Retail overload: KL and JB set to flood Malaysia’s already saturated mall scene

[KUALA LUMPUR] Malaysia’s sprawling footprint of nearly 1,000 shopping complexes, covering 17.3 million square metres (sq m), is set to expand even further as a bumper wave of fresh retail space hits the market.

JLL said that central Kuala Lumpur is poised to gain about 1.3 million square feet (sq ft) more of net lettable retail space with the opening of two major malls – Ombak KLCC and 118 Mall – over the second half of 2026.

The new supply is coming into an already saturated market. But these much-anticipated projects are not simply adding space; they are also being positioned around more specific demand pools, from cross-border shoppers in Johor to visitors drawn by major landmarks in Kuala Lumpur.

National Property Information Centre (Napic) data showed that Malaysia had about 17.3 million sq m of existing retail space from 988 shopping complexes as at end-June 2025, with occupancy at around 79 per cent.

The numbers vary depending on how the market is defined.

Napic’s shopping-complex data covers a broader retail-property category, while a survey conducted for the Malaysia Shopping Malls Association by research consultant Stratos Pinnacle counted 733 malls and retail centres as at Mar 19, 2025.

Of these, 490 were malls and 243 were retail centres. The survey applied a minimum net lettable area (NLA) threshold of 50,000 sq ft, compared with Napic’s 20,000 sq ft threshold.

Around 34 complexes are in the incoming supply pipeline with the stock concentrated mainly in Selangor, Kuala Lumpur and Johor, according to Napic. 

Lifestyle: A rising retail pitch

Many of the newer projects are also being pitched above basic convenience retail, with a stronger emphasis on dining, lifestyle, wellness, entertainment and destination appeal – categories aimed at capturing higher-value local and foreign spending. 

The pipeline is not slowing in Malaysia’s southern state, either.

Earlier in May, Coronation Square Mall broke ground in Johor Bahru, with the nearly 1.3 million sq ft mall positioned by its developers as the largest retail mall in the city centre.

Developed by Coronade Properties with CapitaLand Investment as retail adviser, the project adds another major retail asset to the Johor-Singapore Special Economic Zone.

On the sidelines of the ground-breaking, the Singapore Retailers Association and CapitaLand Investment signed an agreement to support Singapore retailers expanding into Johor Bahru, including through market-entry support, pop-ups and knowledge-sharing sessions. 

In Johor Bahru, SKS City Mall JBCC opened on May 1 at 90 per cent occupancy, the mall’s management said.

The tenant mix includes family dining, lifestyle and wellness, entertainment, beauty and personal care – categories it said were partly aimed at cross-border shoppers. 

Elena Lee, general manager of SKS Group’s malls division, told The Business Times that the mall also brought in several Singapore brands to appeal to Singaporean shoppers.

“Newer malls today need to go beyond retail and F&B by offering experiences that encourage people to visit more often,” she said, adding that malls must become “somewhere people can come to spend time, join activities and enjoy different experiences throughout the year”.

Wooing Singapore shoppers

The cross-border draw is supported by tourism data. Singapore was Malaysia’s top source of international tourists in 2024, followed by Indonesia, China, Thailand and Brunei, Malaysia’s tourism ministry indicated.

For Johor, that pattern is especially relevant, with Malaysia targeting 22 million Singaporean visitors for Visit Malaysia Year 2026, news agency Bernama reported. 

It reported Azfar Mohamad Mustafar, who was then Malaysia High Commissioner to Singapore, as saying that the city-state’s high cost of living has led many middle-income Singaporeans to choose Malaysia, particularly Johor, for shopping and daily necessities.

Jamie Tan, managing director of JLL Malaysia, told BT that F&B – once a supporting act occupying 15 to 20 per cent of a mall’s NLA – has become a bigger draw, with lifestyle malls now allocating 30 to 40 per cent or more to dining.

This trend means moving beyond cinemas and department stores as default anchors, towards concepts that give people a reason to stay, not just visit, he added.

In Kuala Lumpur, 118 Mall reflects a different strategy, anchored by the draw of Merdeka 118. According to PNB Merdeka Ventures, more than 70 per cent of the mall’s 800,000 sq ft of net lettable retail space has already been committed.

The mall will feature a Malaysian Artisan District, a food hall and a 20,000 sq ft event space beneath an 88 m glass dome.

Phang Sau Lian, president of the Malaysia Shopping Malls Association, told BT that cross-border traffic is increasingly influencing tenant mix, particularly for malls near transport nodes and tourism zones.

With the Singapore dollar trading at just over three times the ringgit, mall operators are becoming more intentional about curating tenants that appeal to regional visitors, said Phang, who is also CEO of Sunway Malls KL.

“This drives demand towards experiential F&B, family entertainment, personal care and wellness services – categories that deliver both experiential value and practical spending,” she said.

Family-oriented activities can also lift spending across more than one category. Phang said that a family visit can generate two to three times more cross-category spending than a single-purpose visit.

The strategy is not without risk. Experiential tenants may require larger spaces, higher fit-out investment and longer payback periods, Phang noted.

JLL’s Tan said that for newer malls, the real test is whether such concepts are aligned with the catchment and can sustain traffic after the launch buzz fades.

The stronger ones, he said, are those that start with a clear understanding of their catchment and build their tenant mix around specific demand pools, rather than relying on a generic blend of retail, dining and entertainment.

“The winners will be malls that know exactly who they are serving,” he added. “That could mean cross-border shoppers in Johor Bahru, office workers and tourists in Kuala Lumpur, or families in suburban catchments.”

Tan said that shift is changing the economics of mall management. As online shopping takes a larger share of transactional retail, landlords are giving more space to tenants that cannot be easily replicated online: restaurants, clinics, gyms, beauty services, children’s activities, events and other experience-led uses.

For older malls, the challenge is tougher. Those without strong transport links, a clear catchment or the capital to refresh their tenant mix may find it harder to compete as newer developments enter the market with more curated concepts.

“It is no longer enough to be a place where people shop,” Tan said. “A mall has to be a place where people choose to spend time.”