Retail sales improve while consumers remain cautious

• Retail sales grew 7.8% in Q1 2024 compared to Q1 2023, mainly driven by the CNY festival and school holidays. Consumers, however, deferred spending plans as the Consumer Sentiment Index (CSI) in Q1 2024 softened to 87.1 (Q4 2023: 89.4).
• Demand for prime retail space continued from several brands in Q2 2024. Notable new openings in the City Centre include Malaysia’s first Apple store, American fast-food restaurant Shake Shack, and MPH Bookstore’s flagship store at The Exchange TRX.

One neighbourhood mall in the Suburban submarket comes online

• The completion of Bloomsvale Shopping Gallery, a neighbourhood mall in the Suburban submarket, added 230,000 sq ft of new supply to the market. The four-level mall is part of a 5.2-acre mixed development at Old Klang Road.
• No new supply was delivered in the City Centre submarket in the quarter. Two upcoming neighbourhood malls in the Suburban submarket, with a combined leasable area of 449,500 sq ft, are likely to become operational in the third quarter of 2024.

One notable investment deal

• KIP Real Estate Investment Trust (KIP REIT) has entered into a conditional sale and purchase agreement with DPulze Ventures Sdn Bhd for the proposed acquisition of DPulze Shopping Centre in Cyberjaya for MYR 320 million.
• The acquisition of the seven-floor mall is KIP REIT’s largest acquisition since its listing on the Main Market of Bursa Malaysia in 2017. It is scheduled to be completed by the first quarter of 2025.

Outlook: Demand for City Centre’s prime shopping malls to remain optimistic

• No new mall openings are anticipated in the City Centre’s submarket through year-end. Rents in City Centre will remain growth-oriented for the rest of the year, and tourists are expected to remain a key demand driver for prime retail centres.
• Upcoming malls in the Suburban submarket are expected to push vacancy slightly higher. However, demand from retailers in these upcoming malls is expected to gain healthy traction, leading to market stabilisation by year-end.