Will it be a catalyst
to a mall retail war?

The repeated,
cautionary heeding that the Klang Valley has an oversupply of retail space will
seem like nonsense when two huge malls, with a collective net lettable area
(NLA) of over 2 million sq ft, will begin operations in Cheras by the end of
this year.

If that doesn’t raise
eyebrows, then what about the fact that the shopping centres, namely MyTOWN
Shopping Centre and Sunway Velocity Mall, will be just 800m apart from each
other?

Oversupply or not, one
can’t help but admit that’s a lot of retail space coming in within a relatively
small radius!

The situation can be
likened to two rival gangs battling for territory. But is Cheras big enough for
these two behemoths?

Is it viable?

One industry observer
who requested anonymity raises concerns that the proximity of the two malls
will make it very challenging to conduct business.

“It’s also quite near
the Kuala Lumpur city centre and a short distance from other malls such as
Suria KLCC, Berjaya Times Square and Pavilion.

“It will be
challenging for the market and business. They will both need to fight hard,”
says the observer.

Shopping mall: An artist’s
impression of the MyTOWN Shopping Centre in Cheras.

Property consultants
Knight Frank, meanwhile, believe that despite the growing supply of retail
space, there is equally growing demand for shopping centres.

“Shopping centre properties
will remain viable,” Knight Frank associate director Rebecca Phan says during a
presentation at the Association of Valuers, Property Managers, Estate Agents
and Property Consultants in the Private Sector Malaysia (PEPS).

She says this is
because shopping malls serve an economic and social need, and can remain viable
by experimenting with new formats, designs and technologies.

“They are
complementary to non-store shopping (such as online shopping) and are able to
satisfy a wide range of consumer needs and wants, from conveniences to services
to experience.

“Malls are also a
leisure culture for Malaysians,” she says.

Apart from the two
upcoming juggernauts, Cheras already has the Cheras Leisure Mall and Aeon
Maluri shopping centre. The Tun Razak Exchange is also on the horizon.

What the players say

The development of
MyTOWN Shopping Centre is being undertaken by Boustead Ikano Sdn Bhd, while
Sunway Velocity Mall is being helmed by the Sunway Group.

Boustead Ikano general
manager Jo Hogsander admits that he was overwhelmed by the number of malls here
when he first came to Malaysia.

“When I came to
Malaysia, I thought there were many malls. But I know now that there is demand
for it. In a year from now, you’ll always need a better car and the building
we’re constructing now, we are the next generation.

“In Malaysia, there is
still a need for good, convenient, clean, safe shopping centres.”

A unique feature of
MyTOWN Shopping Centre is that it will be structurally linked to IKEA Cheras,
the largest outlet mall in the country.

Sunway Shopping Malls
& Theme Parks chief executive officer H.C. Chan says he sees the presence
of IKEA and MyTown as a creation of another shopping corridor in KL, fashioned
along what we have seen in Mutiara Damansara with The Curve, IKEA, IPC.

“Reception wise, we
expect Sunway Velocity to do well due to the underserved Cheras market, despite
the largely affluent urbane market

With a population size
of 800,000 people and at 4.5 sq ft per capita, Cheras is an “ample market,”
says Chan.

“Generally, rule of
thumb is 7.5 sq ft per capita. For example, Singapore is 7.1 sq ft per capita,
says Chan, citing Jones Lang Wotton’s retail property research for April 2016.

“Fundamentally, the
real issue is the absence of lifestyle and experiential malls in Cheras and
that is where Sunway Velocity Mall fills the void.

“I am looking from a
quality rather than a quantity perspective. Hence, we are addressing this from
multiple angles.”

Hogsander concurs that
there is demand for more retail space, especially in Cheras.

“When you increase the
amount of work in any major city and not just KL, that increases the demand.
And with more people moving into the city, there’s a steady supply of
newcomers.

“With construction of
the mass rapid transit (MRT) and new infrastructures in KL, the mobility will
be higher, so you can live somewhere and work somewhere else (in the city).”

He adds that the
addition of the MRT would ease congestion and boost accessibility to the mall.

“I think it’s the
future. In KL, there is more of a need for it. Transport facilities have been a
bit restrictive and with this investment, people can park their cars and take
the MRT.

“We can now travel
within the time we choose and not the time the traffic chooses.”

Chan also agrees that
the MRT will be a “game changer” for Sunway’s upcoming mall in Cheras.

