JOHOR BAHRU: Genting Plantations Bhd and US property giant Simon Property Group Inc last week opened the doors to Southeast Asia's first premium outlet retail mall, Johor Premium Outlets (JPO), after working on the project for more than three years.
JPO is owned and operated by Genting Simon, a 50:50 joint venture between Genting Plantations unit Azzon Ltd and Simon Property Group's outlet division, Premium Outlets.
When JPO matures, Genting Simon Sdn Bhd general manager Jean Marie Pin Harry said there are plans to establish another Premium Outlets store for the Malaysian market in the near future.
"We will be looking for future sites but that is subject to the outcome of feasibility studies. We will announce the details in due course," Jean Marie told The Edge Financial Daily in an interview last week.
He declined to pinpoint the potential location of the future site but Premium Outlets' 69 other stores worldwide tend to be located near major tourist attractions and/or metropolitan areas with good connectivity.
For now, Genting Simon's main focus is to get the first JPO off the ground and to draw in the crowds, following the soft launch of the retail mall last Thursday.
During a visit by The Edge Financial Daily to JPO last Friday, we found a constant stream of visitors at the mall, many of whom appeared to be Johoreans and some Singaporeans.
Prime Minister Datuk Seri Najib Razak is scheduled to officially open JPO on Dec 11.
JPO is an open strip mall that houses individual boutiques for designer fashion labels and brands where off-season products are sold at discounted prices.
The brands available include Burberry, GAP, Coach, Nike, Samsonite, Royal Selangor and Zegna. It currently has 55 retailers with the remaining six stores to be opened soon.
JPO sits on 45 acres of land and has a gross lettable area of 190,000 sq ft in retail space.
Genting Simon has also penciled in space for future expansion of JPO should the need arise, Jean Marie said.
For Genting Simon, Johor is the ideal spot to open Premium Outlet's first Southeast Asian store given the southern state's proximity to Singapore.
"If you look at retail markets in the region, the number one market is Japan, followed by South Korea and the next is Singapore.
"We look at Malaysia and Singapore as a combined market for retail, so this is the logical place to be," Jean Marie said, adding that Premium Outlets already has multiple stores in Japan and South Korea.
According to Jean Marie, JPO's target clientele is mainly Singapore visitors and international tourists, apart from Malaysian shoppers.
He declined to comment on the projected number of annual visitors to JPO and the expected earnings contributions to Genting Plantations.
Maybank IB Research previously estimated that JPO will contribute net profit of between RM7 million to RM11 million a year to Genting Plantations from 2012 to 2014.
This constitutes less than 5% of the group's overall bottom line, the research house added.
Additionally, JPO is strategically located between Genting group's two resorts — Resorts World Genting, about 3½ hours' drive away from JPO, and Resorts World Sentosa in Singapore which is about an hour's drive away.
"There is significant cross traffic between Kuala Lumpur and Singapore, as well as both resorts. If tourists are on their way and want a place to shop, this is it.
"Promotions for JPO will go hand in hand with those of the two resorts," Jean Marie said.
In a recent note, Maybank IB Research said JPO could leverage on visitors to Singapore and Iskandar Malaysia due to its close proximity.
Nevertheless, Maybank IB Research observed that JPO could face challenges in attracting foreign tourists as the designer brands offered seem fewer than other premium outlets.
It pointed out a longer-term risk given that two more premium outlets are being planned for Sepang and Penang by 2020 under the Economic Transformation Programme (ETP).
Nevertheless, analysts opine that JPO will enhance the value of Genting Plantations' remaining 6,670 acres of land in Kulaijaya where the group has its Genting Indahpura development.
According to a brief description on the ETP website, Genting Indahpura will feature a hotel, international water theme park and retail outlets.
In a Nov 24 note, OSK Research said the opening of the JPO and a new highway interchange has already helped to boost property prices at Genting Indahpura.
OSK Research said that shoplots are now sold at about RM560,000 each from RM300,000 to RM350,000 earlier this year.
Based on OSK Research's calculations, Genting Plantations' landbank in the Kulaijaya area is worth about RM1.6 billion.
This is based on valuing Genting Plantation's 6,437-acre oil palm land at RM5 psf and 237-acre development land at RM21 psf.
Jean Marie concurs that JPO serves as an icon to draw interest and development to Genting's land in Johor.
"This is a 100% greenfield. It was a palm jungle. There was nothing here. [JPO] is an attraction to bring tourists here," he said.
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