Greater Kuala Lumpur retail stock inches up 3.3% YoY in 2023

The influx of new malls is expected to intensify competition for foot traffic.

The retail sector in Greater Kuala Lumpur experienced steady growth in 2023, with total retail stock, including hypermarkets, increasing by 3.3% year-on-year (YoY) to reach 75.1 million square feet, as per Savills Research.

This expansion equates to 9.3 square feet per capita, with Outer KL holding a dominant 55% market share.

New retail supply contributed to this growth, adding 2.5 million square feet from three major completions, including The Exchange TRX, which boasts a net lettable area (NLA) of 1.35 million square feet; Pavilion Damansara Heights Phase 1, with 533,000 square feet; and KSL Esplanade Mall, offering 650,000 square feet. Notably, two of these projects are located in the KL suburbs, while one is in Outer KL.

In 2024, an additional 1.1 million square feet of retail space is expected, pushing the total to 76.3 million square feet, marking a 1.5% growth.

New entrants are Elmina City Lakeside Mall, covering 214,000 square feet, and 168 Park Selayang Mall, adding 235,000 square feet. However, the influx of new malls is expected to intensify competition for foot traffic and market share. While high-performing malls are likely to maintain their position, weaker or poorly managed malls may continue to face challenges due to their limited retailer and product offerings.

The occupancy rate in Greater KL's retail malls has been on a declining trajectory since 2013, driven by an imbalance in supply and demand. The situation worsened between 2020 and 2021, as pandemic-induced lockdowns and retailer closures led to a sharp drop in occupancy rates. 

However, a recovery trend began in 2023, with the average occupancy rate showing gradual improvement, reaching 80.4% in the first quarter of 2024.