THE MALL GAME

June Lim, CEO of Amax Prop­erty Man­age­ment Sdn Bhd and Coun­try Head for Malaysia, ARA As­set Man­age­ment Ltd, talks to ThePeak about the re­tail real es­tate in­dus­try and the po­ten­tial of REITs in Malaysia.

The Peak (Malaysia) - - Contents -

June Lim, CEO of Amax Prop­erty Man­age­ment Sdn Bhd and Coun­try Head for Malaysia, ARA As­set Man­age­ment Ltd, talks to ThePeak about the re­tail real es­tate in­dus­try and the po­ten­tial of REITs in Malaysia.

How did you get started in the REIT busi­ness? I didn’t get my start with REITs; my forte, ac­tu­ally, is in re­tail real es­tate. It was my fam­ily that sug­gested I dive into the real es­tate in­dus­try. I read es­tate man­age­ment at the Na­tional Univer­sity of Sin­ga­pore be­fore join­ing a de­vel­oper, where I did leas­ing work for a shop­ping mall. There, I dis­cov­ered how fast-paced and vi­brant the re­tail in­dus­try is. The scene could change at any time and while there is a sort of breath­less­ness as­so­ci­ated with it, it was also in­cred­i­bly ex­hil­a­rat­ing. Re­tail is fas­ci­nat­ing be­cause you’re al­ways try­ing to pre­dict hu­man be­hav­iour. You need to have a mind for strat­egy when it comes to mall man­age­ment, and that strat­egy can change in a blink of an eye to ac­com­mo­date new and un­ex­pected de­vel­op­ments. It keeps you on your toes. Tell us about your first few years in the in­dus­try – was there one par­tic­u­lar mo­ment that set the prece­dent to your suc­cess to­day? It was an awak­en­ing I had dur­ing my time with CBRE in Sin­ga­pore: no mat­ter how hard you try, there will be times when you may not suc­ceed, and you will have to come to terms with it and move on. Ex­pe­ri­ence has taught me that if I can’t swim against a wave or dive un­der to avoid it, my only re­course would be to ride it. I do be­lieve you have to be as adap­tive as wa­ter in or­der to thrive in the re­tail in­dus­try. You started your REIT jour­ney in Sin­ga­pore and now you’re lead­ing the way in Malaysia. Tell us more about ARA’s as­sets in Malaysia and the ini­tia­tives you have taken to en­hance them. We ac­tively man­age four malls in Malaysia: 1 Mont Kiara, CITTA Mall, Ipoh Pa­rade and Klang Pa­rade. A fifth, AEON Ban­daraya Me­laka, is mas­ter leased to AEON. When I first joined ARA, I was tasked to over­see

the con­cur­rent as­set en­hance­ment ini­tia­tives (AEI) of Ipoh Pa­rade and Klang Pa­rade. We suc­cess­fully com­pleted Ipoh Pa­rade’s AEI within a year and Klang Pa­rade’s in a record­set­ting seven months. Now, Ipoh Pa­rade stands as the town’s iconic bea­con of moder­nity, with the ti­tle of ‘Big­gest Out­door LED Ad­ver­tis­ing Screen’ in the Malaysia Book of Records, while Klang Pa­rade’s flo­ral themed in­te­rior won an In­ter­na­tional Prop­erty Award in 2016.

1 Mont Kiara is strate­gi­cally lo­cated but lacked pres­ence ow­ing to its clin­i­cal look, so a new framed façade was added. We also ad­dressed the M&E equip­ment in the mall and added more es­ca­la­tors to en­cour­age move­ment. In con­trast, CITTA Mall was un­der­serv­ing its com­mu­nity with poorly main­tained fa­cil­i­ties and empty floors, so we em­barked on a leas­ing ini­tia­tive to fill up space, es­pe­cially on the ground floor to ac­com­mo­date more din­ing op­tions for vis­i­tors.

