PETALING JAYA: Real estate investment trusts (REITs) with retail assets capped off 2025 on a high, with expectations of continued income stability going into 2026.
Retail-centric REITs such as Pavilion-REIT, Sunway-REIT and KLCCP Stapled Group announced solid year-on-year (y-o-y) earnings for their financial year ended Dec 31, 2025 (FY25), with projections of a positive 2026.
An analyst said the local retail sector in 2026 is expected to be supported by solid domestic demand, tourism, evolving consumer behaviour and more digital adoption.
“Steady employment conditions, gradual wage growth and continued government cash assistance initiatives are all expected to help spur and stabilise household spending.
“This will underpin demand for essentials and mid-priced discretionary goods, especially among mass-market consumers,” he told StarBiz.
Another analyst said the local retail sector will receive a huge boost this year from Visit Malaysia Year 2026 (VM2026), which is expected to spur tourist arrivals into the country.
“The VM2026 campaign will be a major tailwind for the retail industry.
“Higher tourist arrivals should lift footfall in malls and high-traffic retail zones, benefiting sectors such as food and beverage (F&B), fashion, personal care and souvenir retail, particularly in urban and tourist-heavy locations.”
Additionally, he noted online shopping remains a key growth engine for the segment.
“Retailers that are integrating their physical stores with online platforms, social commerce and delivery services are likely to capture a larger share of consumer spending, as shoppers today continue to expect convenience and seamless experiences.”
As such, he said this is driving retailers to invest more into digital payments, data analytics, artificial intelligence (AI)-driven marketing and inventory optimisation.
“These tools improve efficiency, personalise customer engagement and support sales growth.”
Meanwhile, Savills Malaysia Group retail services head Murli Menon said the retail sector is poised for a dynamic transformation, driven by VM2026 and the adoption of new technologies.
He predicts a rise in “agentic” AI and social commerce, alongside a boom in wellness retail catered to an ageing population.
“While the tourism influx will benefit the hospitality and F&B sectors, success will depend on adaptability.
“Retailers must blend seamless digital integration with memorable physical experiences to remain relevant in a competitive market.”
He added the hospitality sector is undergoing a strategic transformation towards sustainability, anchored by the upcoming “VM2026” campaign.
KLCCP Stapled Group, which consists of KLCC Property Holdings Bhd and KLCC-REIT, announced last week that its net profit for the fourth quarter ended Dec 31, 2025, rose to RM669.3mil from RM430.91mil in the previous corresponding period.
Revenue grew to RM492.96mil from RM459.10mil a year earlier.
For FY25, KLCCP Stapled Group’s net profit rose to RM1.28bil from RM1.02bil a year earlier, while revenue climbed to RM1.74bil from RM1.71bil in FY24.
Maybank Investment Bank Research, in a report, expects income stability for the group for FY26.
“Retail rental reversions are expected to remain in the low single digits. In hospitality, completed refurbishments at Mandarin Oriental KL are expected to support higher room rates and event-driven demand, aided by tourism momentum into VM2026.
“Overall, KLCCP’s integrated KLCC ecosystem and stable tenant base should continue anchoring recurring income, though growth remains modest,” it noted.
