plans to inject new properties into the KLCCP Stapled Group.
“Any potential acquisition will need to meet strict investment criteria and must be value-accretive,” he noted.
KLCCP Stapled Group remains financially sound, with gearing below 0.3. Its recent refinancing of an RM388 million facility for the Mandarin Oriental reduced financing costs by 100 basis points, reflecting its Triple-A credit rating and prudent capital management.
The hospitality segment remains a challenge. Despite its premium positioning, the Mandarin Oriental Kuala Lumpur currently posts occupancy rates above 50%. However, renovations across the Grand Ballroom, guest rooms, and upcoming upgrades to 20 apartment units are expected to elevate its offering.
Datuk Salem said the hotel’s “RevPAR” (revenue per available room) remains strong due to healthy average room rates, and the focus now is to gradually lift occupancy to the high 50s and low 60s.
Office Market Leadership and Future Land Use
KLCCP Stapled Group continues to lead in the office segment, with nearly full occupancy across its towers, including the landmark Petronas Twin Towers.
To stay competitive, the group is rolling out its “Workplace for Tomorrow” initiative — incorporating modern features such as open-plan layouts, chill-out zones, and collaboration areas across its ageing assets, some of which are over 20 years old.
On undeveloped land in the KLCC precinct, Datuk Salem said the priority is on interim activation, such as lifestyle events and temporary installations, to enhance the destination’s completeness, rather than rushing into new commercial developments amid concerns of oversupply.
Share Price and Market Perception
Addressing KLCCP Stapled Group’s relatively muted share price compared to “sexier” industrial REITs, Datuk Salem was candid: “If you’re good, you’re seen as boring.”
Despite this perception, he emphasised that KLCCP Stapled Group has delivered consistent performance and dividends.
“What matters is that we continue generating value for our shareholders through discipline, strong fundamentals and prudent cost control,” he said.
With a low gearing ratio and access to sub-4% long-term financing due to its Triple-A rating, KLCCP Stapled Group remains well-positioned to navigate interest rate cycles and protect investor returns.
With a sharpened focus on optimising core assets, enhancing visitor experiences, and maintaining financial discipline, KLCCP Stapled Group is taking a measured yet strategic path toward long-term value creation. Amid renewed interest in defensive assets and premium REITs, the group appears poised to ride the current tailwinds while preparing for future opportunities.
