KUALA LUMPUR: The recent sale of retail lots in several Klang Valley malls, as advertised by liquidators, has raised concerns among homeowners and business owners.
However, Olive Tree Property Consultants' chief executive officer, Samuel Tan, assures that such sales are common among owners of these premises and should not be a cause for alarm.
That said, Tan advises mall owners, particularly those managing properties over five years old, to consider repurposing their assets to remain competitive.
He noted that numerous malls across Malaysia have been abandoned for years, with no signs of revival.
"Some malls were abandoned because developers were unable to complete them due to financial issues. Others operated briefly but later ceased operations due to poor management, an unsuitable tenant mix, low foot traffic, or inconvenient locations," Tan told Business Times.
Tan said that many failed malls were sold on a stratified basis, making it challenging for developers to control the tenant mix. This often led to an imbalanced range of services or products, further discouraging shoppers.
"A poor tenant mix is a significant issue that often spells failure for a mall," Tan said.
In Johor, the Lot 1 Waterfront City Mall, Danga City Mall, and Skudai Parade have been abandoned for years.
The RM240 million seven-storey Danga City Mall, featuring more than 500 retail units and over 46,000 sq m of retail space, was touted as the next big thing ahead of its opening in the 1990s.
The mall, which has been closed since July 2018, may be repurposed and reused as a park-and-ride station for the RTS, according to Tan.
The Lot 1 Waterfront City Mall, commonly known as Lot 1, was an ambitious RM6 billion project envisioned as a key component in Johor's transformation into a world-class commercial and financial centre.
However, the majority of the development did not kick off, save for the construction of Lot 1, which went into operation in 2000. After three years in operations, the project reportedly was abandoned in 2003 due to a host of concerns.
Tan said that abandoned malls could still be refurbished, repurposed, or redeveloped to avoid becoming "ghost malls."
He cited Pacific Mall in Jalan Storey, which was abandoned in 1997 and is getting a second life.
The mall's owner, Johor-based SKS Group Sdn Bhd, had in July 2023 announced a deal with hotel giant Marriott International to breathe new life into the retail space by changing it to the 345-room Sheraton Johor Baru. The hotel is expected to open in 2025.
Tan said that repurposing abandoned malls into mixed-use developments, e-commerce warehouses, healthcare facilities, or community centres is a growing trend globally.
For Malaysian malls to survive and thrive, Tan emphasised the need for unique selling points.
"In Malaysia, most malls have similar tenants, which can be monotonous. Shopping should be experiential, featuring thematic designs and unique brands that aren't commonly found in other malls," he said.
According to the National Property Information Centre (NAPIC), the occupancy rate for local shopping complexes improved by about two percentage points in 2023 compared to the previous year.
Additionally, nine new malls, adding about 220,000 square meters of retail space, entered the market last year.
While challenges remain, these trends suggest potential for recovery and growth in Malaysia's retail space, provided mall owners adapt to evolving consumer needs and preferences.
Tan noted that changing consumer behaviour post-COVID-19 has shifted the retail landscape.
While online shopping is growing, many younger consumers still visit malls to see and feel products before purchasing online.
This trend creates opportunities for hybrid malls, where shoppers can buy online and collect their purchases at the mall or experience products in person before ordering online, he said.
Key recommendations for malls include diverse offerings with a focus on experiential shopping, unique brands, and thematic setups.
Malls should also offer essential services like wellness, F&B outlets, and beauty salons, which are crucial mall attractions.
Tan said offering a variety of international cuisines can draw a broader clientele.
There should also be convenience with ample parking and strong security measures, which are vital to a mall's success.
"There should be strategic planning right from the beginning. Targeted market identification during the planning stage is crucial," Tan said.