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- PPK Malaysia cautioned that such cost burdens could undermine the long-term sustainability and competitiveness of the retail property sector, while also impacting rental affordability and the ability of landlords to recover shared operating costs from tenants.
KUALA LUMPUR (July 23): The Malaysia Shopping Malls Association (PPK Malaysia), which represents shopping mall operators nationwide, has renewed its call to the government to address escalating operational costs and the expansion of the sales and service tax (SST) in the upcoming Budget 2026.
The body found that shopping malls are continuing to absorb rising costs amid higher electricity tariffs and increasing fees tied to licensing and regulatory compliance, according to the PPK Malaysia Shopping Industry Survey 2024-2025.
PPK Malaysia cautioned that such cost burdens could undermine the long-term sustainability and competitiveness of the retail property sector, while also impacting rental affordability and the ability of landlords to recover shared operating costs from tenants.
“While the rental SST taxes are imposed on tenants, they will inevitably suppress rental affordability and exert additional pressure on landlords’ margins and cost recovery, particularly in a climate where mall operators are already subsidising operational expenses,” the body said.
PPK Malaysia highlighted that mall operators are limited in how much of these rising costs they can pass on to tenants through service charges.
As a result, landlords are left absorbing the difference and further delaying any meaningful recovery in earnings, which could affect investment sentiment and dampen shopper experience in the long run.
The survey, now in its 12th edition, was conducted in collaboration with Stratos Pinnacle Sdn Bhd via self-administered email questionnaires.
Findings from the survey showed that average monthly mall operating expenses now range from 31 sen to RM12.29 per square foot (psf) of net lettable area, covering electricity, water, insurance, marketing, quit rent, sewerage and property maintenance. In contrast, average monthly service and promotional charges collected only range from 58 sen to RM7.13 psf.
This reflects a 27% gap between expenses and recoverable charges—a sharp increase from 13.4% in 2022—indicating that landlords are shouldering a larger portion of operational costs, thereby squeezing margins and weighing down earnings, according to the survey.
The findings were based on responses from 61 shopping mall operators of various sizes and market positioning, noted PPK Malaysia.
Last month, the association proposed a staggered implementation of SST and urged the government to exclude service charges from SST calculations, noting that these charges are not part of rental income but are used to recover shared-area operating expenses.
Currently, commercial rental and leasing services are subject to 8% SST, while construction services carry a 6% SST rate.
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