Demand for prime retail space remains robust, while international retailers continue expanding across the market

• International retailers showed strong interest in entering and expanding, benefiting the Greater KL market. Foreign brands opening their first stores included Byredo, Smith & Wollensky, Charles Tyrwhitt, 13de Marzo, Lotteria, Longjing and Kumo Kumo.
• Consumer confidence remained strong, with Malaysia’s IPSOS Index standing at 56.2. Government stimulus measures, stable employment conditions and tourist arrivals boosted overall retail performance.

Suburban submarket welcomes three new retail completions

• Three new malls opened in the suburban submarket, totalling 2.36 million sq ft. Sunway Square Mall (320k sq ft) and KLGCC Mall (240k sq ft) achieved strong opening occupancies, while Hextar World (1.8m sq ft) soft-launched into the market.
• City Centre vacancy improved to 9.5%, driven by near-full occupancy in prime malls and new tenant take-up. Suburban vacancy rose to 18.5% as new completions added supply pressure, though major malls sustained strong occupancy levels.

Major investment transaction in City Centre signals investor and market confidence

• Valiram Family Office acquired landlease’s 40% stake in The Exchange TRX mall and its entire 60% stake in the adjacent TRX Campus office for RM1.1 billion. The Exchange TRX mall was valued at RM4.3 billion in 2024. The deal, expected to complete in H2 2026, demonstrated investor confidence in the retail market.
• Sustained demand for retail space supported overall rent growth. City Centre mall rents increased marginally, driven by improved prime mall occupancy and resilient leasing demand. Suburban malls showed marginal rent growth, supported by strong major mall performance.

Outlook: City Centre awaits the launch of two new prime malls

• Two major completions by H2 2026 will add 1.27 million sq ft to the City Centre submarket with Ombak KLCC and 118 Mall. While vacancy is expected to rise due to supply pressure, the prime locations are expected to attract quality tenants over time.
• Retail demand will remain strong, driven by increased tourism, including Visit Malaysia Year 2026 and Chinese tourist arrivals. Quality spaces will continue to attract retailers expanding their footprints, while experiential retail trends grow as landlords innovate.