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8/12/2019 CBRE Kuala Lumpur Retail MV 2010 Q2
http://slidepdf.com/reader/full/cbre-kuala-lumpur-retail-mv-2010-q2 1/4© 2010, CB Richard Ellis, Inc.
Kuala Lumpur RetailSecond Quarter 2010 www.cbre.com.my
CB RICHARD ELLIS
The current sentiment in the retailmarket is positive. As of end-2Q 2010,
both the Malaysian Institute of Economic
Research (MIER)’s Consumer Sentiment
Index (CSI) and Business Conditions
Index (BCI) remained above their long-
term thresholds at 110.4 and 119.6,
respectively. Despite the government’s
stated plans to slowly cut back on
subsidies for food and oil, but MIER
projects overall consumer price inflation
to grow by 2.2% in 2010, which is well
within the preferred range.
During the period, the overall vacancy
rate at prime shopping centres within the
Klang Valley was 6%, while those for
prime centres in the city-centre were
slightly higher, at just under 10%.
2010 is a review year for a number of
significant mega-malls, including Suria
KLCC, KL Pavilion, Gardens, Mid-Valley,
Sunway Pyramid and AEON Bukit Tinggi.
During Q2 2010, we saw prime rents in
some leading shopping centres begin to
increase, with reports that prime rents in
Suria KLCC and Mid-Valley have already
risen by 10-30% in some cases. We are
now seeing an increase in retailer
demand, which was almost zero in 2009.
Many retailers have specific allocations
for multiple new outlets this year.
New launches during the quarter included Empire Gallery and Jusco
Mahkota Cheras, both of which opened
in April 2010, with a combined net
lettable area (NLA) of 500,000 square
feet. As many as seven new malls,
namely 1 Shamelin, One Mont' Kiara,
CITTA, SS2 Mall, Subang Avenue,
Space U8 and First Subang are
expected to be completed during the
remainder of 2010, accounting for well
over two million square feet of NLA. Thisfigure excludes Viva Mall and Fahrenheit
88, which are also expected to open this
year after undergoing repositioning, and
Kenanga Wholesale City, a strata-title
development targeting wholesalers.
Notable transactions during the quarter include the signing of Parkson (122,000
square feet), MBO Cinemas (26,000 square
feet), and Superstar Karaoke (11,000
square feet) at KL Festival City. CBRE was
involved in all three transactions, along with
the placement of a number of F&B options
at CITTA.
The most significant acquisition activity
during Q2 2010 involved the two-recently
launched REITs, Sunway Real Estate
Investment Trust (SunREIT) and
CapitaMalls Malaysia Trust (CMMT).
CapitaMalls Asia is the sponsor of CMMT,
which will be the largest "pure-play" retail
REIT in Malaysia, with a net asset value of
RM 2.13 billion. The REIT has a total of
1.35 billion units, of which 787 million units
(58%) were offered to institutional investors
in Malaysia and overseas, and to retail
investors in Malaysia only. Cornerstone
investors for this REIT include the
Employees Provident Fund (EPF) and
Great Eastern Life Assurance (M) Bhd. The
REIT’s portfolio comprises Gurney Plaza in
Penang, a 62% interest in Sungei Wang
Plaza in Kuala Lumpur, and The Mines in
Selangor, a total net lettable area of around
1.88 million square feet.
SunREIT, with a total net asset value of RM
3.79 billion, is comprised of eight properties,
of which three, namely Sunway Pyramid
Shopping Mall, Sunway Carnival ShoppingMall and Suncity Ipoh Hypermarket, are
retail properties. These three retail
properties account for 67% of SunREIT’s
net property income and also 67% of the
portfolio’s combined gross floor area (GFA)
and were assigned a purchase
consideration of RM 2.6 billion. The REIT’s
cornerstone investors include the
Government of Singapore Investment
Corporation (GIC), Employees Provident
Fund (EPF), Permodalan Nasional Bhd(PNB) and Great Eastern Life Assurance
(M) Bhd.
Quarterly News
• A significant announcement
during the quarter was the
fact that Japan's Fast
Retailing Co, the operator of Uniqlo casual wear shops,
has set up a joint venture
with a unit of DNP Holdings
(DPBM.KL) to open stores
in Malaysia. Reports
indicate that Uniqlo outletswill be situated in Suria
KLCC and Fahrenheit 88,formerly KL Plaza.
