THE Amcorp Mall in Petaling Jaya is synonymous with the weekend flea market that has made the mall a household name.
What is less obvious to the man on the street is that the mall with its two office blocks and service apartments has actually come a long way since its launch in 1995, surviving the 1997 financial crisis
“When the mall was completed in 1997, it was at the start of the crisis,” said Melawangi Sdn Bhd (a wholly owned subsidiary of Arab-Malaysian Corporation Bhd) executive director Azlan Baqee Abdullah.
He said that the traits of shoppers changed when the economy took a turn in the middle of 1997.
“It was a buyers’ market and they became more demanding. Shoppers wanted a place that was comfortable, safe and clean and all these were the primary duty of the developer or caretaker and involves a lot of cost. We have to meet demands of shoppers or they’ll just go to some place else,” said Azlan.
While it was the start of the recession, it was also the end of a boom and many malls came into completion, thus increasing competition.
“The shop owners, the tenants and the shoppers all have different expectations and demands. That’s why you need a management that can combine these three parties together,” he said.
The offices and apartments had its own sinking funds and not much upkeep was needed.
“However, we need to keep up with the competition as a mall so we need to do new things all the time,” he said.
The developer added a pledge to their sale and purchase agreement that the more units of the mall it sold, the more money they would put into a refurbishment fund.
About 30% of the mall was sold in the beginning and about RM4mil was put into the refurbishment fund, which has accumulated interest of about RM1.3mil over almost ten years.
Purchasers were also offered a leaseback due to the difficulty in getting tenants for the units.
“Not everyone took up the offer because they felt that what we offered was too low. Those who did gained because the crisis was worse than what they had anticipated,” said Azlan.
Those were hard times as occupancy level was low with tenants changing almost every six months with lapses in between.
To make matters worse, the number of defaulters was on the rise.
“Purchasers had to contribute to service charges. Those who didn’t rent out their units could not pay us. The default went up to as high as RM7mil, which was about one year’s operating cost and we had to come up with the money for that.
“In order to bring the default rate down, we gave a 20% reduction in service charges in 2000 and we have not increased it since.
“The loss to the sinking fund was about RM10mil because our operating costs did not go down,” he said.
To mitigate the loss, they started the Advertising and Promotion revenue coming in by leasing out common areas for events and promotions.
“We started the flea market in 1998 by renting out tables for about RM30 to RM40. It’s not a big revenue but it creates a lot of recall factor.
“There were so many malls so the flea market was our identity and it brings in the people. It’s been successful until today,” said Azlan.
He said that some of the traders actually moved on to being a tenant in the mall.
“We’re in the heart of old PJ and there are a lot of people around here who like these things. That’s why it has sustained for so long. it’s our branding. It started on Sundays only and then moved on to Saturdays as well and now we’re even having it on Friday onwards,” said Azlan.
There was still a block that was approved as a 425-room hotel but was not completed because of insufficient funds.
To increase the volume of adult population and working crowd in the mall, they decided in 2004 to change the concept to a block of 400-unit service apartments and 300-unit of business suites.
The mall was flourishing by 2006 and they dug into the refurbishment fund to refurbish the mall in time for their tenth anniversary.
They further closed down the anchor tenants and converted those into the offices for Amcorp and its subsidiaries.
With a hazy economy looming ahead, Azlan remains confident that their track record of steering the ship out of stormy waters would guide them through the uncertainties.