More megamalls are being built in Johor Bahru, but how viable are they in the long term?

The mall is connected to IKEA Tebrau and will have around 300 stores across four storeys.

Tenants include a major electronics retailer, a cinema and a gourmet supermarket. There will also be an e-sports centre for hosting game tournaments and viewing parties.

The centre’s total area, which includes IKEA, is 1.2 million sq ft – the size of 16 average football pitches.  

Toppen will also have an open rooftop for public use, where customers can dine alfresco at food and beverage establishments, teenagers can enjoy a built-in skateboard ramp and young children can play at a water playground area.

Toppen, created by IKEA, is confident that its all-under-one-roof concept will attract visitors from the local area, as well as from nearby Singapore.

“The combination of these unique features - fantastic community spaces, a great tenant mix and the one and only IKEA store in southern Malaysia - will enable us to draw people from far away,” said an IKEA Southeast Asia spokesperson.

“We expect to see repeat visits as we build our reputation as the place to meet with family or friends, get errands done, go shopping and just hang out,” the spokesperson added.  

STATE GOVERNMENT CONFIDENT MEGAMALLS WILL DO WELL

The Johor state government is also sanguine that Toppen is able to attract shoppers in the long haul and join the list of megamalls — Paradigm, Southkey Mid Valley, Aeon Tebrau City, JBCC Komtar and JB City Square — that have thrived with modern themes.  

Ms Liow Cai Tung, the Johor executive council member for tourism, told CNA: “I'm quite confident that Toppen can attract more visitors to come over, with close to 85 per cent of retail space having been leased out. I see this as a positive sign where retailers recognise the potential of the mall location and traffic volume.”

Paradigm Mall, which opened its doors in November 2017, has seen encouraging responses from shoppers and retailers. 

Its developer, WCT holdings, told CNA it recorded RM40 million (US$9.6 million) profit in the first quarter of 2019, attributing the higher operating profits to "improved occupancy level" at Paradigm Mall in Johor Bahru.

The mall is also upgrading its complex. WCT has announced that a luxury hotel - a 200-room Hyatt Place - will open in 2022.   

Nonetheless, despite the positive prospects, there is no guarantee that these malls would not run out of steam within a decade.

Mr Robert Lee, a Singaporean who travels to Johor Bahru weekly for groceries, noted that Toppen was just one of the many malls to pick from in Johor.

“It’s yet another megamall, the stores on offer are mostly the same. I think once the novelty has worn out, people won’t visit again,” said the businessman.

“In a few years, it could end up like some of the other malls in Johor Bahru – empty. And it might even be left abandoned,” he added.

FAILED MALL PROJECTS DOT JOHOR BAHRU LANDSCAPE

Elsewhere in the city, abandoned malls - like Pacific Mall, Danga City Mall and Lot 1 JB Waterfront City - dot the landscape.

Pacific Mall is located at Bukit Chagar, within 1km of the Woodlands Causeway.

The five-storey shopping complex, built with a 24-storey office tower, was abandoned in 1997 when it was 90 per cent complete.

When CNA visited the site recently, the building was still standing more than two decades years later. Its entrances were boarded up and security officers were patrolling outside to deter drug addicts or looters.

Even Danga City Mall, once a promising IT shopping hub with amenities like a bowling alley and paintball facility, stopped operations in 2018 after 10 years.  

According to local media reports, the mall was set to be renovated, but when CNA visited last month, there were no visible signs of refurbishment.

Motionless escalators and deserted corridors were all that remained.

JOHOR FINE-TUNES URBAN PLANNING STRATEGY

According to tourism and business expert from Universiti Teknologi Malaysia, Assoc Prof Nanthakumar Loganathan, there is a narrative that “malls as a concept is dead” as online shopping is making them irrelevant.

"Historically, we can see that some malls in JB have failed to pull in enough customers or revenue. Over the last decade, people have turned to online shopping instead of spending their time walking around the different outlets," said Assoc Prof Loganathan. 

However, he noted that Johor has recently fine-tuned its urban planning strategy, including locating shopping centres close to one another. This gives people a wider range of amenities and shops to pick from.

“This is similar to how Kuala Lumpur is designed, with malls being centralised in high volume areas, and not all over the place. I think this has attracted lots of Singaporeans to Johor, because they can do grocery shopping, furniture shopping, clothes shopping, eat and hang around all at the same place,” said Assoc Prof Loganathan.

He gave the example of Damansara in Petaling Jaya, which has an IKEA store alongside a shopping mall, the IPC shopping centre. The facility is also close to another mall, The Curve, and a bigger shopping complex – 1 Utama Shopping Centre.

Similarly, IKEA’s store in Cheras is connected to MyTown Shopping Centre. It is also near Berjaya Times Square mall.

LINKING IKEA STORES TO SHOPPING CENTRES A WAY TO DRAW SHOPPERS

IKEA said the strategy of linking its stores to shopping centres “is a winning formula”.

It said that its malls in Kuala Lumpur have enjoyed “double-digit growth" in visitors over the last year. Moreover, its total turnover, which included rental income from the two shopping centres, grew 15 per cent, from the year before.

“We create destinations with broad pull and our businesses support one another through a lot of cross-visitation,” said the IKEA spokesperson.

IKEA estimates that Toppen will create 5,000 jobs in Johor Bahru.

Assoc Prof Loganathan, who was commissioned to conduct a study on how the Malaysia government could provide more jobs for locals in order to dissuade them from finding work in Singapore, highlighted that Toppen would benefit Johoreans.  

“These jobs in the tourism and hospitality sector could give Johoreans more choice, instead of travelling across the Causeway where they will lose time (commuting) and money (spent on accommodation).”

“The main reason why people in Johor are leaving the state is there are no sustainable jobs ... It would be better for them to work at shopping centres like Toppen and contribute to the local economy,” he said.