• Also significant is the news
that Carrefour, the world’s
second-largest retailer, may
exit from Malaysia, Thailandand Singapore. In Malaysia,
the big-box retailer has 23
stores, worth an estimated
RM 1.5 billion, which are
now the subject of muchspeculation, with local and
foreign retailers showinginterest. Carrefour has so
far refused to comment on
the matter.
Change From
1Q 2010 2Q 2009
Supply
Prime Rents
Occupancy
*The arrows are trend indicators overthe speci fied t ime period and do notrepresent a positive or negative value.(e.g., absorption could be negative,but still represent a positive trend overa specified period.)
Quick Stats
8/12/2019 CBRE Kuala Lumpur Retail MV 2010 Q2
http://slidepdf.com/reader/full/cbre-kuala-lumpur-retail-mv-2010-q2 2/4
M ar k et Vi ewK u al aL um p ur R et ai l
S e c on d Q u ar t er 2 0 1 0
© 2010, CB Richard Ellis, Inc.
Page 2
The total supply of retail space in the Klang Valley as of
end-2Q 2010 was 41.2 million square feet, up 3% over
end-2009 supply. We expect as many as 9-10 malls,
totaling over three million square feet of net lettable
area, to be completed during the second half of this
year.
Malls currently undergoing repositioning and
refurbishment include Fahrenheit 88 (formerly KL
Plaza) and Viva Mall (formerly Ue3).
Occupancy Rates
Total Supply
Rental Index
Rents rose slightly during 2Q 2010, as evidenced by our
prime retail rental index, which follows the prime rental
rates at selected shopping centres in the Kuala Lumpur city centre.
The base year for the index was in 1995, and over the
following decade, rents rose 64%. A sharp spike in prime
rents was seen in 2007, when prime rents rose over 20%
on average. This is partly due to 2007 being a review
year for a number of major shopping centres.
2010 is a review year for Suria KLCC, KL Pavilion,
Gardens, Mid-Valley and Sunway Pyramid, and we have
already received reports of rent increases of 10-30% for
some units.
0
10
20
30
40
50
'05 '06 '07 '08 '09 2Q '10 '10e '11e '12e '13e
T o t a l N L A ( m i l l i o n s f )
Cumulative Supply of Shopping Centres in the Klang Valley
2005 - 2013e)
Average Occ upancy R ates of Selected Major Shopping Centres
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009 1Q 2010 2Q 2010
O c c u p a n c y R a t e ( % )
Kuala Lumpur city centre
S uburbs
Klang Valley
Prime Retail Rental Index
0
50
100
150
200
250
300
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
Q 1 2 0 0 9
Q 2 2 0 0 9
Q 3 2 0 0 9
Q 4 2 0 0 9
Q 1 2 0 1 0
Q 2 2 0 1 0
R e n t a l I n d e x
The average occupancy rate of selected shopping
centres (both prime and non-prime) in the Klang Valley
was estimated at 92% as of end-2Q 2010. The
occupancy rate for selected shopping centres in the
Kuala Lumpur city centre was just under 90%.
Occupancy rates have improved slightly during the first
half of 2010. Although we believe that there is an
oversupply situation in the Klang Valley overall, average
occupancy in general is high and some centres even
have a waiting list. This is because in the poorer
centres, rents are low, and upper floors or remotespaces in these centres are leased to trades that do not
require high traffic.
Source: CBRE Research
Source: CBRE Research
Source: CBRE Research
8/12/2019 CBRE Kuala Lumpur Retail MV 2010 Q2
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M ar k et Vi ewK u al aL um p ur R et ai l
S e c on d Q u ar t er 2 0 1 0
© 2010, CB Richard Ellis, Inc.
Page 3
Our research shows that Malaysians, on average,
spend almost 16% of their gross income on retail
spending, compared to 17-18% for their counterparts
in Hong Kong and Singapore, and around 14% for
those in Thailand and the Philippines.
This suggests that there may be some truth to the
old adage about the favorite hobbies of Malaysians
being eating and shopping.
Based on CBRE Research’s How Global is the
Business of Retail? 2010 report, Kuala Lumpur is the
seventh most global retail city in Asia.
The percentages in the chart refer to the percentage
of 268 most global retailers chosen by CBRE who are
present in each city.
For a full copy of How Global is the Business of
Retail? 2010, please contact us.
