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Savills Malaysia: Massive store closures in major malls unlikely

PETALING JAYA (June 24): Although some renowned fashion brands such as Zara and Esprit have announced store closures in Malaysia recently, occupancy rate into the second half of the year (2H 2020) is expected to be relatively stable for established malls in the country.

“We expect a recovery in the retail sector as the public is returning to the major malls but no significant shopping spree is envisaged as fears still linger for a second wave of Covid-19 outbreak,” Savills Malaysia managing director Datuk Paul Khong (pictured) told EdgeProp.my, noting that foot traffic is improving albeit still below pre-Movement Control Order levels.

“Good news is that mall footfalls are sustained by Malaysians who see visiting malls as their way of life especially in city areas. Malls have always been a natural destination for Malaysians as they offer a one-stop shopping experience with entertainment, fashion, F&B and groceries all housed in one location within a well-controlled, safe and comfortable environment,” Khong said.

Savills Malaysia Research’s report titled “Asian Cities Reports - Kuala Lumpur Retail 1H 2020” released earlier stated that the average occupancy rate of malls in Greater Kuala Lumpur had remained stable in 1Q 2020, only dropping marginally by 0.9% to 87.2% from the previous quarter (end-2019).

While it is a relief to see malls sustaining without massive closures for now, Khong said some pressure on occupancy rates might come in 4Q2020 after the six-month loan moratorium period ends.

While there are still some leasing deals happening now, in general, retail leasing activities are expected to be slower into 2H2020 as retailers may take a more prudent outlook or revisit their expansion plans.

Expecting more challenges in securing new tenants in 2H2020, landlords are now engaging closely with their tenants to work out their own “Prihatin” stimulus packages, with attractive terms.

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