KUALA LUMPUR: The Exchange TRX Mall's impact on the existing real estate investment trust (Reit) players in Malaysia's luxury mall landscape is marginal, according to Kenanga Research.
TRX Mall also does not diminish the pull-factor of nearby malls.
The firm said majority of tourists are still inclined to shop at Suria KLCC as they are also drawn by the iconic landmark of Petronas Twin Towers.
"In addition, many high-net-worth individuals within Klang Valley would still prefer shopping in the heart of Bukit Bintang where malls like Pavilion KL are situated," it said.
TRX first opened its doors in November 2023 and is deemed as the new luxury shopping destination.
Certain brands have set up their flagship store in TRX mall such as Jimmy Choo and Gentle Monster.
Apple, which opened its first Malaysian flagship store in TRX, also helps to give the mall an edge over competitors.
However, the report said that the hype is now gradually fading, leading to a drop of in-store shoppers, according to most retailers surveyed.
"Based on our survey, only 13 per cent of respondents is seeing increasing shoppers compared to the beginning of the year.
"Our observation also revealedbthat the mall is busy during lunch hours, particularly at the lower ground floor where most food and beverage outlets are located.
"However, retailers said the crowd does not translate to meaningful sales for luxury brands," it added.
Luxury sales at TRX have been on a downward trend since mid-2024, partly due to seasonal factors, such as the absence of major festivals like Chinese New Year or Hari Raya, which typically boost spending.
It added that some retailers have observed that affluent locals are opting to shop abroad, taking advantage of the strengthening ringgit to buy luxury goods at more favourable prices, further contributing to the dip in local sales.
"Although larger brands seemed to be able to command commendable traffic, we also hear from several retailers that they are still struggling to meet their sales target.
"From the data we compiled (based on 25 samples), the majority are recording turnover of below RM1 million and we observed that 30 per cenr of luxury brands are generating a higher monthly revenue between RM1 million and RM3 million while a smaller 20 per cent of them that can exceed the RM3 million mark," it said.
The firm maintained "Overweight" on the Reit sector.
It noted that Pavilion Reit and KLCC Stapled Group, which have exposure to luxury malls in the city centre, will give positive risk reward to investor portfolios as the potential impact from TRX is likely already priced into the market.