SINGAPORE - Local retailer Mustafa’s, which operates Mustafa Centre in Syed Alwi Road, will open its first department store in Malaysia in a shopping mall in Johor Bahru, mall owner Capital World announced on Friday.

Singapore-listed Capital World said in a bourse filing that it will sell most of the retail space at its 11-storey Capital City Mall in Tampoi to Mustafa’s for RM368 million (S$113.7 million).

Mustafa’s will buy 591 unsold retail units, representing a combined net lettable area of 641,216 sq ft. It will also acquire 374 accessory parcels at the mall, including al fresco and multi-purpose areas spanning a total of 1.28 million sq ft, and all 2,181 carpark spaces.

Mustafa’s managing director Mustaq Ahmad said: “Having established ourselves in Singapore as a mega one-stop retail store for everything from fast-moving consumer goods to fashion, cosmetics and electronics, we believe the time is ripe for us to get into Malaysia.”

He added that Capital City Mall meets many of the requirements for its first flagship store in Malaysia, including its close proximity to Singapore and ample floor area.

Both the Mustafa department store and Capital City Mall are expected to open for business in the second half of 2023.

Capital City Mall was completed in April 2018 and opened in October that year. However, the mall had been shut since February 2020 after Capital World ran into financial difficulties and had to seek court protection from creditors while restructuring its debts.

The sale to Mustafa’s comes after Capital World in April 2022 restructured about RM187 million of debt.

As the mall is also part of a wider freehold integrated development in Tampoi, proceeds from the sale will help Capital World complete the remaining components of the project. These are expected to include a 315-room hotel, an 18-storey tower with 630 serviced suites, and 690 serviced apartments.

The company said it will also pursue other real estate opportunities, including helping Mustafa’s identify potential sites in Malaysia and Indonesia to develop its mega stores.

Trading in Capital World shares has been suspended on the Singapore Exchange since Feb 14, 2020. It has until April 30 to submit a trading resumption proposal to the exchange.

Capital World chief executive Hoo Khee Leng said the deal with Mustafa’s “will fast-track Capital World’s turnaround and restore value to shareholders as we work towards getting the company’s share trading suspension lifted”. 

This article was first published in The Straits Times. Permission required for reproduction.