
Mustafa struggles to open its first department store in Johor Bahru
Mustafa struggles to open its first department store in Johor Bahru
- Local retailer Mustafa's plans for a new store in Johor Bahru have been delayed for over two years due to ongoing negotiations with property owners.
- Mustafa has invested in acquiring retail units within Capital City Mall but faces challenges due to the mall's fragmented ownership structure.
- The complexities of negotiations hint at further delays in the opening of the store beyond the initial timeline set for late 2023.
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In Singapore, local retailer Mustafa has encountered difficulties in establishing its first department store in Malaysia, with plans delayed for over two years. Negotiations are ongoing with different property owners concerning various spaces in the Capital City Mall located in Johor Bahru, which is aimed for Mustafa's operations. The store was initially planned for the second half of 2023, but complex ownership issues within the strata-titled mall pose significant hurdles. The management has invested RM368 million to acquire units in the mall but still requires more favorable conditions to secure the ideal five floors needed for a proper department store. As part of the deal with mall owner Capital World, Mustafa intends to occupy five floors in the 11-story Capital City Mall, where it will own a total of 591 unsold retail units. However, the negotiations are complicated due to the fragmented ownership of property units within the mall, making it necessary for Mustafa to engage with multiple parties to reach agreements that will allow for the store's opening. Although Mustafa’s managing director Mustaq Ahmad expressed optimism that the mall aligns with their operational and strategic needs due to its location near Singapore and sufficient space, the complexities of negotiations raise concerns. Matthew Cheong, an executive director at Savills Singapore, mentioned that breakthrough in leasing requires unanimous consent from space ownership, which can often be a cumbersome process due to individual owners' varying interests. Despite these challenges, Capital World remains optimistic, having received a deposit from Mustafa as part of their agreement. The unique nature of strata-titled properties adds another layer to this situation, as each owner exhibits distinct negotiation leverage based on their property holdings and interests. The stalemate in negotiations suggests that even though the initial cut-off date for a store opening was set, further delays remain likely as discussions progress.