STRONGER economic growth and consumer confidence are fuelling a more robust retail property market. Demand is also the uptrend. STARBIZ assistant news editor ANGIE NG and Journalist PANG HONG YEE probe the outlook for the Industry
RETAIL property will be the next sector to take off after the recovery in the residential property sector over the last 12 to 18 months.
The bullish outlook among developers in the retail property sector would spearhead more development and expansion of such commercial development, especially in Kuala Lumpur and the Klang Valley.
The increasing number of new retail complex development and expansion also signals that better times are here again. Presently, there are 200 shopping centres in the Klang Valley and the number is gradually growing with the new ongoing developments.
The total gross built up area of retail space is 96 million sq ft while net lettable area is about 59.5 million sq ft. Another 8.5 million sq ft is expected to come on stream by the end of this year.
Among the new projects planned or underway are The Curve in Mutiara Damansara and The Pavilion in Kuala Lumpur as well as expansion of the Sunway Pyramid and the Mid Valley Megamall.
The Curve, which is developed by Boustead Properties Bhd, is set to be the latest attraction in the Golden Triangle of Petaling Jaya that encompasses Bandar Utama, Mutiara Damansara and Damansara Perdana. With lettable space of 671,500 sq ft, the project is located within the retail precinct of Mutiara Damansara that also houses Ikea, Tesco and Ikano Power Centre.
The Pavilion, which is earmarked for completion in the next two years, would offer gross lettable area of 1.8 million sq ft and net area of 1.3 million sq ft
Construction of the Mid Valley Megamall expansion by owner-operator, Mid Valley City Sdn Bhd has commenced recently and is targeted for completion in 2007.
Phase II will have 700,000 sq ft of retail space, two office towers with 450,000 sq ft of office space each, 176 units of service apartments and a 450-room five star hotel.
While most of the retail malls are centred in the Kuala Lumpur city centre, the trend is moving towards the suburban centres to serve the growing population in those areas.
Sunway Pyramid, with its planned expansion to add another 700,000 sq ft of net lettable area to the current 900,000 sq ft, will become the largest shopping mall in Bandar Sunway and Subang Jaya suburbs.
Construction of Sunway Pyramid Megamall by Sunway City Bhd (SunCity) would cost more than RM400mil and is scheduled for completion in April 2007.
SunCity managing director Datuk C.K.Wong said the new precinct with trendy streetscape and specialty precincts designed by one of the top American shopping mall architects, Smallwood Reynolds Stewart & Associates, would turn shopping into an exciting adventure at Sunway Pyramid.
There are at least two abandoned shopping centres being revived. Plaza Best World in Johor Baru is revived by the Ekovest Group,while up north, the Alor Star Mall is being undertaken by Jurus Kota Sdn Bhd. The tax incentives offered by the government to kick start real estate investment trusts (Reits) in Malaysia may also promote dynamism and opportunities in the industry. Developers of these malls will be able to unlock the investment value of their property and move on to other new developments.
Malaysian Association for Shopping and High Rise Complex Management president Richard Chan said the overall occupancy rate remained stable at 86% while well located and well managed centres were recording 100% occupancy and high rental return.
“Demand for quality centres at strategic locations remained strong. Retail sales growth is expected to pick up at a gradual pace and a growth of 7.1% is in order for this year valued at RM56bil compared to a growth of 3.6% last year,” he added.
The industry's growth in the second quarter this year showed an impressive improvement of 15% compared with 5.9% in the first quarter. The third and fourth quarters are expected to show strong double-digit growth, especially with the dual festivals of Deepavali and Hari Raya Puasa in November and December respectively.
Chan said as a rapidly evolving business, the transformation was particularly obvious in the size of these retail centres with quite a number having more than 2 million sq ft of retail space.
Hypermarket centres (hyper centres) are increasingly becoming a common sight, especially in large neighbourhoods. Most well known and the largest is Dairy Farm Group with the Giant hypermarkets and supermarkets. Others include Cold Storage supermarkets and Guardian Pharmacies, Carrefour, Tesco and Pacific Hypermarket.
Chan said a number of hyper centres have been planned, including Giant's six new centres this year to add to its 10 currently. Carrefour and Tesco would also be expanding from their current seven and five such centres respectively.
“The latest concept is called Power Centres such as the Ikano Power Centre in Mutiara Damansara. The anchor comprises a large warehouse, factory style or discount store and there are other specialty outlets that when put together becomes a massive power magnet for shoppers,” he said.
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