SECTION 03 pg. 26 AL-SALĀM REIT OPERATING ENVIRONMENT PESTLE ANALYSIS To ensure the REIT remains abreast of all ongoing developments, a PESTLE analysis was employed, enabling the identification of significant external influences and opportunities shaping the REIT’s performance and strategic direction. These include: Al-Salām REIT is expected to experience a significant positive impact on foot traffic and revenue generation on KOMTAR JBCC due to the upcoming Johor Bahru-Singapore RTS Link, projected for completion by 2026 or 2027 with a capacity of 10,000 travellers per hour, alongside the Elevated Autonomous Rapid Transit (“E-ART”) slated for completion in the coming years. This is further enhanced by the construction of a POB connecting the station directly to KOMTAR JBCC, positioning the REIT as an entry point for visitors arriving from and departing to Johor Bahru and Singapore. These developments are expected to be a primary driver of a significant increase in footfall from Singaporean cross-border shoppers and local commuters. While short-term traffic congestion during construction remains a challenge, the REIT proactively responds through AEIs to improve e-hailing and public transport infrastructure and ensure flagship assets are positioned as premier transit-oriented retail destinations. This is also expected to increase Menara KOMTAR’s appeal as a choice office space, especially for cross-border businesses seeking to establish a presence in both Malaysia and Singapore requiring frequent travelling between both locations. With favourable economic policies such as the JS-SEZ, the demand for quality office space in the city centre is expected to remain strong, leading to rents holding stable in the coming years. The working crowd from Menara KOMTAR is also expected to translate to improved footfall in KOMTAR JBCC, reinforcing the synergies within the REIT’s flagship assets. Catalytic Infrastructure Development and Connectivity Global tariff threats and trade restrictions have indirect consequences on the REIT’s overall financial, business, and operational performance. With these uncertainties, global supply chains are being redefined, where suppliers and consumers alike are forced to adapt to this new order, taking into account cost escalations. Based on recent studies, 55% of Malaysian companies cited rising costs due to trade uncertainty, leading some to pass costs on to customers and other downstream consumers, ultimately impacting retail spending and consumer purchasing power. Despite these risks, the Malaysian economy proved resilient, showing signs of growth throughout 2025, strengthening currency, and other positive economic indicators. Regardless, the REIT remains committed to implementing fail-safes, primarily through continued cost management at both the property and fund levels to ensure margins remain sustainable despite these external geopolitical developments. Global Tariff Threats The monetary environment throughout FY2025 was characterised by interest rate volatility, even as Bank Negara Malaysia (“BNM”) maintained the Overnight Policy Rate (“OPR”) at 2.75%. While stable rates can support consumer discretionary spending, the REIT remains exposed to fluctuating financing costs due to the reliance on floatingrate debt. To safeguard unitholder value, the REIT prioritises prudent capital management, including active efforts to refinance existing facilities and restructure debt to secure more favourable and sustainable terms. Monetary Environment and Interest Rate Volatility In addition to the positive national macroeconomic outlook, the REIT stands to gain by potential financial capitals provided through the 13th Malaysia Plan, offering RM430 billion between 2026 to 2030 in development expenditures, alongside the Visit Malaysia 2026 (“VM2026”), a governmentled initiative targeted to attract 47 million foreign visitors and generate RM329 billion in tourism revenue, compounded with the Visit Johor 2026 campaign set to attract 12 million additional visitors, present a positive outlook Al-Salām REIT, particularly KOMTAR JBCC. In view of KOMTAR JBCC’s proximity to the CIQ, KOMTAR JBCC is expected to benefit from the spillover of tourism campaigns and visitors from VM2026 and Visit Johor 2026 (“VJ2026”). The renewed tenant mix of KOMTAR JBCC is also expected to attract more visitors, in line with consumer preferences from the crossborder tourist demographic. Tourism Policy and Campaign Developments
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