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Monday, December 22, 2008

Supply of shopping centre space to slow

The supply of shopping centre space in the Klang Valley is expected to slow over the next three years as developers put projects on hold as it is now tougher to raise funds.

At the same time, some developers have stalled projects as a knee-jerk reaction due to fears of the slowing global economy while others are waiting for raw material prices to fall.

Regroup Associates has projected that in Klang Valley there may be only 1.47 million sq ft of net lettable area in 2009, down by 400,000 sq ft projected in the first half of the year.

In 2010, only half, or 2.16 million sq ft of net lettable area, will be ready as opposed to 2.63 million sq ft which was supposed to come on stream in 2010.
However, opportunities are still available even during an economic downturn, said Regroup Associates managing director Allan Soo.

"Developers should view things objectively and look for opportunities.

"Those who do so will see actual opportunities during a recession as retail demand can be created," Soo told Business Times.

According to Soo, there are still unserved communities and opportunities to create something new. He cited Cheras as an example where more malls can be developed and where funds are likely to come and buy these properties in the future.

Moreover, during difficult times, there is less competition in the markets and costs of construction are also lower.

One could do something that caters to trends of the future, Soo added.

"Consumers go for experience and a good time. This is called experiential retail. If developers continue to build yesterday's mall, it is bound to fail," he said.

Soo also pointed out that successful malls are not necessarily Grade A shopping malls.

"Success which is measured by traffic, rents and profits are even made by hypermarkets," he pointed out.

By Business Times (by Vasantha Ganesan)

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