Knight Frank 1H2022 Real Estate Highlights report: Malaysia’s retail and industrial markets improving


Malaysia’s retail and industrial markets improving

As Malaysia transitions to the endemic phase of Covid-19, signs of economic recovery and growth have been apparent. According to the Knight Frank 1H2022 Real Estate Highlights report, the economy grew 5%, primarily supported by improved domestic and external demand, as well as continued policy support. Malaysia began moving to the endemic phase on April 1 this year, leading to the normalisation of economic activities.

Klang Valley retail to see overall improvement
In the Klang Valley, the retail market rebounded in 2021, following the gradual easing of strict containment measures in the four-phase National Recovery Plan (NRP). In 1Q2022, higher footfall at shopping malls plus the Chinese New Year festival created a positive outlook for the retail market, with a promising growth rate of 18.3%.

“For the entirety of 2022, the country’s retail sales growth has been revised upwards from 6.3% to 13.1% following the transition to the endemic phase earlier this year,” the report said.

VoIP Phones

The completion of Mitsui Shopping Park LaLaport and Malaysia Grand Bazaar in Bukit Bintang in 1H2022 offered a combined one million sq ft of net lettable area (NLA) of retail space. Both retail spaces are part of an integrated development comprising serviced residences, hotels, offices, retail and entertainment outlets, and transit hubs.

The report also indicated that as at 1H2022, the retail space supply was 18.38 million sq ft in KL fringe, 13.6 million sq ft in KL City and 34.11 million sq ft in Selangor.

The next half of the year (2H2022) will see the scheduled completion of four new shopping centres and retail components with a combined retail space of about 2.15 million sq ft; namely, KSL Esplanade Mall in Klang, IOI City Mall (phase two) in Putrajaya, Datum Jelatek’s retail component in Taman Keramat and EcoHill Walk in Semenyih, the report said.

Besides that, rising consumer demand for convenience and accessibility has hastened retailers’ initiatives to increase footfall at malls and retail outlets.

“Shifting consumer behaviour coupled with the acceleration in digital transformation amid the Covid-19 pandemic have led retailers and mall operators to increasingly adopt omnichannel strategies to improve sales and engagement,” the report said.

AEON Co (M) Bhd has accelerated its digital transformation by merging ­offline and online channels via various platforms including myAEON2go, AEON loyalty programme, iAEON app and AEON Living Zone. IPC and MyTOWN have created mobile apps with integrated mobile reward programmes and adapted to social commerce by introducing shoppable live streams, personal shopping services and campaigns with food delivery services, GrabFood and foodpanda. Atlas, one of Malaysia’s largest vending machine operators, has implemented Braille-enabled vending machines and Atlas TryBot for automated sampling.

As for sales transactions and rental rates, the report noted that occupancy rates have held steady while the revenue of shopping mall owners is improving. This is due to the lower rental rebates and discounts to tenants amid the rising foot traffic.

The rental rates of many retail spaces have gone down in 2021 compared to 2020. According to Knight Frank, the estimated rental rates were derived from the gross revenue of respective annual reports.

“Shopping icons in the Kuala Lumpur city centre, namely Suria KLCC and Pavilion Kuala Lumpur, command average monthly gross rentals of RM29 and RM25 psf (2020: RM33 and RM26 psf) respectively. The malls enjoyed commendable occupancy rates of 93% and 90.2% respectively.

cloud based services

“In KL fringe, Mid Valley Megamall and The Gardens Mall command average monthly gross rental of about RM13 and RM12 psf (2020: RM15 and RM14 psf) respectively. The occupancies of these malls remain high at around 97.8% and 90.7% respectively,” the report said.

Knight Frank highlighted that the resumption of economic activities in the endemic phase will bring overall improvement. However, rising inflation and the ongoing Russia-Ukraine war have caused a supply chain bottleneck, which may impede consumer spending.

Due to the change in consumer purchasing habits, omnichannel strategies — which integrate online and offline sales — are still essential for companies to continue in business. E-commerce is moving into a new phase in which on-demand services are assuming a significant role. Trends brought on by the pandemic will continue to exist as long as customers’ need for speed, convenience and safety exists.

Let our specialist provide you the best solution.

NewRetail is here! 2022 is the first year of new retail in Malaysia. Wish to find out more?

Contact the Exabytes new retail team now to learn how to provide your customers with a unified and seamless shopping experience through powerful, automated new retail solutions!

Leave your contact, and we will get back to you.

    Notify of
    Inline Feedbacks
    View all comments