Major facelift for Sungei Wang Plaza
CMMT invests RM54.5mil as retail mall segment faces intense rivalry
KUALA LUMPUR: CapitaLand Malaysia Mall Trust (CMMT), the owner of Sungei Wang Plaza and four other malls in Malaysia, is fighting hard to keep its assets relevant.
It submitted plans and proposals to the Kuala Lumpur City Hall in the second half of last year to reconfigure Sungei Wang Plaza and improve its trade mix to boost competitiveness.
CapitaLand Malaysia Mall REIT Management Sdn Bhd general manager for mall management (central region) Lawrence Teh said the investment to boost the value of that piece of real estate is expected to be about RM54.5mil.
“It is a major refurbishment and we have sought the services of a Thai designer. If you go to Bangkok’s malls, you can see the retail scene there is very vibrant and creative,” said Teh.
CapitaLand Malaysia Mall REIT Management is the REIT manager. The major refurbishment is expected to be completed in 2019.
CMMT has in total set aside RM80mil to enhance its malls. Besides Sungei Wang Plaza, CMMT portfolio of assets includes the newly reconfigured Gurney Plaza in Penang, The Mines in Seri Kembangan, Tropicana City Mall in Petaling Jaya and the East Coast Mall, Kuantan.
CMMT’s spending comes as the Malaysian retail mall segment is facing intense competition across the country.
According to Bank Negara, 140 shopping complexes are due for completion by 2021, adding to the huge over-supply.
Klang Valley has prime retail space per capita at 8.2 sq ft per person while in Penang it is 10.5 sq ft per person. In contrast Hong Kong and Singapore the ratio is 3.6 and 1.5 sq ft per person respectively.
At the same time, Sungei Wang property management committee will also be spending an initial amount of about RM3mil to modernise the external facade of the mall fronting Jalan Sultan Ismail.
Both CMMT and the property management committee are working together with the single objective to boost visitors and enhance the value of the mall in a challenging retail environment, particularly so in the Klang Valley due to an over supply of mall space.
The 41-year-old Sungei Wang Plaza has been trying to modernise with the times but the flood of new malls, the ever-changing retail mix, e-retailing has somewhat diluted visitor traffic.
“The construction of the mass rapid transit (MRT) saw a drop in the number of visitors but now that the MRT is up and running, we are seeing an increase in visitors,” Teh said.
Around the Sungei Wang Plaza, there are several new malls coming up. The major developments are the Bukit Bintang City Centre and the 108-storey Merdeka PNB 118. Both these developments are positioned as iconic projects, adding to the already intense competition for an old mall such as Sungei Wang Plaza.
The on-going redevelopment of Bukit Bintang Plaza for the next four to five years has also affected Sungei Wang Plaza parking and flow of shoppers.
Calling Sungei Wang Plaza and Bukit Bintang Plaza “siamese twins” due to the way the two buildings are connected, Teh said Sungei Wang’s above ground parking was via a ramp Bukit Bintang Plaza.
“The number of visitors will rise again post-Bukit Bintang Plaza re-development,” Teh said.
Serviced apartments, a hotel and a retail podium is being planned for the former Bukit Bintang Plaza site. The urban renewal project is a joint venture between de listed-Trade winds Corp Bhd and Ministry of Finance-owned UDA Holdings Bhd.
Yayasan Selangor building shares borders with both Sungei Wang and Bukit Bintang Plaza.
Teh added that what Sungei Wang has is location. It is beside the Bukit Bintang MRT station with multiple exits and is a short walk from other major retail attractions in the area.
Teh is also looking at the various new developments in that area like the Bukit Bintang City Centre positively.
“There is a pedestrian bridge linking Suria KLCC and the Petronas Twin Towers to Pavilion KL.
“With the redevelopment of the former Pudu Prison into another destination, Sungei Wang Plaza is centrally located. They can go to Berjaya Times Square and beyond,” said Teh.
CMMT centre manager for Sungei Wang Plaza Elise said the gross floor area of the main Sungei Wang building and the annexe block totals 1.67 mil sq ft. Of this portion, CMMT owns 511,103 sq ft.
In terms of net lettable area (NLA), CMMT owns 453,718 sq ft, or about 54%, of total NLA of 842,000 sq ft.
Lim said the entire Sungei Wang Plaza has 674 parcels, of which CMMT owns 205. In terms of leases, CMMT has 224 due to sub-division of some of the parcels.
As at Dec 31, 2017, Sungei Wang Plaza was revalued at RM583mil, representing a loss of RM1.12mil compared to its net book value, prior to revaluation, of RM584.12mil.
The fair value of the real estate assets are determined semi-annually in accordance with REIT guidelines.
It is likely that the drop in valuation was due to loss of usage of its car parking bays. The mall has 1,295 bays, of which 415 are not usable because of the on-going renewal works over at Bukit Bintang Plaza.
This article first appeared in StarBiz Premium