Sunway Malls 2023 sales performance was in line with expectations and registered a 5% growth year-on-year on the back of Sunway Carnival double digit growth, resilient out-of-home dining and a strong Q1 2023 festive spending across Sunway Malls.

With this result, the mall group again surpassed its previous record set in 2022. In 2022, Sunway Malls had achieved a record-breaking sales performance in its 26 years of business then.

For 2023, the mall group operator saw its sale performance came in above expectations in Q1 with sales growth at 19% y-o-y, before moderating for the remaining quarters. For Q2 2023, the mall group matched its previous year same-period performance, while Q3 2023 came in at 2% higher and Q4 2023 saw a 1% growth.

Commenting on the performance, HC Chan, CEO of Sunway Malls & Theme Parks said “Certainly, Sunway Malls strong Q1 performance provided a huge buffer to ease off the moderation effect of the remaining quarters. Throughout 2023, businesses and consumers faced with escalating costs due to inflation and weaker Ringgit arising from the Feds aggressive interest hikes.”

“Still Sunway Malls had managed to navigate both the challenging business landscape and the high base of 2022 to achieve a commendable 5% growth,” Chan added.

The mall group’s growth is ahead of the forecasted 2023 national GDP of 4%.

Sunway Malls’ 5% sales growth was driven by high growth from travel, health & personal care and entertainment retail sub-sectors and supported by resilient performances of the F&B and fashion retail sub-sectors.

Pent-up demand and an uptick in travel saw the travel related retail sub-sector grew the highest at 28% y-o-y among Sunway Malls’ retail sub-sector categories.

Entertainment sub-sector also performed better with a 15% upside. Demand for health and personal care saw an improvement with 11% up from a year ago.

The fashion retail sub sector registered 5% uptick supported by robust demand during the festive period. In the F&B category, demand for out-of-home dining was resilient with 5% growth despite persistent high food & non-alcoholic beverages inflation.

“F&B category has made headway and emerged as one of the Top 20 sale categories in Sunway Malls, which was previously dominated by non-F&B categories,” shared Chan.

This is in tandem with the growing dominance of F&B categories in recent times whereby it occupies 25% -30% of the total nettable area. This trend is expected to move further heading to 35% range in the near future.

In line with the growing importance of F&B and catering to growth in Muslim friendly offerings, Sunway Malls introduced among others brands Pokok, Serai, Me’nate Steak House and more to cater to the increased demand in 2023.

The halal food market is expected at grow at a CAGR of 7.1% between 2021 and 2025.

To circumvent increased competition entering the market as well as catering to demands for more quality retail space, Sunway Malls is upgrading its current malls with asset enhancement initiatives (AEI). Between 2023 to 2026, a total of 5.47 million sqft of new malls are expected to enter the Klang Valley market.

The mall group is currently undergoing a RM550 million Asset Enhancement Initiative (AEI) exercise of 800,000 sqft retail space in Sunway Pyramid and Sunway Carnival with a respective investment of RM200mil and RM350mil each.

“The AEIs are strategic thrusts to convert low-yield to high-yield for Sunway Malls next growth phase. The quality retail space will enable Sunway Malls to cater to a variety of new and fresh offerings including more Muslim friendly offerings,” Chan elaborated.

In addition, Sunway is also building two malls; Sunway Square with a retail space of 300,000 sqft in Sunway City Kuala Lumpur with an expected completion at end 2024 and Sunway Ipoh Mall with a retail space of 1 million sqft in Sunway City Ipoh which is expected to be completed by 2026.

The mall group operator takes cognizance several key headwind themes in 2024 – tax hikes and new taxes, roll-back of subsidy, tariff hikes, persistent inflationary outlook and geopolitical tensions, amongst many others which continue to drive business costs up and weigh heavily on margin and profitability for this year.

However, it remains optimistic given its proven track record, strong branding and network of retail partners. For 2024, the mall group forecasts a growth of 5% in tandem with potential turnaround in external demand.

“We see this as part of a normalisation of growth towards more sustainable levels.” Chan remarked.