The 11th Malaysian Property Summit 2018 concluded recently.
It was a gathering of property professionals, property investors, fund managers and other property-related people.
Throughout the day, various experts gave their views and opinions on the property market. Although their views were varied, most agreed that the slow market would continue for the most part in the year. Although they were cautiously optimistic of a gradual recovery, they nevertheless acknowledged that there were significant challenges ahead that the industry would have to overcome.
One of the more interesting talks was on the state of retail space in the country. Allan Soo, the deputy executive chairman of property consultancy firm Savills (Malaysia) Sdn Bhd presented his opinions on the retail space market. His view was that the retail market would continue to be challenging.
With 27 new malls anticipated to enter the market in Greater Kuala Lumpur (GKL) alone, we cannot expect the market to be anything but challenging. There are only that many retailers with the capacity to continue to open new outlets every time a new mall opens. There are only that many customers for all these retailers and malls around GKL.
Every time a new mall opens, it has to fight for customers. And it has to compete with other existing, more established malls for relatively the same small pool of potential customers. If you are a retailer, or if you are running one of these malls, you must be continuously challenging yourself trying to out-do the other person, competing for an ever-shrinking market.
Allan estimates that the GKL area will have 197 malls in the next three years, with a total of 86.2 million sq ft of retail space. All this additional space coming available is sure to put pressure on rents in current malls. As the retail pie shrinks with each new opening, the retailers must also be facing serious problems keeping their bottom line where it should be. Add to this problem the ever-growing popularity of online marketing, and the situation becomes even more difficult.
But through all this, some malls seem to have not just kept their market share, but have also managed to vastly improve it. Several of these malls are so crowded over the weekends, you are constantly bumping into other people as you walk around. If you walk into some of the shops to have a meal, you may actually have to queue outside for a table. The weekdays may be a little less crowded, but not much so.
So these malls have managed to maintain their appeal. Creative marketing techniques, interesting events and a host of activities happening within the mall all add to their appeal and ability to draw the crowd.
The mall is no longer merely a place to go to shop for something you need. The mall had become an entertainment outlet for the family. Many people go to malls over the weekends simply to enjoy the free air-conditioning. Or maybe they go with their family or friends to have a meal. The availability of a wide variety of food and beverage outlets add to the mall’s appeal.
Keeping your shopper entertained seems to be a major key in attracting people to the mall. Imagine an average family outing on a weekend. You leave the house at 11am on a Sunday. You’re at the mall by 12pm. You jostle with people to get a car park of course, but you eventually find a space. You walk around for a bit and allow the kids to roam and explore, all the while keeping a watchful eye over them. You may be indoors in a mall, but danger lurks everywhere and you’ve heard all kinds of horror stories. Better to be safe than sorry.
Then it’s time for lunch. That takes you from 1pm to 2pm. Afterwards, mummy wants to do some shopping. So daddy and the kids go upstairs to see what movie is playing. They buy tickets for the 3.30pm show. Mummy joins them, and the whole family is immersed in a movie until 5pm.
Then all troop off to a cafe to have coffee and cakes. They are done by 6pm and by then, ready to go home. They arrive home at 7pm, tired but happy. They think to themselves, “what a lovely way to spend a nice lazy Sunday with the family”. This scenario is probably being played out in hundreds of families each weekend.
So, are shopping centres losing their appeal as time goes by? Do more people go to malls because they look upon them as entertainment outlets? Or is the appeal of going to a mall to shop for your things still as appealing as it used to be years ago?
These are interesting questions. The answers to them are less obvious and require far more thought and research.
Happy hunting, and may the force be with you.
Siva Shanker is a real estate practitioner who tries to manage the labyrinth of the property market honestly while consistently maintaining a high standard of ethics. He welcomes feedback at firstname.lastname@example.org.