Retail Market

At The Mines, plans are underway to upgrade canal-front retail spaces with curated F&B offerings, alongside the replacement of Lotus's with Jaya Grocer by end-2026.

These developments place greater emphasis on experience, placemaking and mixed-use integration, reflecting the evolution of shopping centres into broader lifestyle destinations.

Retailers are adopting a more measured approach towards expansion. While MBO Cinemas ceased operations entirely, store closures in 1H2026 — such as Starbucks, KyoChon and Fuiyoh! It's Uncle Roger — were largely concentrated among underperforming outlets.

Necessity-based retail remained resilient: Jaya Grocer, Village Grocer, NSK Grocer and Lotus's expanded, while Lotus's Malaysia acquired The Food Purveyor for RM 1.7 billion and XL Holdings acquired 34 Giant Mini outlets. The continued earnings growth of 99 Speed Mart, MR D.I.Y. and Eco-Shop highlights sustained demand for value-driven offerings.

Retailers are increasingly differentiating through immersive concepts and IP-driven retail. Recent openings include Miniso Land, Miniso Friends, Southeast Asia's first Godzilla Store, Toys "R" Us's IP-focused flagship store and The Gundam Base Malaysia. AEON360's collaboration with Google Cloud to develop an AI-driven shopping ecosystem signals growing adoption of data-driven technologies.

The proposed IOIPG REIT — comprising retail, office and hotel assets valued at approximately RM 7.6 billion, including IOI City Mall at a proposed consideration of RM 5.1 billion — represents one of the largest potential REIT exercises in recent years.

KIP REIT's acquisition of Setapak Central Mall (514,777 sq ft NLA, 99.9% occupancy) for RM 435 million at a yield of 7.2% underscores continued investor confidence in well-performing retail assets.

Mega and regional malls largely sustained occupancy rates above 90%, reflecting strong tenant retention. DA MEN Mall achieved full occupancy following the introduction of Easyhome Mall under a master lease arrangement.

The slight improvement in occupancy suggests leasing demand is gradually strengthening. The recent groundbreaking of Coronation Square Mall in May 2026 reflects developer confidence in Johor Bahru's long-term retail prospects, underpinned by the upcoming RTS Link and the JS-SEZ.

Key destinations such as Paradigm Mall, The Mall Mid Valley Southkey and AEON Mall Tebrau City continue to attract established and emerging brands. The F&B segment continues to account for the majority of notable retailer movements.

The Waterfront Shoppes at The Light Waterfront in Gelugor is scheduled to open in 2H2026, adding approximately 1.0 million sq ft. As part of the 152-acre The Light Waterfront development, it benefits from an integrated ecosystem comprising the Penang Waterfront Convention Centre, hotels, offices, residences and recreational facilities.

In 1Q2026, Penang's overall occupancy eased marginally to 70.5% from 70.9% in 4Q2025. Penang Island declined to 75.9% from 76.4%, while Seberang Perai recorded a modest decrease to 63.4% from 63.7%. Selected localities — Greenlane, Tanjong Tokong and Kepala Batas — recorded occupancy improvements during the quarter.

In 2025, monthly average ground floor rental rates in selected prime malls within George Town ranged from RM 2.98 to RM 36.98 per sq ft per month.

The Hill @ Damai by Bina Indah Development Sdn Bhd, located along Jalan Bersatu within the Damai / Luyang residential enclave, is positioned as a placemaking and lifestyle-commercial destination with healthcare-supportive attributes, including a purpose-built cardiac centre in a future phase.

Fatty Lai Crab Pot — a China-born brand with more than 500 outlets worldwide — launched its first Malaysian outlet at Imago Shopping Mall. Imago also welcomed McDonald's, A&W, Enso Teppanyaki, Osote and Gohson Coffee. The Parenthood, recognised as Malaysia's first London-themed indoor playground, debuted at Imago, while the upgraded Kidzooona reopened at Suria Sabah.