As the number of malls increases in Phnom Penh, local malls may lose business to the international standards of mega malls, real estate experts say. The opening of Japanese Aeon mall in June 2014 was the first to raise the bar, and seems to mark only the beginning of a fast-forward shift of the capital’s shopping habits. This change in consumerism could be a problem for smaller shopping destinations as more international players enter the field.
A report of Bonna Realty Group from the first quarter of 2015 predicts the number of malls will rise from 14 to 25 by the end of 2018. This translates into an increase from 360,000 square meters to 600,000 square meters.
Seng Bonna, director of Bonna Realty Group, stated that as of now only Aeon Mall had international standards and the upcoming opening of Parkson along Russian Boulevard (in 2016) or the Phnom Penh International Airport Mall (in 2018), did not impose an immediate threat to malls with lower standards. He added that this was bound to change, however, if the number of international malls further increased as people with middle incomes could afford to spend more time in upscale locations.
Ann Sothida, associate director of CBRE Cambodia, said that two or three international malls were no problem as long as they were located far enough from each other and she added this was especially so because shopping habits in upscale malls primarily consisted of eating or watching movies, rather than buying high-end products.
Still she expressed optimism for the opening of international malls, such as Aeon, because “[Cambodia] needs such a mall in [Phnom Penh] to help invigorate the economy.”
On the other hand she warned that smaller malls without quality standards in products, design, and management were likely to lose income and occupancy, and could eventually collapse like Young Commercial Mall on National Road 6 that closed due to a reported lack of shoppers in September 2014 after going online only a year earlier.
Additionally, Bonna’s report explained that teenager shoppers in particular tend to seek out malls as recreational places and chose malls with higher quality products and design.
A recent visit to Sovanna Mall on Road 271 seemed to confirm the younger generations have newer preferences. While Sovanna Mall had once been among Cambodian teenagers’ favourite hangouts, Post Property saw empty hallways, dropped roller blinds, and bored employees playing with their smartphones.
A shop employee, who has been working in the Sovanna Mall for eight years and who asked not to be named, said there were many clients coming to the mall in the past, but since last year the number of visitors had dropped, attributing the loss to places like Aeon.
“When something new happens, people want to see and know what it is like. This is why less people come here now,” she said.
The mall management declined to comment on recent traffic without a formal written request.
Judging from Bonna’s report the apparent decline in shoppers in local malls is already mirrored in the supply. With monthly rental prices from $20 to $100 per square meter in the city centre the overall occupancy rate for malls is currently at 74 per cent.
Though, not all smaller local malls seem to suffer from the recent developments.
Chi Sang, CEO of Rattanak Plaza Shopping Centre, said that his mall was busier than ever because of the success of a 4-star hotel on the top floor that has been running for almost four years. Chi didn’t reveal the mall’s occupancy rate but admitted it was fluctuating and that 70 to 80 per cent of the visitors came for window shopping and eating rather than buying products. Aeon mall has alledegdly faced the problem of being populated by window shoppers as well and reportedly at least seven tenants moved out. However, new ones are seen to be moving in already, keeping the vacancy rate of the 184 retail units around zero.
Whether small and local, or large and international, one thing is clear to Chi:
“The number of malls in Phnom Penh today is enough because Phnom Penh’s population does not increase accordingly,” he said, adding that, “It will negatively affect all malls if there are more malls opening up.”