SINCE the mid-1990s, Penang has experienced a mushrooming of shopping centres on the island and the mainland.
The One-Stop Midlands Park Centre (Jalan Burma), Prangin Mall (in Jalan Dr Lim Chwee Leong), Megamall Pinang (in Bandar Perai Jaya), Kompleks Bukit Jambul (in Bayan Baru), and Island Plaza (in Tanjung Tokong) were some of the shopping complexes that emerged in the second half of the 90s.
The early 21st century continues to see the emergence of new shopping malls and fresh development plans for shopping centres on the island. The new players included Gurney Plaza shopping mall (in Gurney Drive), which opened in 2001.
Local developers such as the Hunza Properties and Ivory Properties have announced plans to develop shopping centres and retail properties in key strategic locations on the island. With a population of slightly over a million, the question of whether the supply of retail properties would eventually exceed the demand inevitably arises.
Some property consultants have sounded the alarm.
Henry Butcher Shopping Centres Consultant Sdn Bhd managing director Tan Hai Hsin said there had been an oversupply situation in the shopping centre industry of Penang since the Asian financial and economic crisis in 1997.
“Shopping centres such as Prangin Mall, Gurney Plaza, City Parade (in Bukit Mertajam), Plaza Utama (in Bukit Mertajam), ASAS Plaza (in Tanjung Bungah) and Megamal Pinang, which opened during the Asian crisis, were not immediately filled up, compared to those which opened during pre-crisis period like Island Plaza, One-Stop Midlands Park Centre, Kompleks Bukit Jambul, and Sunshine Square (in Bayan Baru).
“The oversupply situation will worsen. An additional 4.1 million sq ft of retail space is expected to enter the Penang market in the next three years (see table) with new shopping centres being planned for the southwest district of the island, Air Itam, and Seberang Jaya.
“The new shopping centres being planned include Billion in Seberang Jaya, Giant and Bayan Central in Bayan Baru, and Farlim Megamall in Ayer Itam.
“The incomplete Bayan Bay mixed-development project in the southwest district will also be revived to include a shopping mall,” he said, adding that the oversupply had affected the retail property values.
“In certain prime locations such as in Prangin Mall and Gurney Plaza, however, rental rates continue to increase. However, smaller shopping centres on non-strategic locations, with retail space of less than 200,000sq ft, such as Penang Plaza (in Jalan Burma), Gembira Parade (in Island Park), and Axis Plaza (in Jalan Cantonment) suffer from low rental and poor occupancy rates.”
Tan said that for a shopping mall to be successful in Penang, it must be centrally located and have the size to offer a wide variety of products and services.
“Penang has a small land area and population and it does not require more than one hour to travel to most parts of the island and the mainland. A shopping centre that is centrally located and easily accessible by its shoppers will enjoy great success.
“For example, Prangin Mall is strategically located for Penang consumers living in both island and mainland, while Gurney Plaza is surrounded by high concentration of middle-upper income residents. The other important factor is size. Prangin Mall is popular because it has 900,000 sq ft of retail space and 593 shops, while Gurney Plaza has 700,000sq ft of retail space and 300 retail shops.
“Kompleks Bukit Jambul, in the southern region of the island, has 600,000 sq ft of retail space and 433 tenants,” he noted.
Rahim & Co Chartered Surveyors (Penang) Sdn Bhd managing director Tay Lai Hee said that in view of the plan to build more shopping complexes and retail properties on the island, developers should take a cautious approach to planning their projects to avoid competition with existing ones.
“They have to come up with new concepts of shopping malls that provide more than just shopping facilities, as shoppers look forward to more than just shopping at a shopping centre.
“They must also do research to assess the supply and demand situation to determine the appropriate size for their project,” he said.
Raine & Horne International Zaki + Partners Sdn Bhd partner Michael Geh, however, takes a different view. “Firstly it is important to point out that the retail businesses here do not just cater only to the Penang population. They draw out-of-state shoppers from towns such as Alor Setar, Sungai Petani, Kulim, and Taiping.
On top of this crowd, the retail businesses here also receive support of tourists from neighbouring countries such as Singapore, Indonesia, and Thailand. While the inflow of tourists from Europe may have decreased, there has been a substantial surge in the influx of tourists from the Middle East.”
According to Geh, the issue is not an oversupply of retail spaces in shopping centres.
“The question is whether the management of a shopping complex has adopted an effective strategy to position itself for competition.“The ingredients of an effective strategy would involve having the right tenant mix and trendy lifestyle facilities for the shopping mall,” he said.
Geh said that in 1997, when the economy was sluggish, the feedback was that there was an oversupply of shopping complexes in the Klang Valley.
“Today, shopping centres in the Klang Valley are congested every weekend and there are construction works going on to build more shopping complexes,” he added.
According to Intra Harta Consultants (North) Sdn Bhd manager Peh Seng Yee, the market is slowly absorbing the oversupply of retail spaces in shopping complex due to the improving economy over the past few years.
“There has not been any completion of new shopping complexes since Gurney Plaza, enabling the mismatch of supply and demand to be corrected gradually.
“The recent announcements of newly proposed shopping complexes by developers reflect their confidence of the demand for certain categories of retail accommodation.
“These projects would come into the market in the next two to three years to provide another batch of new shopping avenues to the people of Penang rather than flooding the market,” he said.
Peh said over the past few years, due to an improved economic climate, market rentals and prices generally remained stable or increased gradually for the better performing shopping centres.
“However, there has been continued downward pressure on rentals of retail accommodation in older secondary buildings, particularly those that are inferior in terms of floor layout and design and which are located in less sought-after areas where accessibility is poor,” he added.
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