There has also been a lot of work that we’ve pumped into the malls via our events. Our most suc­cess­ful ac­tiv­ity, the Shud­dup N Dance com­pe­ti­tion, has grown from a lo­cal street dance com­pe­ti­tion into an in­ter­na­tional one, with par­tic­i­pants fly­ing in from neigh­bour­ing coun­tries. It is ac­tiv­i­ties like th­ese that con­tinue to keep our malls rel­e­vant. Malaysia is cur­rently un­der­go­ing a tran­si­tion, what with the change in gov­ern­ment dur­ing the re­cent elec­tions. How do you think the re­tail real es­tate in­dus­try and REIT op­por­tu­ni­ties in Malaysia will evolve with this? I think the fun­da­men­tals of the Malaysian econ­omy re­main sound, de­spite ob­vi­ous con­cerns. The gov­ern­ment’s new ini­tia­tives will lay the ground­work for sus­tain­able longterm growth, and the in­dus­try could ride along the mo­men­tum to breach new bench­marks.

The same ap­plies to REIT op­por­tu­ni­ties in Malaysia, which I be­lieve is evolv­ing in the right di­rec­tion with the re­cent changes to the REIT guide­lines, es­pe­cially in­volv­ing Is­lamic REITs. Th­ese changes, along with a greater un­der­stand­ing of how REITs work, have con­tributed to an in­creas­ing pop­u­lar­ity among re­tail in­vestors. It wouldn’t be long be­fore we see the rise of REITs in Malaysia the same way we have seen them spawn in Sin­ga­pore. Where do you see Malaysia’s real es­tate in­dus­try head­ing in the next five years? Strictly from a re­tail per­spec­tive, I would say malls re­main one of the most vis­ited venues in the coun­try. It’s em­bed­ded in Malaysians’ DNA: at the end of the day, malls re­main flex­i­ble venues. The F&B in­dus­try is at its zenith, re­plac­ing fash­ion, es­pe­cially with the on­slaught of on­line re­tail av­enues. If the rise of third wave cafes, dessert par­lours and speakeasies has taught us any­thing, it’s that peo­ple are now mo­ti­vated to visit venues to be seen, not to spend.

With tech­nol­ogy and e-com­merce, ARA as a group has demon­strated the abil­ity to keep our malls rel­e­vant by com­pletely em­brac­ing the fea­tures avail­able on plat­forms like In­sta­gram and Face­book to reach shop­pers vir­tu­ally. What are the cur­rent chal­lenges fac­ing the REIT busi­ness and what are your strate­gies to mit­i­gate them? Ris­ing global in­ter­est rates will al­ways be a con­cern for us here and be­yond. As a pru­dent man­ager, we will proac­tively hedge our debts if the cost comes to a rea­son­able level and look for op­por­tu­ni­ties to tap into the bond mar­ket over time. Shop­ping malls are a dime a dozen th­ese days. What is your out­look on this and what steps have you taken to en­sure that the malls un­der your care stand out? Like ev­ery­thing else in life, know your place and work to your strengths. We’ve had to carve a niche for our­selves, un­der­stand­ing that we would oc­ca­sion­ally have to let go of glam­orous op­tions for more prag­matic so­lu­tions. Per­haps more im­por­tantly, we’ve al­ways prac­ticed a very hands-on ap­proach when it comes to man­ag­ing the malls and re­spond­ing ex­pe­di­ently to feed­back from mul­ti­ple sources. What are you look­ing for­ward to, for both Amax Prop­erty Sdn Bhd and ARA As­set Man­age­ment, as you move into the fu­ture? On a group level, I would hope to es­tab­lish ARA as a mar­ket leader in the in­dus­try. Our team has done some pretty good work lo­cally and re­gion­ally, and I do be­lieve we still have plenty to of­fer, even to those who are un­fa­mil­iar with our name.

On a more per­sonal level, I hope I would be able to make a dif­fer­ence in my staff’s lives – call it an in­vest­ment in hu­man cap­i­tal if you will. Above all, I am ex­cited to see how our as­sets can grow in this ever-evolv­ing mar­ket, which re­mains a most won­drous game to me.

“IT’S EM­BED­DED IN MALAYSIANS’ DNA: AT THE END OF THE DAY, MALLS RE­MAIN FLEX­I­BLE VENUES.”

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