KUALA LUMPUR: The retail sector will continue to receive investments from key players in the commercial real estate such as developers, real estate investment trusts (REIT) managers and lenders, despite the oversupplied market.
According to Knight Frank report titled Malaysia Commercial Real Estate Investment Sentiment Survey 2018, the key players will also focus on investing in areas like logistics, industrial and healthcare as well as institutional sub-sectors.
Knight Frank Malaysia associate director of retail consultancy and leasing Rebecca Phan said Malaysia’s retail industry will continue to play a formidable role in the nation’s commercial property market.
“The outlook for the retail market, however, does not look rosy in 2018 as an immediate rebound in consumer spending is highly unlikely,” she said in a statement today.
The phenomenon, she added, may be alleviated if proper measures are enacted to prevent new retail developments flooding the market.
“Existing retail properties should retool themselves in order to maintain their relevance in the eyes of patrons,” she said.
Phan said retail sector will continue to attract investments as developers are expected to collaborate with experienced mall managers to enhance attractiveness of their assets to remain competitive in the challenging environment.
“In the current retail landscape, mall operators need to focus beyond the occupancy rate of malls as high occupancy rates no longer constitute to high profitability,” she said.
She pointed out that mall operators should place more emphasis towards developing technologies and marketing tools, which will stir consumers to open up their wallets.
“This can come in the form of social media marketing, campaigns, or workshops dedicated to encourage shoppers to try out products by tenants.
“Also, it has become more common for mall operators to utilise food and beverage operators to act as crowd pullers to increase the footfall of their malls,” she said.
Further, Rebecca said there is a need to maintain a balanced tenant mix in order to generate a conducive retail experience for consumers, citing that food and beverage operators shall not occupy more than 35 per cent of a mall’s net lettable area (NLA).
“Malls in Malaysia have now become a one-stop destination for families. Hence, tenant mix in a mall shall be diverse enough to cater to patrons of different age groups,” she added.
She said competition among retailers remains stiff as merchants attempt to outdo each other in order to generate sales.
“The presence of more shopping malls flooding the market, with similar offering of goods and services, will further dilute the market. Hence, retailers are expected to continue operating in a very challenging environment.”