“Two out of six MRT
stations in Cheras will serve Sunway Velocity – Cochrane and Maluri. This
translates to a capacity of about 400,000 passengers per day.

Despite concerns that
the Klang Valley is facing oversupply issues, especially in retail space, Chan
says Sunway Velocity Mall would not only compete, but also complement the
MyTOWN Shopping Centre.

 “Competition is healthy, but in the longer
term, we will complement each other. Just look at the Bukit Bintang area and
the number of malls there. It’s thriving because it gives consumers a choice.”

And despite the
plethora of malls in the Klang Valley, Hogsander says they’re still crowded,
even on a typical weekday afternoon.

“I went to our
competitors on a Thursday afternoon and I couldn’t find a parking space. I then
went to another competitor and had to do laps to find parking – and these are
big shopping centres with over 6,000 parking bays.

“If you have an old
product, people will leave you, even if you’re in the city. The challenge is to
keep fresh and new - a challenge that occurs within the first two years of
operations.”

Sunway Velocity Mall
and MyTOWN Shopping Centre will open their doors on Oct 28 and Nov 15
respectively – just 18 days apart. Both malls boast 6,500 parking bays.

Sunway Velocity Mall
will have a NLA of one million sq ft and accommodate 500 shops, while MyTOWN
Shopping Centre will have 460 stores on 1.1 million sq ft of space.

Sunway Velocity Mall’s
anchor tenants include the likes of Parkson, TGV Cinemas, Harvey Norman,
Popular book store and Toys “R” Us, while MyTOWN Shopping Centre has secured
names such as Village Grocer, Golden Screen Cinema, Mango and Uniqlo.

Both Boustead Ikano
and Sunway group are no strangers to developing shopping malls.

The former is a joint
venture between the Boustead group and Ikano Retail Asia, which built the
Mutiara Damansara township in Petaling Jaya and developed The Curve, a hugely
popular integrated retail development where the country’s first IKEA outlet is
located.

Hogsander says the aim
is to always ensure that the “customer journey” is well-served.

“Customer journey – we
live by it here. It involves developing our workers and doing constant
training. It means improving access and the experience for them from the first
touch point – namely from the MRT, into the mall and when they leave.

“If you stay loyal to
the customer journey, people will always come back.”

Meanwhile, Sunway
Velocity Mall is a joint venture between Sunway City Sdn Bhd and Fawanis Sdn
Bhd. The Sunway group meanwhile has had renowned success with its other
shopping centres, namely Sunway Pyramid, Sunway Giza, Carnival and Putra.

Chan says the group
plans to elevate the retail scene and experience with the Sunway Velocity Mall.

“We will be looking at
duplicating some of the success formula that worked in other malls if we find
them relevant. For example, a food precinct is definitely something we pay
emphasis on.

“Both food and
beverage (F&B) and entertainment are strategic elements in our retail
planning. We foresee that harnessing the social aspect of the mall gives it an
edge over online presence. It’s something not easily replicated and it’s a play
on all five senses.”

There is demand

According to the
National Property Information Centre’s (Napic) 2015 Property Market Report, the
retail sub-sector recorded a slight improvement in occupancy from 81.8% in 2014
to 82.4% in 2015, with a take-up rate amounting to more than 8.39 million sq
ft.

Based on reports,
about 40 malls would be entering the market in Greater Kuala Lumpur by 2020, of
which a dozen would have NLA of one million sq ft.

On the outlook for the
rest of the year, Chan is expecting a challenging 2016.

“Consumers are
cautious over discretionary spending. Concerns on both macroeconomic issues
like volatile foreign exchange, Brexit, China’s slowdown, low oil prices ,Japan
and certain European Union countries’ negative interest rates to a certain
extent will affect the local economy.

“However, sub-sectors
like F&B are still thriving albeit slower growth. You will see more value
marketing at work as retailers compromise lower margin with sales volume.”

Hogsander says there
are still prospects to increase the retail business year-on-year.

“History shows us
there are peaks and valleys and it’s like that worldwide. It’s very positive as
people want everything under one roof. People are also buying online. If that
didn’t exist, it would actually place more pressure on us because it means more
cars on the road and it makes it harder to get into shopping malls.

“But there’s still a
need to touch, try and look at what you want to buy. Today, shopping is an
experience for the family, an event for the day. Gone are the days when it’s
about going into a shopping mall just to get what you want and back home.”