1 | Malaysia’s mall market is saturated

Malaysia Shopping Centre Supply Vs Occupied Space (2010‑2023)
Malaysia Shopping Centre Occupancy Rate (2010‑2023)

  • 13.41 million m² of shopping-centre space existed nationwide by end-2023—almost double 2010’s level. Meanwhile occupied space has risen far more slowly, leaving a widening gap.

  • Occupancy has slipped from 80 %+ pre-2015 to ~75 % in 2023 (77.2 % provisional for 2024).

  • Klang Valley alone houses 45 % of national stock (≈ 6.06 million m² across 151 centres).

  • New supply keeps coming: another 810,951 m² is already committed in the pipeline.

(The two charts above visualise the 2010-23 trajectory in supply, take-up and occupancy.)

2 | Demand is fragmenting but malls aren’t

CBRE | WTW warns that incoming space will “widen the gap between well-performing and under-performing malls”.
Knight Frank notes super-regional icons still run at > 95 % occupancy, while mid-tier centres languish in the low-80s or worse.
Yet more than 60 % of Kuala Lumpur/Selangor inventory sits in mid-sized Regional or Neighbourhood categories, showing a clear mismatch between supply profile and consumer pull.

3 | Why street-based retail fixes the problem

                                                                                                                                                   
BenefitImpact for Malaysian cities
Placemaking & tourismPedestrian streets (e.g. Jonker Walk, Armenian St, Petaling St) routinely top visitor itineraries and lengthen dwell time, translating into higher spend per trip.
Lower capex, faster ROIConversion of ground-floor shophouses or TOD frontage costs a fraction of a new mall, spreads risk across many small landlords, and can be phased.
True segmentationStreets allow micro-clusters—artisan F&B, fashion pop-ups, design-led cafés—so each block tells a different story, unlike cookie-cutter tenant mixes.
Resilience to e-commerceExperiential open-air environments (food streets, cultural events, markets) deliver what online channels cannot: serendipity and social interaction.
Climate & sustainabilityNarrow shaded corridors, natural ventilation and adaptive-reuse of heritage fabric cut operational energy versus fully air-conditioned boxes.
Inclusive economicsAffordable ground-floor rents let local SMEs and startups coexist with national chains, diversifying the tenant base and employment opportunities.
 
 

Bukit Bintang’s planned pedestrianisation—now under formal study—illustrates official recognition of these advantages.

 

4 | Numbers that favour streets over boxes

 

  • Retail space per capita (Klang Valley)

    • 6.06 million m² ÷ 8.8 million residents ≈ 0.69 m²/person (~7.4 sq ft)—already higher than many Asian peers. New malls would push it further.

  • Footfall trend: Edge Malaysia reports many new centres still open below 50 % occupancy and struggle to build traffic, while historic street districts continue to draw weekend crowds.

  • Rental yield spread: Super-regional malls command RM 41 – RM 31 psf, but average Klang Valley rents hover around RM 9 psf—and fall sharply in secondary malls—compressing investor returns.

 

5 | Actionable blueprint for Malaysian developers & councils

 

  1. Re-zone key corridors for pedestrian priority – pilot weekend closures (as proposed for Jalan Bukit Bintang) to test traffic impact.

  2. Leverage TOD nodes – require at-grade retail frontages along new MRT/LRT exits to form continuous active edges.

  3. Micro-incentives for heritage shophouse upgrades – low-interest façade loans, façade-improvement grants, simplified approvals.

  4. Curate tenant diversity – mix 30-40 % F&B, 20 % lifestyle, 20 % creative retail, 10 % services, 10 % events/pop-ups to avoid homogeneity.

  5. Embed green infrastructure – permeable paving, street trees, arcades and “five-foot ways” to mitigate heat and rain.

  6. Market street brands digitally – geotargeted campaigns positioning each corridor as a unique “district” rather than another generic mall.

In conclusion, Malaysia does not need more enclosed mega-malls; it needs people-centric, open-air streets that unlock local character and spread retail risk. Shifting even 15 % of planned new retail GFA into curated shopping streets could absorb oversupply, lift urban liveability, and future-proof returns in the face of e-commerce. The data—and global consumer behaviour—point the same way: build streets, not boxes.

Reference List

  1. EdgeProp.my. (2024, March 6). Shopping complex occupancy rises slightly y-o-y in 2023, office space remains flat.Article summarising National Property Information Centre (NAPIC) Property Market Report 2023.

  2. CBRE | WTW. (2023, November). Klang Valley Snapshot – 3Q 2023 [PDF report]. Kuala Lumpur: CBRE | WTW Research.

  3. CBRE. (2024, July). Asia-Pacific Real Estate Market Outlook 2024 – Mid-Year Review. Hong Kong: CBRE Research.

  4. Knight Frank. (2023, December). Malaysia Real Estate Highlights – 2H 2023. Kuala Lumpur: Knight Frank Research.

  5. The Star. (2025, January 25). Experts hail plan to close Jalan Bukit Bintang to traffic. Kuala Lumpur: StarMetro.

  6. Bank Negara Malaysia. (2018). Financial Stability and Payment Systems Report 2017 (retail-space figures cited in The Star, Bank Negara cautions of severe property market imbalances, 28 March 2018).

  7. The Malaysian Reserve. (2021, April 7). More empty malls — lowest occupancy rate in 17 years. Kuala Lumpur: TMR Media.

  8. National Property Information Centre (NAPIC). (2024). Shopping Centre Rental Index Report 2023 (latest edition listed under “Latest Publication”). Putrajaya: JPPH Malaysia.