This article first appeared in The Edge Malaysia Weekly on July 20, 2026 - July 26, 2026

WALK through Kuchai Lama or Kepong today and the shopfronts tell a story that wasn’t quite there five years ago. Hotpot chains with slick LED signage, bubble tea counters with queues out the door, barbecue concepts with prefabricated interiors shipped almost wholesale from mainland China — these outlets have mushroomed alongside decades-old kopitiams and family-run restaurants. Behind the neon, though, a quieter and more consequential battle is playing out: a fight over commercial rental space, and it is one that well-capitalised mainland Chinese operators are increasingly winning.

CBRE | WTW group managing director Tan Ka Leong tells The Edge that the increasing presence of food and beverage (F&B) operators from China in areas such as Kuchai Lama and Sri Petaling has become more noticeable over the past two to three years, particularly following the post-pandemic recovery period. “These locations continue to attract operators due to their established food culture, strong predominantly Chinese residential catchment and consistent evening footfall.

“Selected prime retail pockets within these areas have generally experienced firmer leasing sentiment, particularly for well-positioned ground-floor units within established food-centric commercial stretches. However, rental performance remains highly location-specific, with prime rows and corner units continuing to outperform secondary shoplots.”

Industry observers describe a straightforward calculus. Many mainland Chinese F&B entrants arrive backed by deeper capital pools than typical local small and medium enterprise (SME) operators, and some are said to be willing to offer above-market rents — or even pay six to 12 months of rent upfront — to secure prime shoplots quickly. For a landlord choosing between a long-negotiated lease with a local hawker-turned-operator and a fully-funded chain offering a year’s rent in one transfer, the decision is easy.

A local resident shares that a row of main road-facing semi-detached houses are slowly transforming into commercial properties near the Kuchai area: “From a typical rent of RM2,000 a month, the landlord of the 60-year-old house was offered a whopping RM15,000 monthly rent by a China F&B operator, who also offered to bear the cost of renovation. How to say no?”

However, another local agent tells The Edge that landlords need to also be cautious, especially when the deal may seem too good to be true, as some may well come with risks: “Yes, it could really just be a good deal, great timing and great location. But one needs to be cautious. We have seen tenants who have left abruptly due to the business not doing so well or running into some legal problems. The landlords are left to handle the mess left behind and then look for another tenant. If their shop is in a prime spot, it should not be an issue getting a new tenant due to high demand. Nevertheless, we advise our clients to do proper background checks just to be safe.”

That is the mechanism worth understanding: it is not that Chinese-run outlets are outright displacing tenants overnight everywhere. It is that a handful of well-funded entrants are resetting the price a landlord thinks the unit is worth and every subsequent negotiation — including renewals for long-standing local tenants — gets measured against that new, often unsustainable benchmark, which could make it more unaffordable for future tenants.

“We understand there have been isolated cases in which tenants have offered longer advance rental terms to secure strategic locations. However, this does not appear to be a widespread market practice and is likely limited to highly competitive retail clusters and financially stronger operators. Landlords in these high-demand areas may have become more selective when evaluating prospective tenants, particularly for strategically located units within established dining clusters. Competition from these newer operators could put upward pressure on rents in the short term.

“Nevertheless, the long-term sustainability of these food-centric areas will still depend on maintaining a balanced tenant mix and preserving the diversity of offerings, as established local operators continue to play an important role in sustaining repeat patronage, local identity and overall dining activity,” Tan says.

Areas like Kuchai Lama and Kepong have become emblematic of this shift because they sit in that commercial sweet spot mainland operators favour: dense residential catchments, relatively affordable rents compared with prime Kuala Lumpur retail belts, strong Chinese-Malaysian consumer bases and good accessibility. These are exactly the conditions that made such neighbourhoods attractive to local F&B operators in the first place — which is precisely why the arrival of aggressive new entrants is felt so sharply there.

An agent familiar with the Kuchai area says a famous Sze Chuan restaurant has been operating there for more than 10 years, a corner shop with maximum exposure. “Then there’s Nanjing Road in Sunway Velocity Mall. Two rows of mainly Chinese F&B restaurants — very authentic, you will feel like you have been transported somewhere in China. The grocer has almost everything you need too.”

Andrea, who frequents Bandar Menjalara, which is close to Kepong, for steamboat since 2010, shares that the area has drastically transformed over the years. “Not only are there more apartments, the number of hotpot or steamboat restaurants I think has tripled since. I used to go there weekly for steamboat with my friends and I would say a mix of local and foreign outlets and if you come by on Friday or over the weekend, it is pretty much packed and the roads are jammed and there’s limited parking too. Why is it so busy? I think there is something for everyone — not just steamboat or hotpots but also dim sum, Japanese, Chinese tai chow, Thai, Nyonya and China cuisine.”

A search online lists several intermediate shops in Menjalara listed for rents ranging from RM9,000 to RM20,000 depending on size and location.

The Malaysia Chinese Restaurant Association says there are currently more than 18,000 Chinese F&B brands operating in Malaysia, spanning a wide range of cuisines, barbecue concepts and tea-drink outlets, with hotpot brands accounting for roughly a third of that total.

And local operators are broadly feeling the squeeze, not just on rent. The Edge reported in its Dec 1, 2025, cover story (“Swamped by China businesses seeking new markets”, Issue 1603), citing a November survey by the Associated Chinese Chambers of Commerce and Industry of Malaysia, that 45.1% of the 245 Malaysian business owners polled are pessimistic about their industry’s competitiveness against Chinese businesses over the next five years, with 70.9% describing competition as intense or very intense and 86.4% citing pricing pressure as the most significant impact.

Are local operators actually being pushed out? A local agent says this: “The honest answer is partially, unevenly and in more ways than one. There are other issues besides rent. Yes, aggressive rent offers or prepayment can price local operators out of renewal negotiations even when their own sales haven’t necessarily fallen — landlords simply have a better offer on the table. Then there’s chains like Mixue driving prices down to levels local operators struggle to match, particularly in bubble tea and casual dessert categories where margins are already thin. Some of these big chains also bring in their own supply and this is a loss of business opportunity for our local vendors.”

CBRE | WTW’s Tan says that there has been some increase in business turnover within certain mature commercial areas, although the reasons are typically multifaceted rather than purely competition-driven. “Factors such as ageing business owners, limited succession planning, evolving consumer trends, rising operating costs and owners capitalising on appreciated property values are also contributing to this trend.

“Overall, the current market reflects an ongoing evolution in urban retail dynamics, where stronger performing commercial clusters continue to attract new concepts and capital. However, longer-term sustainability will ultimately depend on whether rental growth remains supported by genuine consumer demand and sustainable business fundamentals.”

If you run an established stall or restaurant in one of these neighbourhoods, the practical risk is not necessarily an imminent eviction — Malaysian tenancy law generally protects the term of an existing signed lease. The real exposure shows up at renewal time, when a landlord who has seen a nearby unit go for 30% to 50% more to a new entrant may push for a steep increase or decline to renew at all in favour of a tenant offering a year’s rent upfront.

For landlords, the calculation is not purely mercenary — locking in guaranteed income for a year removes vacancy risk entirely, something an SME on a month-to-month cash flow simply cannot match.

The running theme across most of the interviews on this issue is not a call to keep mainland investment out but a push for a more even playing field: clearer scrutiny of unlicensed or improperly registered operators and encouragement for larger Chinese chains to source and contract locally so the investment leaves more behind than a higher rental benchmark. 

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