Local retailer Mustafa’s plans to open its first department store in Malaysia have been delayed for more than two years, with negotiations still taking place with the owners of the spaces it wants at a shopping mall in Johor Bahru, sources told The Straits Times.
Mustafa is looking to operate on five floors of the 11-storey Capital City Mall.
But it is facing challenges, as some of the space that it is keen on is owned by other parties, the sources said.
Negotiations are ongoing to get these parties to sell or lease their space to Mustafa, the sources added.
Capital City Mall is a strata-titled mall, which means retail units can be owned by individual owners, investors or businesses.
In January 2023, Mustafa struck a RM368 million (S$118.9 million) deal with mall owner Capital World, which will see it owning 591 unsold retail units in Capital City Mall, alongside other assets.
However, the assets Mustafa will acquire will not cover five floors, which is said to be ideal for a department store operation, the sources said.
Singapore-listed Capital World, which developed Capital City Mall, suggested in an earnings statement on Feb 12 that Mustafa’s plans were still under way.
The developer said it was “looking forward to the opening of Mustafa’s first flagship store in Johor Bahru within our mall, marking a significant milestone”.
It added that it had received a deposit of RM96 million from Mustafa, amounting to approximately 26 per cent of what was agreed to under the 2023 deal.
Both Capital World and Mustafa declined to comment or offer a timeline for the opening of the Johor department store when approached by The Straits Times.
The retailer currently operates Mustafa Centre in Syed Alwi Road. It had planned to open its store in Johor in the second half of 2023.
Mr Alan Cheong, an executive director of research and consultancy at Savills Singapore, said that acquiring space in a strata-titled mall can be complicated as “ownership of the property is fragmented”.
“One has to deal with different parties, each more likely to have a mind of their own,” he said.
Mr Cheong added that the incoming tenant is usually disadvantaged as “those who insert themselves in between floors may have a stronger hand in negotiations when someone wants to consolidate their holdings”.
CBRE Singapore’s head of retail services Joan Chen said deals like Mustafa’s “can be delayed if there are landlords who cannot agree on terms”.
This is because their premises could be a significant piece in the area that Mustafa is looking to operate in, she said.
“Unlike sales en bloc which may still proceed once the required quota is met, this requires 100 per cent of approached owners agreeing to the respective lease terms with Mustafa,” Ms Chen said.
Mustafa’s managing director Mustaq Ahmad has said that Capital City Mall meets many of the requirements for its first flagship store in Malaysia, including its proximity to Singapore and ample floor area.
The mall is part of a wider freehold integrated development in the suburb of Tampoi.
The retail units that Mustafa will acquire under the 2023 deal span a net lettable area of 641,216 sq ft.
The deal also includes 374 accessory parcels at the mall, including al fresco and multipurpose areas spanning a total of 1.28 million sq ft, and all 2,181 carpark spaces.
The Straits Times
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5 Dec 2025 18:52