New Supply During H1 2010
Retail Sales & GDP
Global Retail Cities in Asia
New S upply of S hopping Malls dur ing 1H 2010
Kuala Lumpur
45.6%
S uburban
54.4%
Retail Sales as a % of GDP
15.7
17.6 18.0
13.7 14.3
0
5
10
15
20
Malaysia Singapore Hong Kong Thailand Phi lippines
%
Source: Business Monitor International, Mastercard, CIA World Factbook,
CBRE Research
Most Global Retail C ities in Asia
43 41 40 40 3936
3230
28 28
0
10
20
30
40
50
H o n g
K o n g
B e i j i n g
T o k y o
S h a n g h a i
S i n g a p o r e
T a i p e i
K u a l a
L u m p u r
B a n g k o k
S h e n z e n
S e o u l
%
Source: CBRE Research, How Global is the Business of Retail? 2010
New supply of retail space during the first half of
2010, equal to about 1 million square feet, was
almost equally divided between Kuala Lumpur and
suburban areas.
We expect this trend to hold for the remainder of the
year, as 46% of projected supply for H2 2010 is in
Kuala Lumpur, with the remainder in suburbanareas. These calculations include malls under
refurbishment as well.
Source: CBRE Research
8/12/2019 CBRE Kuala Lumpur Retail MV 2010 Q2
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MarketView Kuala Lumpur Retail
© Copyright 2010 CB Richard Ellis (CBRE) Statistics contained herein may represent a differentdata set than that used to generate National Vacancy and Availability Index statistics publishedby CB Richard Ellis’ Corporate Communications Department or CB Richard Ellis’ research andEconometric Forecasting unit, Torto Wheaton Research. Information herein has been obtainedfrom sources believed reliable. While we do not doubt its accuracy, we have not verified it andmake no guarantee, warranty or representation about it. It is your responsibility to independentlyconfirm its accuracy and completeness. Any projections, opinions, assumptions or estimates usedare for example only and do not represent the current or future performance of the market. Thisinformation is designed exclusively for use by CB Richard Ellis clients, and cannot be reproducedwithout prior written permission of CB Richard Ellis.
For more information regarding
the MarketView, please contact
Nabeel HussainVice President, Research
CB Richard Ellis (Malaysia) Sdn Bhd
#9-1, Level 9 Menara MileniumJalan Damanlela
Bukit Damansara, Kuala Lumpur
50490 Malaysia
T 603 2092 5955 (Ext. 167)
F 603 2092 5966
Retail Services
Allan SooManaging Director
CB Richard Ellis (Malaysia) Sdn Bhd
#9-1, Level 9 Menara Milenium
Jalan DamanlelaBukit Damansara, Kuala Lumpur
50490 Malaysia
T 603 2092 5955 (Ext. 111)F 603 2092 5966
Retail Services
Outlook
The market is now much healthier than 2008-2009 and leasing has become more
positive and conversion rate faster. However, there is a significant amount of
supply coming in over the next year, and so some malls will continue to struggle.
Currently retailers are choosy about locations and are bargaining for rental
concessions and because there is so much choice, the winning factors are
predominantly safe bets like established centres (even if rents are high) and
obvious strong catchments.
The market is beginning to segment into well defined niche markets and
submarkets like the Bangsar/ Mont Kiara areas, the Subang areas and the PJ
areas. The battles that will be fought in the future will be localized and the winners
will be those with the superior locations, mix and concepts.
2010 will be significant in terms of another threshold, however. This is the year of
the rent reviews as Suria KLCC, Pavilion, MidValley, Gardens, Sunway Pyramid 2
and AEON Bukit Tinggi all undergo rent reviews. Suria KLCC prime rents have
surpassed RM 100 per square foot and it will be interesting to see the change in
the tenant mix as some under-performers exit this location.
As part of the world’s largest commercial property services group, CBRE Malaysia
focuses on developing new markets for international and domestic retail chainsand on providing creative end-to-end solutions for retail centre development,
leasing and marketing.
We advise tenants on leasing retail premises in Malaysia and we help them find
the retail spaces most suited to their needs. We also give advice on lease terms
and conditions as well as representing retail tenants on renewals and lease
restructuring.
Our services for landlords include development consultancy, marketing
consultancy, leasing agency, reporting and property management. CB RichardEllis has the resources, knowledge and experience required to enable landlords to
achieve success.
CBRE retail services professionals are able to meet both occupier/tenant and
owner/investor needs. These professionals, with a wealth of local market
knowledge, are supported by market research tools to ensure clients make
strategic and informed decisions.
(333510P) (VE(1)0232)