Rental rates over the next 12 months are expected to climb moderately from the first quarter of 2024 (1Q24) level of RM1,920 per month. The average monthly rental price in Malaysia over the past two years was RM1,895, slightly lower than the 1Q24 average. While rents are higher today than in seven out of the 10 recent quarters, the annual rate of increase has been declining, according to IQI in its “Malaysia home rental index report 1Q24.”
The Malaysia home rental index shift is based on the balance between the supply of rental properties and the number of people looking to rent, seasonal trends, number of international students in the country, and changes in the activity of investors who buy properties to rent out. The report is based on over 67,000 residential rental transactions since 2018.
Source: https://ms.wikipedia.org
In Kuala Lumpur, rents are up 7.6% compared with a year ago but the rate of increase has been declining. In Selangor, the average rent is RM1,879, up 10% annually and it has fully recovered to the pre-pandemic levels.
Nationwide gross rental yield remained stable at 5.16%, with Johor Baru offering the highest yield at 6.25%. Malaysia’s gross rental yield of 5.16% is lower than comparable numbers in Thailand, Indonesia and the Philippines, while Singapore offers a gross yield of 4.63%.
The vacation rental market is growing rapidly with 2024 revenue projected at RM5.3bil. It is expected to hit RM6.9bil by 2028, according to the report.
Many low to medium income earners may not welcome this news. The market is getting a little “tight” for a particular segment. This may not be so on the upper end of the scale, where supply seems high compared to current demand. If prospective foreign investment and investors become “real”, then the overall property market (whether sale or for rent) will move upward in value/cost. Developers will be happy with such an outcome.
Reference:
Rental rate uptrend, B.K. Sidhu, The Star, 20 July 2024
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