Kuala Lumpur to welcome one new prime shopping mall in Q4

It will be located in the City Centre.

No new malls were added to Kuala Lumpur’s prime retail market in the second quarter, according to a JLL report. Retail stock remained steady at approximately 11.5 million sq ft in the City Centre submarket and 37.3 million sq ft in the Suburban submarket. City Centre’s upcoming mall, Ombak KLCC, is slated for completion by Q4 2025.

“Overall vacancy rate saw a slight improvement, driven by firm take-ups and brand expansions across both submarkets. Landlords of low-performing malls proactively implemented repositioning and brand-mix adjustments to enhance asset performance, attracting new tenants,” the report said.

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Active demand from F&B and fashion continued, with notable entrants such as Benihana, Tous Les Jours and Cabbeen, while established brand Marimekko focused on expansion. Pop Mart and Wilson’s new store openings featured immersive retail, offering engaging and interactive shopping experiences.

The quarter saw notable closures, including Don Don Donki, Spotlight and a premium grocer in the Suburban submarket. However, absorption from new entertainment, leisure and co-working tenants occupying sizable spaces helped stabilise market demand.

Continued slow rent growth in Q2 2025

The market recorded a modest rent increase, supported by healthy leasing activity and demand. However, mall operators reportedly experienced higher operating costs from wage increases and rising energy expenses, tempering rent hikes.

No notable prime en bloc investment transactions were recorded. However, recent en-bloc transactions have been mostly located in the suburban submarket, with purchasers typically aiming to expand their portfolios.

Outlook: Positive demand for retail space is anticipated to continue despite policy changes

New retail supply of 1.27 million sq ft is expected in the City Centre submarket within 12 months. While vacancy is projected to rise, demand is likely to be stimulated by Visit Malaysia Year 2026, with retail benefiting from increased tourist arrivals and spending.

Growing tourism arrivals and Malaysia’s unemployment rate falling to its lowest in a decade signal stable retail demand ahead. However, the increase in sales and services tax is likely to impact both consumer spending and increase operating costs for mall operators.