PAVILION SHOPPING MALL

KUALA LUMPUR (Jan 8): Last year was unkind to not only the Malaysian property market but also the retail sector. “There were strong headwinds in the domestic and regional retail markets. The overall impact was a dour year. Margins and volumes were down by double digits,” says Savills Malaysia managing director Allan Soo (pictured, below).

Soo will be presenting a paper on the retail market, entitled “Retail Market Performance and Outlook”, at the 9th Malaysian Property Summit (9MPS).

Allan SooThe event is being organised by the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the private sector of Malaysia (PEPS). The Edge is the media partner.

While 2015 was not a good year for the retail sector, it was not all gloom and doom, says Soo. “We all want to hear good news and the best probably comes from the online business, outlet malls and Johor Bahru. With rising costs and falling discretionary spending, the market was driven by value-for-money propositions, like online and outlet malls, where customers searched for bargains with quality.

“JB’s retail market was an exception because the weak ringgit saw Singapore dollars flooding the malls in Johor, particularly in September. Overall, JB saw a 20% increase in sales volume.”

In the new year, Soo sees more “value-driven propositions” in the form of discounters and outlet malls. He also expects the landscape to be somewhat transformed with an influx of regional food and beverage names into Malaysia.

“This will change the F&B landscape. It will become more sophisticated and exciting,” he says without disclosing the names of the new brands.

Kuala Lumpur currently has 54 million sq ft of retail space, Soo reveals. He expects the figure to rise to 60 million sq ft this year.

With 2016 looking to be a challenging year for retailers, what needs to be done to survive the soft conditions?

“We need to shave margins and consolidate. This is already happening in the region, especially Hong Kong, with the luxury market being impacted drastically by China’s slowdown,” Soo explains.

“The last few decades of strident growth in the supply of malls and shops are coming to a turning point, so I expect 2016 to be a threshold in terms of same store growth, if any, and rent as well. It will be challenging and retail will see a crippling crunch. New brands will come in as well, adding more pressure [to the market].”

Click here for more details about the 9th Malaysian Property Summit 2016 and to download the registration form.

Click here to win a ticket worth RM1,088 each to the 9th Malaysian Property Summit 2016.

This story first appeared in The Edge Property pullout on Jan 8, 2016, which comes with The Edge Financial Daily every Friday. Download The Edge Property here for free.

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