KUALA LUMPUR: More retailers are taking advantage of the current market uncertainty by securing low rental charges and fit-out contributions to sustain their businesses.
Savills, in its Asian cities reports on the Kuala Lumpur retail segment, said a number of retailers have also opted to take their businesses online as a result of the current nationwide lockdown.
“They feel that they can generate greater profit margins by providing take-away and delivery services as an easier means, rather than for them to capture customers in a shopping mall which sees lower footfall.”
According to Savills, the grocery retail segment is seen as pandemic-proof, adding that the essential services sector has been enjoying stimulating sales during the pandemic.
“Furthermore, with dine-ins suffering from on-off opening guidelines, grocery operators stand to gain further as people begin to cook more at home during the lockdown.
“This year, we have seen two new entrant supermarkets, namely QRA, a premium supermarket in Kenny Hills, with another outlet to be opened soon; and The Hauz of Spize in Bangsar, Kuala Lumpur.”
Savills said the restrictions imposed and the increasing daily Covid-19 cases have reduced the mobility patterns and behaviours among the population.
“This directly correlates to the performance of the retail market as people tend to spend less physically and more online due to convenience and the fear of getting infected. “The full recovery to pre-Covid levels is vague at the moment, largely depending on the speed in containing the virus, the rollout of vaccination programmes, the uplift of travel bans and the rebound in consumer spending.”
Within the next three years, Savills said Greater Kuala Lumpur would see the completion of 13 new malls, adding at least 8.9 million sq ft of net lettable area (NLA) to the market.
“More than half of it (54.3%) are to be completed this year and are located in the suburbs. Major upcoming completions include Pavilion Bukit Jalil at 1.8 million sq ft of NLA followed by IOI City Mall 2 at one million sq ft.
“Nevertheless, further delays in opening are likely because of continued uncertainties in the retail market.”
Savills said retail malls in Greater Kuala Lumpur have seen a slight increase in occupancy rates by 0.2% in the first quarter of 2021.
“This is mainly attributable to the slight progression in leasing activities made by newly-completed malls.
“Continuous pressure on occupancy is expected until the Covid-19 pandemic is contained.
“Many tenants in non-prime and neighbourhood malls have struggled to survive and the current standard operating procedures are seen as an obstacle to recovery,” it said.
However, occupancy rates for prime malls remained steady, largely due to major landlords’ financial abilities to maintain zero tenancy termination, according to Savills.