MALAYSIA has as a total of 1,035 shopping malls/complexes with 178 million sq ft as of 3Q 2019 based on a data by National Property Information Centre (Napic).
To-recap, Malaysia had over 600 shopping malls operating in the country in 2018. It was projected that this number will balloon to 700 shopping malls with a total net lettable area of 170 million sq ft by end of 2019.
However, the COVID-19 pandemic has adversely impacted shopping malls in the country. When the movement control order (MCO) was implemented in March, shopping malls became ghost towns. Retailers suffered huge blow to their businesses and income.
Based on a report by Retail Group Malaysia, the country’s retail industry recorded a negative growth rate of 20.2% in retail sales in in the first half of 2020 (1H 2020) as compared to the same period in 2019.
Meanwhile, retail sales growth rate was -30.9% from April to June, 2020 as compared to same period in the previous year.
Nevertheless, local developers are still actively building malls around the country focusing on densely-populated area.
In addition, there are another 39 shopping malls which are still under construction. Once complete, these malls will add another 16 million sq ft of retail space to the existing market. Meanwhile, the average mall occupancy rate stood at 79.2%
Why the need to build more malls when the sector already showed visible signs of oversupply in urban areas?
There is an influx of investment interest in malls over the years. This is as malls are typically more capital intensive, which is why developers continued to build malls.
Also, shopping malls are lucrative business as a well-conceived and successful mall is able to generate more than RM100 mil of net property income annually.
Would these upcoming malls be able to sustain? They could possibly face difficulties to survive in an overcrowded market.
The key factor which will affect the industry is people’s buying power which are through their disposable income. People are more caution with spending during this time of uncertainties and this will continue till next year.
Besides that, the rise of the e-commerce has already impacted the global retail industry.
Furthermore, the younger generations – millennials and Gen-Z are shaping the future of shopping – online shopping.
Not only the younger generation, in fact, more people are switching to online shopping – the new normal birthed by pandemic.
Moving forward, the digital shopping platform might sideline the brick-and-mortar retail stores. – Dec 16, 2020
