Management Discussion and Analysis REVIEW OF OPERATIONS (CONT'D) OFFICE SEGMENT (CONT'D) Menara KOMTAR (CONT'D) Lease Expiry Profile Based on Net Lettable Area (%) Average Occupancy Rate (%) Asset Performance (as of 31 December 2024) 41% 21% 49% 2025 2026 >2027 2022 89% 2020 2021 2023 2024 86% 86% 93% 88% Challenges and Prospects In the first half of 2024, Johor Bahru's office market experienced a 2.6% increase in supply, leading to an average occupancy rate of 69.6% and approximately 4.74 million square feet of vacant office space. This expansion underscores the broader challenges facing the office sector, including market volatility, ongoing maintenance and compliance costs, and the evolving impact of hybrid work models. Market volatility remains a significant concern, with fluctuations in interest rates and economic uncertainties potentially affecting rental yields and property valuations. Additionally, this segment faces operational costs associated with regular maintenance, HVAC upgrades, accessibility improvements, and adherence to safety regulations. These factors contribute to the complexity of managing office assets effectively. The shift towards hybrid work arrangements has also led many tenants to reassess their space requirements, often resulting in downsizing. This trend has intensified competition among landlords, as the demand for office space becomes more selective. Despite these challenges, there is a growing preference for high-quality, sustainable office environments that support employee well-being and collaboration. Features such as biophilic design, wellness spaces, and energyefficient systems are increasingly sought after by tenants aiming to enhance productivity and satisfaction. Within this evolving landscape, Menara KOMTAR continues to demonstrate resilience, maintaining a strong occupancy rate anchored by the stable tenancy of the JCorp Group of Companies. Its positioning within a prime location and the stability of its tenant base reaffirm its appeal. Menara KOMTAR (CONT'D) 1 ABOUT US 33 2 BUSINESS OVERVIEW 3 SUSTAINABILITY STATEMENT 4 CORPORATE GOVERNANCE 5 OTHER INFORMATION 6 FINANCIAL STATEMENTS
RkJQdWJsaXNoZXIy NDgzMzc=