Pavilion Kuala Lumpur

KUALA LUMPUR: The expected entry of 4.5 million sq ft of retail space (13 shopping malls) in the Klang Valley by end-2015 and early-2016 is expected to further dilute the retail market, said Knight Frank Malaysia in its Real Estate Highlights 1H2015.

With retailers continuing to be spoilt for choice, developers of new and less prominent malls are offering attractive incentives, partnership and short-term tenancies to pop-up retailers to improve occupancy.

Knight Frank noted that prime and established regional and neighbourhood shopping malls with proven track record of high visitation are still the preferred retailers’ choice for expansion, even at high rentals.

Despite the subdued market, the retail sector continues to witness the entry of new international brands and expansion of existing brands and outlets, especially in prime shopping centres in the Klang Valley, said Knight Frank.

Meanwhile, according to Malaysia Retailer Association and Retail Group Malaysia (RGM), retail sales registered negative growth of 0.8% in 4Q2014 compared to a year ago.

“The negative sentiment continued into the first two months of 2015 before the pre-GST spending rush by consumers during March to avoid the 6% tax on non-exempted and standard rated items,” said Knight Frank.

RGM has projected a 4% growth rate for retail sales, the third revision from the earlier projected 5.5% growth.

“Overall, the short-term outlook for the local retail industry is expected to embrace more challenges. The rising cost of living and weakening of the Malaysian ringgit amid a slowing economy will continue to dampen consumer sentiment,” said Knight Frank.

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