IJM JV in talks for two foreign hotels in Light City

GEORGE TOWN: IJM Perennial Develop-ment Sdn Bhd (IJMPD) is currently negotiating for a China and a US-brand name hotels to operate in the RM4.5bil Light City mixed development project in Penang, says general manager Tan Hun Beng,

IJMPD is a joint-venture (JV) company between IJM Corp Bhd and Singapore based Perennial Holdings Pte Ltd to oversee The Light City project located next to the first Penang bridge. Tan told StarBiz that the company has allocated a 31-storey building block to accommodate the two hotels and nine-storey offices. Both the four and five-star hotels will have a gross development value of RM650mil and a total of 459 rooms, Tan said.

“This could be the country’s first China hotel brand name,” he said, adding that “A China-based operator will operate the hotels aimed at the corporate market, serving the needs of businessmen visiting Batu Kawan and Bayan Lepas Industrial Parks.”

Tan also expects the recent inflow of investment into Penang will fuel the need for hotel rooms. He noted that the company will soon be announcing on the two hotels and their respective operators.The Light City’s main attractions include a 680,000-sq-ft shopping complex called The Waterfront Shoppe, accommodating a 45,000-sq-ft cineplex, a 30,000-sq-ft supermarket, a 30,000-sq-ft food court and the 70,000-sq-ft Penang Waterfront Convention Centre.The mall will also have a multi-storey car park with electric vehicle charging stations and 3,000 parking bays.

“Some parts of the mall will be designed to resemble the island’s iconic landmarks,” added Tan.

IJMPD had recently signed a tenancy agreement for a Hong Kong-based supermarket brand to be one of the mall’s anchor tenants. The company will also sign with a well-known Cineplex brand name soon.

According to Tan, IJMPD’s shopping complex will have 40% allocation for food and beverage and entertainment businesses to keep up with changing trends and to stay competitive in the mall business.

“We will sign with most tenants in 2024, as the mall is scheduled to be ready by early 2025.” Tan noted.

Meanwhile, The Light City also has a residential component known as the Mezzo, a 30-storey building with 456 condominiums, priced from RM900,000 when launched in early 2021. Since the soft launch in February 2021, IJMPD has sold about 70% of the Mezzo residence.

“Many of our customers come from Singapore and Hong Kong, keen to invest because of the weakening ringgit. We, in fact, have sold many units through online sales presentations,” Tan pointed out.

As for The Light City second phase, he said the development will have a 340,000 sq ft net lettable area, a commercial tower and the Essence residential condominium.

The Retail Group Malaysia (RGM) last month revised the retail sales projection for the fourth quarter of 2023 to 2.1% from its 3% forecast in September 2023.

Both Malaysia Retailers Association and Malaysia Retail Chain Association (MRCA) also projected the same similar figure for the final quarter.

According to RGM, the persistent increase in food prices in the fourth quarter impacted the costs of home cooking and dining out and the consumers’ purchasing power.

However, RGM said the higher cost of living weakened spending power and raised the prices of necessities and consumer goods despite shopping traffic returning to pre-Covid levels. RGM pointed out that the weak ringgit also made importing raw materials, semi-finished goods and finished retail goods more expensive.

Consequently, many Malaysians have deferred the purchase of high-value consumer goods, it added. Looking ahead to 2024, RGM forecasts a 3.5% growth rate for the Malaysian retail industry.

MRCA, meanwhile expects the local retail industry to grow by 3.3% to 3.5% in 2024.

Deputy president Datuk Ken Phua said: “This was based on a moderate and conservative estimation because of the sales and service tax hike, higher raw material costs, and geopolitical issues.

“We have decided to retain this estimate although Bank Negara recently forecast a gross domestic product (GDP) growth of 4% to 5% this year,” Phua said.

A recent MIDF Research report noted that Malaysia’s retail trade is expected to expand by 7.5% in 2024 due to resilient consumer demand amid a healthy labour market and softening inflation pressure.

The Mordor Intelligence recent report also highlighted that the local retail market size is valued at USU$89.66bil in 2024, and it is expected to reach US$119.64bil by 2029, growing at a compounded annual growth rate of 5.94% during the forecast period of 2024 to 2029.

For decades, the local retail industry has been one of the largest contributing sectors to the country’s GDP.

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