Mall owners: Too soon to decide on rental rebate requests

Aiming for a win: Some shopping malls are seeing a drop in business, but PPKM say more monitoring is needed before rebates can be offered.

PETALING JAYA: It is too premature to offer rental rebates to retailers as further monitoring is needed to assess the impact of Covid-19, says Malaysia Shopping Malls Association (PPKM).

“We need more time to monitor sales turnover, perhaps over the next few months, depending on further development of the current situation.

“Shopping mall members will need to analyse and monitor data and trends and to curate appropriate and targeted action plans on a case-by-case basis,” said PPKM in a statement yesterday.

The association was responding to a statement issued jointly by Malaysia Retailers Association, Malaysia Retail Chain Association, Bumiputra Retailers Organisation, Asean Retail-Chains & Franchise Federation and Branding Association of Malaysia on Monday, urging shopping malls and shoplot owners to give tenants rebates of between 30% and 50% to help them ride out the effects of the Covid-19 outbreak.

PPKM said its members would have to tailor assistance programmes to different tenants as they were impacted by Covid-19 differently, though, it pointed out, the poorer retail performance currently may be due to the slower post-festive period.

The association added that in comparison, shopping mall owners in Singapore have announced measures to assist businesses there as its shopping industry is heavily reliant on tourists, especially from China.

In Hong Kong, it said, businesses in shopping malls were badly affected, first by protests since last year and now by the Covid-19 outbreak.

PPKM said it will meet with retailers’ representatives soon to discuss how to overcome the current challenging situation.

“It is still premature to immediately accede to the (retailer associations’) request for rental rebate.

“Besides marketing assistance to stimulate spending and drive sales, subject to individual mall operators’ discretion, mall operators may consider to allow tenants to operate shorter business hours mall-wide or only for some of their tenants, as part of the measures to reduce operating cost.

“As proven in the past, we are confident that shopping malls and retailers will remain resilient and with prudent management we shall overcome the hurdles together,” it said.

The association, it added, has participated in several meetings with the government to request for assistance on several measures to preserve cash flow and maintain employment for mall owners and retailers alike.

“Our requests include subsidies for utilities charges, tax relief and temporary suspension of statutory contributions,” it said.

Real Estate and Housing Developers’ Association (Rehda) president Datuk Soam Heng Choon said building owners and retailers need to work together to come up with a win-win solution regarding rental fees.

He said that in many shopping malls in the Klang Valley, retailers are charged rental fees based on two components: a basic fixed rate and also a certain percentage of their turnover.

“As such, building owners will already be receiving lower fees if their tenants’ turnover is less due to slower business.

“For the fixed portion of the rental, it is up to the shopping mall owners to discuss with the retailers to see how much of it can be reduced, because building owners will also have their own commitments such as paying bank loans and bank interest,” he said when contacted.

Shopping mall owners, he said, will be able to tell if their retailers are doing poorly in their business, and make a decision as to which retailers would need a slash in operational costs.

“Different businesses have different needs.

“The same medicine can’t be applied to all,” he said.

Soam said shophouse owners face a different scenario as they charge a fixed rental rate only.

“Building owners could listen to their tenants and observe if their tenants’ business was suffering.

“I have met individual building owners who reduced the rental when requested by tenants.

“However, there are some businesses that may not be badly affected such as motor repair shops because people need these services,” he said.

Both parties, he said, need to work together to find an “amicable solution” to overcome a bleak economic situation worsened by the outbreak.

“The relationship is a long-term one, so building owners will also want their retailers to do well and survive,” he said.

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