21 MARKET REPORT SUMMARY BUSINESS OVERVIEW 3. RETAIL Iskandar Malaysia (IM) remains a significant shopping destination for visitors from Singapore, capitalising on the favourable Singapore Dollar – Malaysian Ringgit exchange rate. IM’s proximity to Singapore is driving visitors from the island republic to shop and spend in IM malls. With this trend, the overall occupancy rate improved to pre-pandemic levels at around 75% over 14.8 million sq. ft. space. As of 2023, incoming supplies include Medini Lakeside Mall, The Commune and Horizon Mall @ Horizon Hills, all slated for opening in 2024-2025. Additionally, IM expects Singaporean retailer Mustafa to open in Capital City Mall by the end of 2024, after consideration of the slow progress of planning and construction works. Upon opening of these four malls, there will be an additional 1.63 million sqft retail space in the market. The preference for cashless payment persists with shoppers continuing to favour digital wallet payments in the post-pandemic era. Bank Negara Malaysia (BNM) and the Monetary Authority of Singapore (MAS) have collaboratively introduced a cross-border QRcode payment link between Malaysia and Singapore. This facility enables customers of participating financial institutions to make retail payments seamlessly. Shoppers can now conveniently pay by scanning the DuitNow QR code when shopping in IM. This enhancement has contributed positively to the retail industry. Mall operators are diversifying their strategies to boost footfall. These include collaborations with external partners such as travel agencies and hotels; embracing modern devices; and enhancing infrastructure. Paradigm Mall collaborated with Singapore-based travel agencies and offered mall vouchers to guests staying at their partner hotels to tap into tourism foot traffic. Meanwhile, several mall operators have provided electric vehicle (EV) charging infrastructure in some of their car parking bays anticipating this transition process. Sunway Big Box Retail Park has set up Iskandar Malaysia’s (IM) first Tesla supercharging station to attract Tesla owners from southern Malaysia and Singapore. Other than that, Al-Salām REIT and Mass Rapid Transit Corporation (MRT Corp) are developing a pedestrian overhead bridge linking KOMTAR JBCC and the Rapid Transit System (RTS) Link Bukit Chagar station. The completion of this infrastructure project is anticipated to direct visitors to KOMTAR JBCC. The IM retail sector has generally returned to pre-pandemic levels, propelled by robust spending of Singapore visitors. However, inflation and weaker local currency may diminish local spending power. Meanwhile, in both Batu Pahat and Melaka, mall performance remains relatively stable without notable enhancements. Although there is improved performance in certain spots, retailers and mall operators may still face challenges due to higher costs. Cumulative Supply and Vacancy Rate of Retail Malls in Iskandar Malaysia 0 5 10 15 20 0% 10% 20% 30% 40% 50% 2016 2017 2018 2019 2020 2021 2022 2023e Cumulative Supply Vacancy Rate (%) Total Supply (mil. sq. ft.) Vacancy Rate (%) (Extracted from CBRE/WTW Market Outlook Report 2024)
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