Savills upbeat on local retail property market
KUALA LUMPUR: Real estate services provider Savills (Malaysia) Sdn Bhd is optimistic on the outlook for the retail property market in 2016 on the back of local and tourism spending despite economists warning of weak consumer sentiments this year.
“It’s always dependent on the population. If you have enough population, you will have enough spending. Our population has grown steadily and we’ve already hit over 30 million and that can only mean a growth in the retail scene,” Savills Malaysia managing director Allan Soo told SunBiz after presenting the retail property market performance and outlook at the 9th Malaysian Property Summit 2016 here yesterday.
For 2016, he said, the local retail property market can expect consolidation, declining rent in the best malls, opportunity for good locations and improved sales in better malls. The weak ringgit is an opportunity for tourism and luxury, while there is potential pent-up demand opportunity.
The Kuala Lumpur urban area is the eighth largest in the region despite its small population compared with megacities such as Jakarta and Seoul. The Malaysian economy continued to expand at a moderate pace, supported by the private sector.
Soo said in the grocery and department store segment, there are still potential growth areas.
The positive retail outlook takes into consideration Padini Group, which has 262 stores nationwide compared with 256 stores in 2013, even though it is challenged by more difficult competition like H&M and Uniqlo, and an overall 20% drop in same-store sales, seen by most retailers last year.
Soo added that Greater KL retail space is expected to exceed 60 million sq ft by end-2017, from 56 million sq ft in 2015.
“With about 155 malls and hypermarkets, retailers got to consolidate. It’s about time we start thinking whether or not we need more shopping malls, especially in KL,” said Soo.
He said the average occupancy rate in KL is 89.5%. Prime malls located at good locations are generally close to full occupancy.