New competition in Malaysia's capital

The Exchange TRX shopping center, which opened in November, is the latest name to join this race.

Competition begins.

According to The Star newspaper in Malaysia, The Exchange TRX is located in Bukit Bintang, Kuala Lumpur's main shopping district. With a net leasable area of ​​120,000 ^m² , the mall houses approximately 400 stores across four floors. The first floor showcases luxury brands such as Chanel.

Other well-known brands have also established stores, such as Gentle Monster, a popular South Korean eyewear retailer, and the French-Japanese fashion brand Maison Kitsune. The Japanese department store Seibu also has a presence here.

The Exchange TRX shopping center

SCREENSHOT FROM THE SMART LOCAL MALAYSIA

According to Nikkei Asia , The Exchange TRX is part of a redevelopment project aimed at creating an international financial district in the heart of Kuala Lumpur. The development and operation of this commercial center is being undertaken by a joint venture between Australian real estate developer Lendlease and a Malaysian government- owned company.

Mitch Wilson, project director of The Exchange TRX and head of retail at Lendlease Malaysia, said that brands have leased 98% of the mall's space. This is considered unusual for Malaysia, where some malls open with many unfinished stores because tenants are not yet ready.

Concerns about oversupply.

The Exchange TRX is facing intense competition from other rivals in the region. A large shopping mall is expected to open nearby in 2024, further fueling competition amid concerns about inflation and a nationwide economic downturn.

This prospect could become a concern in the future. In Kuala Lumpur, new shopping malls have been built to cater to the growing middle class, but there are also concerns about oversupply.

Many people were present at the opening of The Exchange TRX on November 29th.

NIKKEI ASIA SCREENSHOT

The Pavilion Damansara Heights shopping center, catering to upscale customers, opened in the luxury residential area in October but still has plenty of space. Additionally, another large shopping mall is scheduled to open in 2024 near The Exchange TRX. This location is situated in Merdeka 118, the world's second tallest skyscraper.

Nikkei Asia quoted Yulia Nikulicheva, an expert from real estate company JLL Malaysia, as saying: "The vacancy rate in the high-end segment of the market is currently at 17.2% and is expected to increase slightly in the coming years due to the entry of more shopping malls."

"Location is a key factor in the success of shopping malls, especially in Kuala Lumpur, where there is strong local competition," said Yulia.

Furthermore, despite a promising start, the TRX exchange still faces many challenges. The continuous opening of shopping malls has left some people feeling weary. "All shopping malls are pretty much the same" is a common sentiment among consumers.

Regarding future prospects, researchers at CGS-CIMB Research (Singapore) say that the outlook for the retail sector, particularly in central Kuala Lumpur, will remain challenging in 2024. This is due to the continued availability of vacant space, coupled with higher taxes on luxury goods.

Another reason is that although the occupancy rates of shopping malls in Kuala Lumpur are improving, they are still below pre-pandemic levels.

The Malaysian Retail Group has lowered its forecast for Malaysia's annual retail growth rate in 2023 to 2.7% (from 4.8% previously), due to an unexpected 4% drop in retail sales in the second quarter of 2023.

"On the positive side, we expect private spending to remain stable thanks to the country's positive economic indicators," The Star quoted a report from the Malaysia Retail Group.

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