MALAYSIA: Malaysia is building more malls, yet shoppers aren’t flocking in as expected. As more retail spaces emerge with no shoppers, shop owners have no choice but to move out.
Al Jazeera reported on Malaysia’s “mall-crazy” challenges from the perspective of Goh Sook Lam, a computer shop owner at 3 Damansara Mall, on July 14.
Mr Goh described the empty corridors of the mall, noting that despite a Taekwondo competition two levels down, it failed to draw customers to the upper floors.
He mentioned struggling to break even, stating his only choice is to “move out or see other places.”
Malaysia, home to 33 million people, had over 1,000 shopping complexes by the end of 2023. Nearly 40% of these centres are in the greater Kuala Lumpur area. Despite this abundance, many malls struggle with low foot traffic and occupancy rates.
The National Property Information Centre (NAPIC) reported that retail space in Malaysia reached 17.69 million square metres in 2023, an increase from 16.51 million in 2019.
However, the national occupancy rate for retail space was 77.4% last year, lower than pre-pandemic levels.
The decline had begun before COVID-19, with rates falling from 81.4% in 2016 to 79.2% in 2019 and 75.4% in 2022, marking the lowest in nearly two decades.
While some new malls, like The Exchange TRX Mall, have thrived with high occupancy rates and strong foot traffic, this success is not the norm. Many malls, even in prime locations, find it difficult to draw in shoppers.
Pavilion Damansara Heights, for instance, opened with much anticipation but saw sparse crowds and vacant levels on weekends.
The oversaturation of retail space is a critical issue. Phang Sau Lian, president of the Malaysia Shopping Malls Association, noted that consumer trends are rapidly changing, and malls must adapt to stay relevant.
Food and beverage outlets have become significant drivers of mall traffic, increasing their share of leased space to nearly 30% compared to single digits a decade ago.
Foo Gee Jen, adviser at Real estate consultancy CBRE-WTW, pointed out that consumers now seek experiences beyond shopping.
“It’s no longer just about buying,” he said. Modern malls compete by offering unique attractions such as public gardens and arts and culture centres. However, older malls that haven’t upgraded struggle to meet these new demands.
An example of another empty mall was shown through a TikTok video by Josh Tan in 2023, a Singaporean financial advisor, featuring Puteri Harbour in Johor Bahru, Malaysia.
The video showed an empty mall with only a Starbucks still open. Once bustling, the mall now stood deserted.
“You see, some of the restaurants have already closed. It is now totally empty,” Mr Tan observed. He also claimed that the nearby residence was also vacant. “When I last came here like five years ago, things were still bustling,” he noted.
His video also displayed the interiors of Thomas Town, a children’s park based on the popular TV show Thomas & Friends. This park and the adjacent Hello Kitty Town used to be full of life but now stood empty.
“When we buy foreign properties, we never know what will happen in five years, ten years because the upkeep is just not there. There’s no commitment,” he remarked.
According to Al Jazeera, some mall owners are adopting “unorthodox approaches” to keep the business going in response to these challenges.
In a TikTok video posted in May, a man showcased a Bitcoin mining farm supposedly operating in an empty mall in Malacca, though the video has since been deleted.
In September 2021, Hatten Land, a Malacca-based property developer, partnered with a Singaporean company to operate 1,000 crypto rigs on its properties in the state.
The developer announced plans to repurpose malls for “green” cryptocurrency mining activities on its website, providing no additional specifics.
Malaysia’s retail landscape continues to grow, although there are a few signs of mall construction slowing down, as Al Jazeera noted.
NAPIC reported that at least 33 new complexes with 1.13 million square metres of retail space are coming, with another 10 planned. /TISG