Bursa Malaysia-listed property developer Tropicana Corporation believes it is time to scale up its expansion in Johor, Malaysia. It intends to unlock 800 acres of “premium landbank” with a gross development value (GDV) of RM43 billion ($12.3 billion).
Artist’s impression of the Lido Waterfront Boulevard across a 90-acre plot and positioned as the next CBD in Iskandar Malaysia (Picture: Tropicana Corp)
Lido Waterfront Boulevard is a freehold development with green features, a plot ratio of 1:8 and a proposed Multimedia Super Corridor status (Picture: Tropicana Corp)
Lido Waterfront Boulevard is positioned as the next CBD in Iskandar Malaysia. It is a freehold development with green features, a plot ratio of 1:8 and a proposed Multimedia Super Corridor (MSC) status. It is poised to be an “international-grade development” in terms of sustainability, with Leadership in Energy and Environmental Design (LEED) and Green Building Index (GBI) certifications.
The upcoming Watermark Residences will feature a 54-storey high-rise development with 1,596 serviced apartments. Sizes range from 463 sq ft to 807 sq ft. There are also 16 retail lots within the development, with sizes from 1,012 sq ft to 4,133 sq ft. The project is targeted for launch in 3Q2024.
In the pipeline is a Grade-A modern office tower at Lido Waterfront Boulevard, catering to a wide spectrum of businesses given its MSC status. It will also feature a wide range of facilities and energy-efficient fixtures.
The upcoming Watermark Residences will feature a 54-storey high-rise development with 1,596 serviced apartments. It is targeted for launch in 3Q2024 (Picture: Tropicana Corp)
Tropicana Danga Bay, located less than 10km from Lido Waterfront, is envisioned as a vibrant community hub with serviced apartments and retail lots.
The upcoming 26-storey Bora Residences Tower B at Tropicana Danga Bay will have 245 modern serviced residences, ranging from 531 sq ft to 892 sq ft. There are also six retail shop lots, ranging from 353 sq ft to 672 sq ft. It will debut in 1Q2024.
Both townships are located within a five- to 10-minute drive of the Malaysian terminus of the RTS Link, points out Tropicana’s Lee. Hence, the projects will benefit from the completion of the RTS in three years
Many malls in the Klang Valley near KL have reported a decline in footfall and business from the second quarter of 2023, due to the waning impact of revenge spending post COVID-19.
However, he noted that some key malls in Johor Bahru - such as JBCC Komtar, City Square and Mid Valley Southkey - have reported uptrends in business and that the rental rates have even increased, especially for prime retail space on ground floors.
Two malls in the city centre, JBCC Komtar and City Square, are registering 65,000 footfall on weekdays and 100,000 on weekends. At least 30 per cent of that are Singaporean visitors.
The current footfall figures are between 85-90 per cent of pre-pandemic levels. “There is a high spend in these malls, and also at Mid Valley Southkey, because of the currency (disparity between Singapore Dollar and Malaysia Ringgit), safety, better quality of malls in terms of tenant mix and concept, great food, and trendy cafes. They are simply good places to enjoy during the weekends.”
Many of these locals work in Singapore, and have a higher disposable income than Malaysians in the rest of the country.
The Singaporean visitors are another catchment group on top of these locals. The average household income (of both groups) is above RM7,000 (S$2,009), placing them in the middle income group (in Malaysia) and that is where retail thrives
Some JB malls such as Mid Valley Southkey, have reinvented the retail scene and are now offering outlets like artisan bakeries and international fashion brands which have “attracted crowds from across the Causeway
Toppen has stepped up its quality of offerings recently such as an anchor supermarket Lulu Grocer which opened last November as well as sports retailer Decathlon and Japanese furniture firm Nitori.
The mall is also looking to add to their offerings with an indoor theme park, badminton courts as well as a retail golf simulator experience.
Many of these malls have things like indoor kids' playground, rock climbing and quality restaurants
To stay relevant, meeting customer needs is important to ensure sustainable growth. Constant evaluation and optimization of tenant mix, offers, and experiences created to ensure what our customers truly want
Johor could go from strength to strength as a key retail destination if the city’s retail offerings are streamlined and it focuses on quality over quantity.
The retail market in Johor Bahru is "bucking the trend" of retail decline in Malaysia, due to the influx of Singaporean visitors to the malls, which he estimates to be around 40,000 daily.
Currently, an average 320,000 people cross the Causeway daily between Johor and Singapore.
