Forced sale of retail space is no cause for concern

PETALING JAYA: A few recent advertisements by receivers for the sale of units in some malls in the Klang Valley have fueled concerns, but industry players say there is no need to panic.

Former Malaysian Institute of Estate Agents chairman Chan Ai Cheng said there is no cause for concern as these are individual units within the respective developments.

“For Plaza Mont Kiara, the sale includes six adjoining office suites, while for Jaya One it includes four retail lots and one office lot,” she said of the listings.

Chan said both Plaza Mont Kiara and Jaya One were strata developments, meaning the developers originally sold individual units to separate buyers or end users.

“In this case, it is likely that the owners of these specific plots of land – likely businesses – have been placed into receivership. As a result, these properties are being sold as part of the process to wind down their assets,” she told StarBiz.

Malaysia Shopping Malls Association chairman Phang Sau Lian also said the advertisements did not mean the malls were under receivership.

“From the listings, it appears there are some office suites or retail lots for sale. I think these are strata properties,” Phang said.

According to the National Real Estate Information Center earlier this year, the occupancy rate within the retail space of the local shopping complex will have improved by about two percentage points in 2023 compared to a year ago.

It is notable that nine new shopping centers, covering approximately 220,000 square meters, were added to the retail space last year.

Chan noted that malls are “changing and reinventing themselves” to meet lifestyle needs, rather than simply being a place to buy things.

“It’s about food and drink, community connection and activities. With the right elements, a shopping center will flourish.

Otherwise, it will face challenges and competition. In a sense, I would say the outlook is bright, but only for selective malls,” she said.

However, some industry players are being a bit more cautious.

Samuel Tan, CEO of Olive Tree Property Consultants, said there are several reasons why distressed sales of shopping centers happen, he said, adding that when they do happen, they all need to be treated differently.

“Some malls have been abandoned because developers could not complete them due to financial reasons.

“Some operate for a while but later cease operations due to poor management, poor tenant mix, resulting in low footfall and unsuitable locations,” he said.

Tan said many such malls would likely have been sold on a stratified basis.

“As a result, the developers had no control over the tenant mix.

“A poor tenant mix results in disruption of the services or products offered in a shopping center. Usually such shopping centers cannot survive.”

According to Tan, there are several approaches to tackling the problem.

“Prevention is best. Proper market research must be done to ensure viability. Only prime locations with specific target markets should be redeveloped,” Tan said.

He said abandoned malls could be repurposed, renovated or redeveloped.

“Currently there is no legislation regulating the development of shopping centers, unlike residential properties.

“It can be good to have one that monitors and regulates commercial developments,” he added.