Latest news with #PPKMalaysia
New Straits Times
23-07-2025
- Business
- New Straits Times
Malaysia's 733 malls, retail centres face margin squeeze as costs outpace revenue
KUALA LUMPUR: Malaysia's estimated 733 shopping malls, hypermarkets, supermarkets and market centres are under mounting pressure from rising operating costs and tightening regulations. Findings by the Malaysia Shopping Malls Association's (PPK Malaysia) latest shopping mall industry survey show a widening gap between operating expenses and revenue. The average costs now 27 per cent higher than service and promotional charges collected, up significantly from 13.4 per cent in 2022. The rising cost burden is driven by electricity tariff hikes, increased licensing and compliance fees, and the upcoming Sales and Services Tax (SST) expansion, which now includes rental, leasing and renovation services. Although SST on rental is levied on tenants, PPK Malaysia warns it will reduce rental affordability and compress landlord margins, especially as many mall operators are already subsidising operational expenses. PPK Malaysia urged the government to address these challenges in 2026 Budget, particularly around SST and escalating costs, which are threatening the sustainability and competitiveness of the retail property sector. The association stressed the sector's economic importance, noting that shopping malls directly employ 50,000 to 60,000 people in operations and management. When including retail tenants, contractors and outsourced service providers, the industry supports over one million jobs nationwide. Despite headwinds, the industry remains resilient, though growth has softened from pre-2024 levels, it said. The report noted that today's consumers seek more than just shopping - they're drawn to experiential elements, diverse F&B options, entertainment and sustainability-driven features, pushing malls to innovate and enhance their offerings. According to the Malaysia Retail Industry Report for June 2025 by Retail Group Malaysia, Malaysia's retail sector is anticipated to expand moderately by 2.8 per cent in the third quarter of 2025 (Q3 2025). The report noted that Malaysian retailers remained cautious about retail sales performance for Q2, anticipating a contraction of 1 per cent. This projected contraction may be due mainly to the Hari Raya spending patterns this year compared to the previous year. Meanwhile, the survey by PPK Malaysia, conducted from the fourth quarter of 2024 (Q4 2024) to Q1 2025, captured responses from 61 mall operators across various regions and mall sizes, reflecting a range of service levels and building quality. Malaysia's 733 malls collectively offer 196.2 million sq ft of net lettable area (NLA) and carry an estimated real estate value of RM153 billion. The data underscores a highly fragmented market dominated by smaller retail assets. Malls below 500,000 sq ft account for 81.5 per cent of total establishments and contribute 54.4 per cent of the country's total NLA, highlighting the significance of neighbourhood and mid-sized retail formats in Malaysia's retail landscape. From a regional perspective, the central region remains the retail epicentre, hosting 292 malls (39.8 per cent of the national total) and commanding 46.7 per cent of Malaysia's total retail space. This is followed by the southern region, which has 162 malls, or 22.1 per cent of the country's total; the northern region, with 138 malls, or 18.8 per cent of the country's total; East Malaysia, with 95 malls and 13 per cent of the country's total; and the east coast, with 46, or 6.3 per cent of the country's total. In terms of distribution by NLA, the central region accounted for 46.7 per cent of the total NLA of all shopping malls/retail centres in Malaysia, making up almost half of the total retail space in the country. The southern region had the second largest distribution with 21 per cent of total NLA. This was followed by the northern region, with 16.5 per cent of total NLA; East Malaysia, with 10.8 per cent of total NLA; and the East Coast, with 5 per cent of total NLA. The findings highlight where retail property investments are most concentrated, offering valuable insight for investors, developers, and REIT managers assessing location-specific growth opportunities amid a challenging operating environment.
Malay Mail
23-07-2025
- Business
- Malay Mail
Shopping mall industry warns of strain from SST expansion, calls for relief in Budget 2026
KUALA LUMPUR, July 23 — The shopping mall industry is urging the government to reconsider the expanded Sales and Services Tax (SST), citing its impact on rentals, leasing and renovation services as operators face rising operational costs and narrowing profit margins. In its latest Shopping Mall Industry Survey 2024–2025, the Malaysia Shopping Malls Association (PPK Malaysia) highlighted a growing imbalance between operating expenses and revenue, warning that the sustainability and competitiveness of malls are under threat. In a statement today, PPKM said that although SST is imposed on tenants, it inevitably affects the entire ecosystem — compressing rental affordability, affecting lease renewals, and straining cost recovery for landlords who are already subsidising daily operations. Rising costs versus limited revenue growth The survey, conducted among 61 malls nationwide between 2024 and 2025, found that average operating expenses are now 27 per cent higher than the average service and promotional charges collected — a sharp rise from 13.4 per cent in 2022. The report attributes this widening gap to escalating electricity tariffs, higher licensing fees, increased regulatory compliance costs, and the expanded SST which now includes property-related services. PPKM stressed that this cost imbalance is occurring in an industry that plays a crucial role in Malaysia's economy — providing over one million jobs, including mall staff, retail tenants, outsourced service providers and contractors. Malaysia's shopping mall landscape currently comprises about 490 malls, offering 167 million square feet of net lettable area (NLA). Including standalone hypermarkets and other retail centres, the figure rises to 733 establishments spanning 196.2 million sq ft — with an estimated real estate value of RM153 billion. Smaller malls and retail centres under 500,000 sq ft account for the majority — 81.5 per cent of total establishments and over half (54.4 per cent) of total retail NLA. While the Klang Valley and central region remain the main retail hubs, malls are increasingly well-distributed nationwide, reflecting the sector's significance across all states. Evolving with the times — at a cost Despite mounting costs, shopping malls continue to adapt to changing consumer behaviour — evolving beyond retail spaces into experiential destinations. Malls that remain competitive now blend retail with dining, entertainment, and sustainability-focused initiatives to stay relevant in a shifting market. But innovation comes at a cost, the statement noted. Operators are investing in enhanced experiences and sustainability features aligned with sustainable development goals — all while operating under shrinking margins and added strain from the SST expansion. The expanded SST, which came into effect on July 1, raised tax rates on several services and items previously taxed at 0 to 5 per cent, with new rates ranging from 5 to 10 per cent. Essential goods remain taxed at lower existing rates. Based on survey findings, PPKM reiterated its call for the government to address these challenges in Budget 2026, particularly by reviewing the SST structure and introducing broader cost relief measures that would enable malls to continue supporting employment, tourism and domestic consumption. While the industry remains resilient, the report notes that growth has moderated compared to pre-2024 levels — and without policy adjustments that reflect current economic realities, the mall sector could struggle to maintain its role as a key pillar in Malaysia's retail and services economy.
