Johor Bahru: reveals challenges of the Malaysian city’s retail scene

https://www.channelnewsasia.com/asia/jb-shopping-malls-retail-singapore-mustafa-capital-city-mid-valley-toppen-johor-3857866

 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.