A L - S A L Ā M R E I T A N N U A L R E P O R T 2 0 2 1 48 MANAGEMENT DISCUSSION AND ANALYSIS ASSET PERFORMANCE Menara KOMTAR registered a stable performance in FY2021 on the back of solid tenants who have signed long-term leases. The performance was consistent with the overall performance of the office property segment, which was relatively resilient in FY2021. Menara KOMTAR was affected by the incoming supply of new office space in Johor Bahru and the rise of serviced offices, Nonetheless co-sharing workspaces, and new commercial trends. Taking into consideration the prevailing challenges, Al-Salām REIT is nevertheless confident in Menara KOMTAR’s sustained competitive advantages, including its strategic location in close proximity to the surrounding city centre, excellent connectivity and access to convenient travel, and good building management and supporting services. The asset is well maintained and in good condition, which is important in attracting and retaining tenants. MAJOR ASSET ENHANCEMENT INITIATIVES No major asset enhancement initiative was undertaken in FY2021. The Fund will continue to enhance the relationships with the tenants and proactively attend to tenants’ needs and requirements. CHALLENGES AND PROSPECTS The office segment is expected to remain stable in FY2022, although pressures remain from increasing competition leading to reduced rental rates. Additionally, the current landscape of the workplace is shifting towards a hybrid of work from home and on-site, which requires flexibility and agility. In that respect, co-working spaces/formats are ideal workspace format moving forward. In light of this, the Manager is assessing the commercial feasibility of reconfiguring the current space within Menara KOMTAR to incorporate co-working offerings, allowing optimal use of existing facilities such as workspaces and high-speed internet access. OFFICE SEGMENT - MENARA KOMTAR
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