Mitsui Fudosan will develop a nine-story, 45 billion yen ($397 million) mall in Malaysia with local partners as part of an effort to solidify its overseas earnings base for the future.
Costlier than the company’s outlet malls in Taiwan and the Chinese city of Ningbo, this will likely mark the biggest project for a commercial facility abroad by a Japanese real estate developer. The plan is to open a LaLaport mall like those of Japan in Kuala Lumpur in 2021.
Working with Eco World Development Group and two other local partners, Mitsui Fudosan will set up a special-purpose company as early as this year.
The mall will sit on the 78,500-sq.-meter premises of the Bukit Bintang City Centre, a project co-led by Eco World that includes residential and office space.
The mall will boast five above-ground floors and four underground floors. Construction will begin in 2017. Retail space will likely total 80,000 sq. meters — close to the 102,000 sq. meters of a major LaLaport mall in Chiba Prefecture. The plan is to draw about 300 businesses to the new facility, among them restaurants, household goods stores and fashion retailers. Tenants focusing on middle-income consumers, including Japanese businesses gaining popularity in Malaysia, will be solicited. Annual sales are targeted at 42 billion yen.
Mitsui Fudosan intends to apply Japanese know-how to running the mall through such steps as training store managers and introducing a system to track daily sales of each store. In this way, it seeks to distinguish the facility from the competition.
Malaysia has enjoyed relatively high real gross domestic product growth among members of the Association of Southeast Asian Nations. With the ranks of the middle class seen continuing to expand, the Japanese company expects demand to stay strong.
Mitsui Fudosan opened an outlet mall near an international airport in Malaysia last year. Tenants catering to middle-income consumers are faring well, and sales have beaten initial expectations. An expansion is now planned, driven by popular demand.
Mitsui Fudosan’s wide-ranging business domains include commercial facilities, housing, office buildings and hotels. In Japan, the shrinking population limits prospects for demand growth in housing and office buildings. The company is thus strengthening commercial establishments, such as outlet malls, in Asia. And in the London area, it is working on mixed-use facilities.
The company plans to invest 550 billion yen overseas from fiscal 2015 to fiscal 2017 and to spend about as much on office building and other projects in Japan. Mitsui Fudosan hopes to generate about 12% of its overall operating profit abroad in fiscal 2017, up from just 6.4% in fiscal 2014.
