Indonesian malls prioritise upgrades over expansion

The shift mirrors Thailand’s focus on leisure and Japan’s emphasis on efficiency.

Indonesia’s vast consumer base and limited modern retail space are driving a rethink of the country’s mall development model, as operators shift focus from expansion to modernization.

The country, home to more than 278 million people, has just 0.06 square metre of modern retail space per capita — well below Singapore and Thailand — prompting developers to strive for efficiency, sustainability, and digital integration over new construction.

“The transformation of shopping centres in Indonesia is no longer about increasing numbers, but about making them more relevant — more efficient, greener, and more human,” Alphonzus Widjaja, chairman at the Indonesian Shopping Center Management Association, told Retail Asia.

Developers are investing in artificial intelligence (AI) to monitor energy use, analyse visitor traffic, and improve comfort. Many malls are being redesigned with green architecture features such as natural lighting, open-air ventilation, and solar panels to lower operating costs and reduce carbon emissions.

The shift addresses both the limited supply of modern retail space and the rising demand for energy-efficient urban infrastructure.

“Technology and sustainability are important,” Widjaja said in an interview. “But what truly defines Indonesia’s retail evolution is its ability to maintain human connection.”

Similar changes are unfolding across Asia. Japan prioritises space efficiency, Thailand emphasises leisure-oriented mall design, and Singapore leads in carbon-neutral facilities powered by renewables.

China, according to the Mall China Development Association, has entered a phase of “stock value regeneration,” where developers revitalise existing properties instead of building new ones.

The future of physical retail is not about adding more space but optimising it, association Chairman Wang Jing told the recent Council of Asian Shopping Centers Conference 2025 in Jakarta.

“No longer followers or imitators—the physical retail sector has entered a creator era,” he said. “Only professionalism can bring sustainable innovation.”

He added that modern malls are evolving into mixed-use venues that combine commercial and social functions, serving as urban community spaces as much as shopping destinations.

Indonesia is moving in the same direction. Malls are becoming social and cultural hubs, integrating sustainability and smart technology whilst reflecting local lifestyles.

“The issue isn’t how many malls are built,” Widjaja said. “It’s how to build malls that matter — those that combine sustainability, technology, and Indonesia’s social identity.”