Rental Determination Factors of Super Regional Malls in Greater Kuala Lumpur

Abstract

Rental rate is significant benchmarking and decision-making indicator for the banking and retail sectors. Determining accurate rental rates for shopping mall is essential and should be given a high priority. There are many opinions on the factors affecting rental rates for retail spaces in shopping malls. Rental data collected from tenancies show differential rental rates for the same type of tenants even though they are located at the same retail floor. This research aims to determine the factors affecting the rental of retail space of selected super regional shopping malls using secondary rental data obtained from NAPIC which are originally collected from property managers returns. Verifications on the rental data are made to ensure consistency with existing tenants before regression analyses are conducted. Two regression analyses using ENTER and STEPWISE methods are carried out. Out of twenty-eight factors examined only ten factors significantly affect retail rentals of super regional malls. Among the key significant factors are size, mall's characteristics (KLCC, My Town, IOI City Mall Mid Valley), business category (food and beverage), tenancy period and location of retail outlets (corner, atrium and intermediate). The findings of the research may guide property valuers on the significant factors that affect the rental values of regional shopping malls and may improve real estate investors' decision making.