June 16, 2017 (LBO) – As Sri Lanka’s tourist arrivals rise and the local consumer becomes more brand conscious along with demand for better quality goods and services, an existing shortage of quality mall space is likely to continue in the short to medium term, a new report said.
Jones Lang LaSalle, a property consultancy in its new report titled ‘Sri Lanka – Land of Real Estate Opportunities,’ said that the per capita mall stock in Colombo is relatively low compared to other Asian countries in the region.
“The retail market suffers from fragmentation and there is lack of good quality mall spaces, that provide entertainment and leisure facilities and adequate parking,” Sunil Subramaniam, Head of Transactions at JLL in Colombo said.
“Colombo’s main malls were developed around 20 years ago and are not of international quality.”
Colombo’s eight operational shopping centres account for approximately 0.8 million square feet of built-up area, and have an average vacancy rate of less than 5 percent.
Apart from malls, retail in Colombo is largely restricted to commercial high street locations in traditional retail areas like Pettah, Dematagoda (Northern Colombo) and in upmarket established retail areas like Kollupitiya, Bambalapittiya and Wellawatte (Southern Colombo), the report adds.
However, Subramaniam says several new developments, international grade malls were being planned with global brands as anchor clients.
“The concept of larger international retailers anchoring malls is still not widely accepted in Sri Lanka and there is a limited presence of international brands,” he says.
“There is also a lack of entertainment and recreational amenities in current malls does not present consumers with a compelling proposition and sometimes results in a bland tenant mix.”
The report also bring to the attention the fact that the Value Added Taxation (VAT) was increased from 11 percent to 15 percent which has impacted retailers and wholesalers due to effect on luxury goods and certain consumer durables.
JLL said that certain young Sri Lankan entrepreneurs have ventured into online start -ups especially on social media such as Facebook and Instagram etc and that these may pose a marginal threat to mainstream retailing.