APPD Market Report Article

Kuala Lumpur

May 26, 2024

Yulia Nikulicheva, Head of Research & Consultancy, Malaysia


MYR 33.8


Leasing demand remains stable as retail market sends mixed signals

  • Malaysia’s retail market sent mixed signals in 4Q23. Despite retail industry sales experiencing a 0.2% y-o-y decline in 4Q23 amidst the rising cost of living, consumers displayed a more optimistic outlook as the Consumer Sentiment Index score rose to 89.4 in 4Q23 (3Q23: 78.9), supported by a strong labour market, an improved employment rate and a recovery in consumer spending.
  • In 1Q24, a positive trend of new store openings was observed, with several brands introducing flagship and concept stores. In the City Centre, Uniqlo unveiled its newest and largest store in Malaysia at The Exchange TRX, solidifying its presence. Renowned luxury brands, such as La Prairie, Kate Spade New York, Tiffany & Co and Longchamp, were also seen with new store openings in the same mall.

No new project completes in the quarter

  • No new projects were completed in 1Q24, leaving the Prime retail stock unchanged at 11.56 million sq ft in the City Centre submarket and 36.09 million sq ft in the Suburban submarket. The near-term pipeline supply is expected to be dominated by the Suburban submarket, while the City Centre submarket’s pipeline supply is thin, with only one retail podium slated for completion by year-end.
  • City Centre’s vacancy dipped to 11.8%, primarily due to further leasing progress taking place in the newly-completed The Exchange TRX. In the Suburban submarket, the vacancy rate posted a marginal decline to 18.3% as some suburban malls continued to attract new retailers and fill up their leasing portfolios.

Two notable investment deals conclude

  • There was a slight uptick in investor demand among local REITs as Sunway Real Estate Investment Trust (Sunway REIT) entered a conditional sale and purchase agreement with D’Kiara Place Sdn Bhd, a wholly-owned subsidiary of YNH Property Bhd, to acquire 163 Retail Park in Mont Kiara, Kuala Lumpur, for MYR 215 million. The proposed disposal is estimated to be completed by 2Q24.
  • In addition, KLCC Property Holdings Bhd (KLCCP) has purchased the remaining 40% equity interest in Suria KLCC Sdn Bhd, which owns and manages Suria KLCC Mall, for MYR 1.95 billion as it entered into a share purchase agreement with Ocmador (Malaysia) City Retail Centre Sdn Bhd, Port Moresby Investment Ltd and Bold Peak Sdn Bhd.

Outlook: Thin future pipeline supply in the City Centre submarket

  • Future pipeline supply in the City Centre submarket is expected to be thin beyond 2025. Only one completion is anticipated in 2025 through the completion of 118 Mall, which will add another 850,000 sq ft of NLA within the City Centre submarket. More mall development activities are expected to take place in the Suburban submarket.
  • The leasing market is expected to remain stable. The F&B sector is likely to be the key source of demand. Retail spending is likely to benefit from robust economic growth, a positive tourism outlook, anticipated government fiscal easing and an improving job market.

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

Talk to us 
about real estate markets.