KUALA LUMPUR: Capitaland Malaysia Trust
(CMT) continues to see strong consumer spending across most of its portfolio of malls.
This is contrary to its earlier expectations that consumer spending would be challenged given concerns of rising costs and after the tapering of the effects from the Employees Provident Fund’s early withdrawals that was halted this year.
The trust’s manager, CapitaLand Malaysia REIT Management Sdn Bhd, would also continue to keep up with asset enhancement initiatives (AEI) with plans to spend up to 1.5% of total asset values of RM5bil this year.
“We think consumer sentiment, in general, would still remain cautious due to the increase in cost of living and rising interest rates.
“Nevertheless, the operating numbers we are seeing on the ground still reflects a fairly strong spending across the various malls,” the trust manager’s chief executive officer Tan Choon Siang told a media briefing yesterday.
He added that there is positive momentum in terms of rentals and occupancies of malls.
“We continue to be optimistic in the retail sector for the remaining of this year and this should translate to our top line performance,” he said.
“In the first half of this year, we have continued to see very strong spending across all of our malls and there is a lot of interest for space in our various malls,” he added.
Tan pointed out that in the first six months there had been positive rental reversions which means average rents for the new contracts signed compared with average rents for expiring contracts of 4.7%.
“The better rental reversions will help lift the top line for the remainder of the year.
“Increases in mall spending is mainly driven by the food and beverage, athleisure and some entertainment which are making a strong comeback – these are experiential spending,” Tan said.
Commenting on 3 Damansara, the weakest performing mall in CMT’s portfolio, Tan said plans are underway to beef up the mall with planned AEI of some 2% or 3% of the mall’s asset values, which is higher than the average spend.
Despite a good location, 3 Damansara only has an occupancy rate of 64.1% as of June 2023.
“We have brought in NSK Grocer which has increased footfall – they will open up the Deli and Foodcourt section sometime this quarter.
“Footfall will continue to go up and the general vibe in the mall has improved with the new anchor tenant.
“We will also do a simple AEI on the lower-ground floor.
“When we do an AEI, we try to secure tenants that are prepared to take up the spaces after the AEI is completed.
“The interest has been very positive,” he said.
The plan is to get a majority commitment from potential tenants to the planned renovated space before the Manager actually proceeds with the AEI for 3 Damansara, he said.
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