APPD Market Report Article

Kuala Lumpur

May 31, 2022


MYR 32.4


Retailers expansion signals the return of market confidence

  • The festive season in February continued to assist in elevating mall footfalls and retail sales, further cementing the optimism retail operators have for 2022. The Omicron variant holds little sway over mall performances and we observed crowds to throng popular malls since the beginning of this year.
  • The bulk of the expansions in the quarter were seen from the fashion & accessories industry and the F&B industry. Home and living and leisure/entertainment retailers have also been thriving, with new outlets opening in Pavilion Bukit Jalil and Mitsui Lalaport Shopping Mall.

One new completion drives City Centre stock increase

  • The opening of Mitsui Shopping Park Lalaport KL contributed a total of 889,100 sq ft stock into the City Centre submarket. Anchor tenants include NITORI (home furniture store), Nojima (electronic appliance store), Mr. D.I.Y., BookXcess, Jaya Grocer and Jonetz by Don Don Donki.
  • In 1Q22, City Centre submarket vacancy rates increased slightly to 17.5%, mainly caused by the entry of the new mall- Mitsui Shopping Park Lalaport KL with low vacancies. Nevertheless, occupancy rate of prime malls remains healthy. Some retail REITs have reported that their retail mall occupancy rates have already reached 4Q19 (pre-pandemic) levels.

Local investors on the search for yield-accretive assets

  • With a greater improvement in retail demand during the last quarter and general market optimism inspired by the reopening of international borders, many retail landlords had begun trimming rental rebates. However, several malls are still supporting their tenants by offering tenant assistance packages on a case-by-case basis.
  • There are local investors on the lookout for yield-accretive assets. While they do not rule out potential near-term acquisitions, they are also looking at other sectors too, not limited to retail.

Outlook: Healthy retail recovery anticipated this year

  • Retail industry players expects good retail sales recovery for 2022. The projected growth is expected to be aided by festive season spending, and the further relaxation of COVID-19 restrictions or standard operating procedures (SOPs), aside from the low base in the same period in the preceding year.
  • Starting 1st April 2022, Malaysia will reopen the country’s borders and will enter the ‘Transition to Endemic Phase’ of COVID-19, with all restrictions on business operating hours removed and prayer activities allowed without physical distancing. This good news has further boosted retailers’ confidence surrounding the envisioned growth prospects of the retail segment in 2022.

Note: Kuala Lumpur Retail refers to Kuala Lumpur's prime retail market.

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