Improvements to cross-border immigration processes, such as the use of newly installed immigration e-gates, the digital arrival card and the revival of the Malaysia Automated Clearance System (MACS), have made it far easier for the estimated 50,000 Singaporeans that enter Johor every weekend.
A weekend JB shopping trip may still see a two to three hours one-way commute, but pledged improvements to systems and manpower on both sides might reduce this, making it more attractive and giving visitors more time to shop, dine and enjoy JB services.
While Johor Bahru’s retail scene is promising for consumers and investors, it is also plagued by issues relating to strata title ownership and an oversupply situation.
Johor Bahru has 19.3 million square feet of retail space of malls and hypermarkets in total, and that this is equivalent to more than 11.2 square feet per capita.
Malls that are close to the Causeway border with an array of international brands are more likely to succeed while those in the suburbs of Johor Bahru are unlikely to attain the right catchment of visitors.
Johor’s housing committee chairman Jafni Md Shukor reportedly said that the state government was pushing for a “win-win solution” in rejuvenating abandoned shopping malls in the city.
He identified two malls located in downtown Johor Bahru as examples - Danga City Mall and JB Waterfront Mall. He also identified Skudai Parade, a mall located on the outskirts of the city, as another mall to be redeveloped.
The Bukit Permai state assemblyman said that these premises were still owned by some parties and that these parties had sold the lots inside their buildings to traders.
“Solving this issue is not as simple as many people think as demolishing it involves legal issues and huge financial complications,” said Mr Mohd Jafni.
Mid Valley Southkey, City Square and Toppen have benefitted from being wholly owned while the likes of abandoned strata-owned malls such as Danga City and Waterfront City have closed and authorities are grappling with legal issues to have them redeveloped.
Abandoned strata-owned malls should securitize their ownership to join new developers to revive the mall.
“The real estate value of these abandoned buildings is high with the current value as it is within prime area. But the state government is working towards finding a win-win solution on this matter,” he added.
JB Waterfront City Mall
A report by New Straits Times in April said that the development may be converted into a commercial building similar to KL Tower with an estimated gross development value of RM1 billion, citing unnamed sources.
Property developer SKS Group to rehabilitate the abandoned “Pacific Mall” in Jalan Storey, Johor Bahru into a mixed-use development known as SKS Tower.
The upcoming Singapore-Johor RTS Link project due for completion in end-2026, which aims to connect Bukit Chagar to Woodlands in Singapore, could double the volume of retail visitors to malls in Johor Bahru city when it starts operations.
LRT should be built connecting the megamalls from Bukit Chagar to ease the road congestion and along congested highways.
The single family market is the “canary in the coal mine” for the overall economy and has been in recession since late 2022, Lokar says. “Now it’s rounding into recovery,” he says.
However, the sector continues to face some notable headwinds, including affordability issues and high interest rates. “The market needs lower interest rates for people to consider selling their homes that they refinanced when rates were low,” he says.
2. MULTIFAMILY IS HEADING FOR A TOUGH YEAR
Companies that have leaned into multifamily contracts during the sector’s boom of the last several years should prepare for slowdown in the near term, Lokar says. “If you’ve been living off multifamily, [the sector] is entering recession,” he says. “Starts were down 28.1% in the last quarter, and permit pulls have cratered.”
3. NONRESIDENTIAL IS STRONG, BUT WILL SLOW IN LATE 2024
While single-family construction leads the economic business cycle, nonresidential construction lags. As a result, the market has been strong throughout 2023 and will likely stay strong through much of 2024.
“For companies on the nonresidential side, it has been great. … And next year should be great, or at least good. But be careful for what comes next,” Lokar says. “You’ll be in recession by end of 2024.”
4. THE SILVER LINING AMID SLOWDOWN: IMPROVEMENTS IN LABOR, SUPPLY AND INFLATION
An economic slowdown will provide some relief for companies when it comes to the three top pain points of the pandemic and post-pandemic era: supply chain problems, inflation and labor shortages.
“This deceleration and ultimate recession is going to take pressure off all of those,” says Lokar. “Your workforce issues won’t be fixed, but they will be easier to manage. Inflation is not fixed, but it’s coming down. And the supply chain has gotten better.”
5. INVEST IN YOUR BUSINESS DURING A SLOWDOWN
slowdown will give the construction industry its first “breather” since prior to the pandemic. “You’ll have an opportunity to get the house in order. You’ve spent 3 to 3.5 years surviving the pandemic, with unprecedented supply chain issues, inflation pressures and turnover. You’re going to be able to breathe.”
For businesses that plan ahead, slowdowns can be opportunities for investment and preparation for future growth
