Retail property expected to remain flat in Q1


PETALING JAYA: The retail property sector is expected to remain flat in the first quarter of 2019, underpinned by steady, yet cautious, consumer spending.

The Malaysian Association for Shopping and High-Rise Complex Management past president Richard Chan said the Chinese New Year (CNY) festive period in February will help to sustain the sector during the period.

“Performance won’t be much better than 2018. But, its CNY, which will help. Surprisingly big items, such as car sales seem to do doing good. Bookings for the Proton X70 have been encouraging,” he told StarBiz.

According to reports, bookings for the X70 has exceeded 15,000 units since September. Bookings climbed up to an average of 200 to 300 bookings per day since the vehicle was launched on Dec 12.

“But we are projecting flat growth in the current quarter, as the majority of consumers are still cautious,” said Chan.

CBRE|WTW in its latest Klang Valley Property Market review meanwhile forecasts vacancy and rental rates for the local retail sector to remain flat in the fourth quarter of 2018.

“Cumulative supply of retail space has increased to 56.3 million sq ft, with two new completions, namely KL EcoCity Retail Centre and Eko Cheras Mall. Vacancy rates continued to be under pressure, increased to 15.3%, due to the challenging market and recently completed retail malls.

The property consultancy noted that new entries from the UK’s famous cosmetic brand, LUSH and Thai-owned New York Deli, Dean and Deluca, are making their first appearance in Pavilion Kuala Lumpur.

“International brands opened their first stores last year, gained confidence in Malaysian’s retail market and continued to expand by opening second stores in Klang Valley.”

According to the Malaysian Shopping Malls Association’s (PPK Malaysia) recent Malaysia Shopping Mall Industry Survey 2018, there are currently 671 malls with a net lettable area ranging from a minimum of 50,000 sq ft to 2.2 million sq ft.

The survey, which comprised 47 respondent malls, revealed that the average occupancy rate stood at 92%, with an average month gross rental rate of RM7.87 per sq ft.

“Malaysia’s shopping mall industry offers more than 166.6 million sq ft of net lettable area with an estimated real estate value of RM130bil. In addition, the shopping industry annual sales turnover is close to RM120bil.

“The industry also provides direct employment to about 56,600 people,” it said.

Meanwhile, Retail Group Malaysia in its recent report raised its 2018 growth forecast for the local retail sector to 4.4% from 4.1% previously, after taking into consideration the industry’s better performance during the third quarter and expected moderate growth for the current quarter.

“For the last quarter of this year, the retail growth rate has been revised upwards slightly from 4.3% (estimated in September 2018) to 4.7%.

“School holidays, Double Eleven shopping festival, Black Friday sales, Christmas and the new year will contribute to a better retail sale performance during this period.”

The association is projecting a 4.5% growth rate in retail sales for 2019.

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