PETALING JAYA: Retail property landlords and tenants will need to walk a tightrope carefully over the next few months as they try to find a reasonable compromise and navigate their survival through the Covid-19 pandemic, which is wreaking havoc on the economy.
Rahim & Co International Sdn Bhd real estate agency chief executive officer Siva Shanker said he saw many retail tenants seeking rental exclusions or even discounts during the movement control order (MCO) and beyond; and landlords either giving in reluctantly or not at all.
“Both landlords and tenants need to come together and find a way to tackle this. Everyone needs to understand that the Covid-19 pandemic is affecting everyone, right from the kacang putih seller right up to the big company CEO, ” he told StarBiz.
Yesterday, Prime Minister Tan Sri Muhyiddin Yassin announced an additional stimulus of RM10bil to ease the financial burdens of the small and medium enterprises (SMEs) following calls from the industry to provide greater support for the business community.
The measures announced include the exclusion of rental payments or to provide discounted rentals to SME retail traders on premises owned by government-linked companies; as well as an urging to owners of private premises to reduce their rental rates at least during the MCO period and three months after the MCO ends.
Malaysia Retail Chain Association (MRCA) president Datuk Seri Garry Chua said while it was good that the government is listening to the plight of the SMEs, he however said that the measures are catered more towards helping the “micro” players.
“For firms with more than 200 people, it’s not going to be enough. Moreover, many of the MRCA members are chain businesses with staff of up to 2,000 people.”
Chua added that it would take a long time for businesses to recover once the MCO is lifted.
“Don’t expect things to pick-up immediately. In China, even after three months, only half of the people are actually coming out. Once the MCO is lifted, we think it might take six months for things to stabilise.”
Siva said not every retail landlord would be able to offer rental exclusions or discounts.
“Of course, if you’re a tenant within a government-linked space or within a vicinity that’s owned by a big entity with deep pockets, then you may be lucky.
“But for a small, private entity that has already seen its supply chain severely affected, it is going to be difficult. For landlords that are thinking of suing their tenants for defaulting in their monthly rental payments, well pick a number and get in line.”
Siva said the current pandemic would affect the entire property sector, not just retail or real estate investment trust firms with retail assets.
“It is fairly obvious that we’re all going to be in for a tough time and everyone is going to be taking a beating. The question is how long; as we are facing an enemy that we can’t see or clearly understand.
“I think for the rest of 2020, companies will need to consolidate and survive, so that they can recover in 2021.”