AL-SALAM REIT ANNUAL REPORT 2017

50 AL-SALĀM REIT ANNUAL REPORT 2017 in Johor Bahru city centre opened its doors with a net lettable area of 69,966 square feet. There are another 6 under construction buildings with total net lettable area of 2.36 million square feet are expected to enter the market in the next 3 years. Demand for office space has been stable in Johor Bahru and vacancy rate was about 20%. The average office rent for prime office space in Johor Bahru city centre remained stable at RM3.20 to RM3.50 per square foot, while it was RM2.80 to RM3.20 per square foot for office buildings located in the city fringe. However, new office buildings in Medini and Puteri Harbour commanded higher rental rates in the range of RM4.00 to RM5.00 per square foot. The high rents are being driven by the influx of multinational companies (MNCs) seeking brand new quality prestige office accommodation currently only available in ample supply of Iskandar Puteri. The proximity to catalytic projects within Iskandar Puteri is an added advantage. 4. OFFICE The total purpose-built office space increased by about 5.0% to record at 12.25 million sq ft in 1H2017 (1H2016: 11.67 million sq ft) while occupancy rate declined to 77.7% (1H2016: 80.7%). BCB Berhad has launched its shop offices in Medini known as VERSIS. Currently, the project is under Phase 1A and consists of 54 units of 3-storey terraced and 3-storey semi-detached offices. The average selling price starts from RM2.28 million per unit. Offered with Guaranteed Rental Return (GRR) of 5% for four years, the shop offices are expected to be completed in 2019. Since its official launch in September, the project has received good response with circa 50% take-up rate (Extracted from Research Report Knight Frank : Real Estate Highlights 2nd Half 2017) In 2017, existing supply PBO space was 9.21 million square feet in 111 buildings. About 71% is privately owned while the remaining is owned by the government. In 1Q 2017, BSN Tower