Melting pot

Kuala Lumpur is one of the fastest-growing Asian cities and Malaysia is an increasingly popular choice for businesses. The city is a melting pot of races and religions enjoying low corporate tax rates, free trade agreements, and close access to Singapore and Thailand.

We take a look at how the office, retail, and residential assets are evolving in the city.

Residential
The Kuala Lumpur housing market is on a gradual recovery from the pandemic, with increased demand for mid-priced and affordable ranges. The inexpensive cost of living which provides high-quality living to many people is one of the reasons why residing in Malaysia is so appealing. With the introduction of the Premium Visa Programme (PVIP) last year, many anticipate that it will attract high-net-worth individuals. The PVIP offers long-term residency for foreign talent to live, work, or study in Malaysia.

For example, Skylon Residences (to be completed in 2025) is a luxury low-density condominium located in Kuala Lumpur’s main shopping and nightlife district. Core Residence at TRX is in the New Financial District and is expected to be completed in 2023.

Offices
ESG is a hot topic in Malaysia as the Twelfth Malaysia Plan 2021-2025 highlights three core themes: environmental sustainability, social re-engineering, and economic empowerment. ESG is becoming highly relevant to office buildings with a demand and preference for sustainable buildings as well as features for staff wellness.

Merdeka PNB 118 will be certified with the WELL Building Standard by the International WELL Building Institute. In addition, Sunday Tower has a 37,000sqft vertical garden producing fresh vegetables. Eldelweiss SOFO & Serviced Residences at Tropicana Gardens (to be completed in 2024) is GreenRE certified as it has been constructed with features to improve energy efficiency, water efficiency, and carbon emission.

Retail
Retail has been performing positively in 2022 with the retail sales jumping 96% year-on-year in Q3 2022, however, high inflation and the looming recession may impact 2023 retail sales as consumer confidence lowers. Despite this, moderate improvement is anticipated for the retail industry in 2023 with Retail Group Malaysia forecasting a growth rate of 3.5%.

Shopping malls have been driving shopper traffic and increasing rent by activating common spaces through placing small F&B kiosks, F&B stores, and creating areas to relax in. At MyTown Shopping Center (seen above) they altered their open space to include hang-out areas and playgrounds. Mitsui Shopping Park Lalaport has a central rooftop garden of about 1,700sqm. Working in collaboration with teamLab, they exhibited a 4 month long outdoor  digital art installation in the garden.

Even though shoppers have returned to the malls, Malaysia’s e-commerce income is expected to see growth. In Q3 2022, e-commerce recorded RM189.2 billion (US$43.9bn), a 3.7% growth year on year. Retailers are aiming to adopt seamless online and offline integration to maximise showcasing brands and customer engagement. HP Experience Hub launched by Thunder Match Technology in partnership with HP Malaysia is Southeast Asia’s first Online-to-Offline (O2O) concept, like the Samsung experience store in King’s Cross, London.

Hotels 
The Malaysian government has outlined goals of achieving 24m international tourists by 2025. In 2019, 15.9% of Malaysia’s economy was from tourism and it supported 3.6m jobs. 35% of Malaysia’s tourism consumption was on shopping while 23% was on accommodation.

Office buildings are being transformed into hotels, such as the Hyatt Centric Hotel. In addition, many boutique hotels have been utilising technology to streamline processes and provide personalised service to customers.

Boutique hotels are gaining traction amongst travelers seeking an authentic and unique experience as they often highlight local culture. Boutique hotels such as KLoe have a very young and appealing interior style that has been well-received by locals. Due to its popularity, KLoe has brand collaborations such as the recent event with Heineken to provide Heineken-themed experiences and staycation rooms.

Malaysia, especially Kuala Lumpur, has been a popular choice for leisure and business travel in the Southeast Asia region. Malaysia is an affordable destination and the improvement of infrastructure as well as the strengthening of the tourism industry means that the hotel market could be a good investment opportunity. While Malaysians are quite well versed with online shopping, malls are becoming more lifestyle focused in an attempt to drive consumer engagement with brands and public spaces.

Hui Wen Lim