RISING competition for shoppers and retailers looks set to extend from Orchard Road to Johor. A sprawling new mall is coming up in the Iskandar Malaysia economic zone and its developer is actively seeking investors and tenants.
Iskandar Investment Berhad – the developer behind Iskandar Malaysia – has huge plans for the yet unnamed lifestyle mall, which should be ready in April 2012. The shopping centre will have a gross floor area of a million square feet and a net floor area of 700,000 sq ft, making it almost comparable to the newly-opened Ion Orchard in scale.
The mall will be big not just in size, but also in ambitions. Iskandar Investment expects the project to attract a footfall of around two million in its first year of operation, and to pocket an estimated US$100 million in retail spending annually. The developer is counting on a potential catchment of 23 million people to bring business to the mall. These will include residents in Johor Bahru (JB) and Singapore, as well as tourists to both regions.
One of the mall’s big selling points would be its location right next to the upcoming Legoland. There will also be two office towers, a Legoland-themed hotel and another business hotel nearby.
The development cost for the mall would come up to around US$140 million and construction is likely to start later this year. ‘We are in the advanced stages of discussion with several internationally known investors,’ said Rosenah Hassan, CEO of Iskandar Investment subsidiary Iskandar Harta Holdings.
Iskandar Investment is also on the lookout for tenants and has been showcasing the mall at various exhibitions. It hopes to fill around 60 per cent of the retail space with department and speciality stores, around 20 per cent with entertainment facilities, and around 20 per cent with food and beverage outlets.
Another selling point for the mall is its low rents. ‘We’re looking at a range of RM5 to RM10 per sq ft (S$2.06 to S$4.13 psf) depending on the size of the take-up and the location,’ Ms Rosenah shared. The rents could change depending on the strength of demand. ‘The earlier you come, the better,’ she quipped.
Of course rents in Singapore’s prime shopping areas, with their established shopper base, are much higher. According to a DTZ report last week, first-storey prime retail space in Orchard Road and Scotts Road commanded a monthly gross rent of $39.30 psf in Q3 this year. Such space in suburban areas fetched a monthly gross rent of $33 psf in the same period.
Iskandar Investment is also offering incentives to attract retailers and it is working out the details, Ms Rosenah said. Those which are sufficiently unique to draw visitors – themed restaurants, for example – may be able to enjoy a 10-year exemption from corporate tax and other perks, she added.
While the mall seems to have several factors working in its favour, it will need good branding and accessibility to attract shoppers, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.
The mall will be located in the Medini area, which is some distance from the JB city centre. A new coastal highway, set to be ready in 2012, should connect the shopping centre to the JB city centre and the second JB-Singapore Link. There are also plans to make the mall accessible via a light rail service.
Source: Business Times, 17 Oct 2009
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