Shoplots with trading business expected to face downward rentals

Those who are pure trading in nature will be much more affected by the Internet retailing business, says analyst

by FARA AISYAH/ pic by MUHD AMIN NAHARUL

SHOPLOTS with trading business profiles may face downward rental pressure due to the rise of e-commerce as demand falls, said Asiacap Valuer & Property Consultants Sdn Bhd property valuer Kit Au Yong.

“Those who are pure trading in nature will be much more affected by the Internet retailing business, while non-trading shoplots such as services, and food and beverage will be less affected.

“However, they are not totally shielded as delivery services such as Grabfood is challenging the landscape to a certain extent,” he told The Malaysian Reserve.

He added that with the mode of cashless transaction growing, banks’ physical presence and location will become less important and fewer bank branches are needed, including automated teller machines.

Looking at the adoption rate of cashless transaction, Kit expects it may take three years, especially in the urban areas, before banks go fully online.

In 2017, local banks shuttered 63 branches from 68 planned closures driven by commercial reasons.

In 2016, some 43 bank branches of 32 commercial banks and 11 Islamic banks were closed, also due to commercial reasons.

As for shopping malls, the business has been impacted by e-commerce, in addition to the huge oversupply of malls (TMR pic)

VPC Alliance (KL) Sdn Bhd MD James Wong said the trend of banks closing down is partly due to the introduction of online banking. “Many banks are closing down their unproductive branches or branches that are too close to each other.

“In residential areas, shoplots are catering towards the neighbourhood’s shopping experience and hence, will not be affected by the onslaught of online shopping,” he said.

Wong said there is generally no oversupply of shoplots as the supply of such commercial space in each residential area and township is limited and controlled by planning guidelines.

As for shopping malls, he said, the business has been impacted by e-commerce, in addition to the huge oversupply of malls, with a high turnover of tenants moving in and out.

Data from the National Property Information Centre (Napic) showed that the shop overhang situation is less encouraging as the numbers continue to increase at 13.9% to 5,760 units in the first half of 2019 (1H19) from 5,055 units in the previous six months.

The value of overhang shops in the six months period grew even higher at 22.1% to RM4.98 billion from RM4.08 billion in 2H18.

Johor led the overhang segment with 21.2% share of the national total with 1,222 units worth RM1.26 billion, followed by Selangor with 13.9% (800 units worth RM359.37 million).

For a change, Napic stated, units priced more than RM1 million spearheaded in the overhang, accounting for 23.1% (1,328 units), followed by units priced between RM400,001 and RM500,000 at 15.1% (871 units).

By property type, two- to 2½-storey shops topped the list with a 50% share (2,885 units). Three- to 3½-storey shops ranked second with 23.2% (1,338 units), followed by stratified shops with 19.3% (1,114 units).

The unsold under construction shops showed a better performance as the numbers declined by 11.9% to 6,370 units against 7,233 units recorded in 2H18, while the unsold not constructed category has been gradually decreasing from 401 units in 1H18 to 385 units in 2H18, and 371 units in the review period.

Meanwhile, the mall sector has been dogged by the rise in retail space across the country, reaching 3.31 million sq m, comprising 697 buildings in just the first six months of this year compared to 3.3 million sq m (666 buildings) in the same period last year.

According to Napic, the performance of shopping complexes moderated in the January to June period of this year, as the occupancy rate dropped to 79.7% compared to 79.9% in 1H18.

In 2017, local banks shuttered 63 branches from 68 planned closures driven by commercial reasons

On a quarter-to-quarter basis, however, the occupancy rate slightly increased from 79.3%.

The authority that tracks the country’s property sector said all states recorded occupancy rate more than 80% except for Johor (77.7%), Penang (72.3%), Negri Sembilan (72.2%), Melaka (70.2%), Kedah (77%), Pahang (66.5%) and Terengganu (70%).

According to Napic, 12 new shopping complexes were completed in 1H19, injecting 352,183 sq m of space into the market segment. There were 42 buildings (1.47 million sq m) in the incoming supply and 27 buildings (1.04 million sq m) in the planned supply.