Malaysia’s high-rise home rental growth averages 5.5% in Q4 2023: survey
Tan Ai Leng
[KUALA LUMPUR] Rental for high-rise residential properties in Malaysia increased by 5.5 per cent year on year in the fourth quarter of 2023, with rental averaging RM1,975 (S$566) a month.
This was one of the key findings from the inaugural Malaysia Home Rental Index released by IQI, a real estate agency network that is also a member of Malaysia-based technology group Juwai IQI.
Juwai IQI chief executive officer Kashif Ansari said the rental index analyses over 58,000 rental transactions of high-rise residential properties including condominiums, serviced residences and flats.
The latest findings revealed that the rental growth is 7.4 per cent higher than the Covid-19 pandemic period – from the first quarter of 2020 to the fourth quarter of 2022.
While the country-wide increase was 5.5 per cent, the capital Kuala Lumpur saw a surge of 28.4 per cent with monthly rentals there averaging at RM3,192.
Rentals for homes in Selangor rose 10.7 per cent in Q4 last year, but the average monthly rental was slightly lower than the national average at RM1,851.
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Citing the rental yield data from Global Property Guide, IQI said Malaysia registered an average gross rental yield of 5.16 per cent in the second quarter last year.
Both Johor Bahru and Iskandar Puteri in Johor, as well as Subang Jaya in Selangor, commanded the highest rental yield of 6.23 per cent, 5.7 per cent and 5.4 per cent, respectively, in the second quarter last year.
Ansari expects the rental for high-rise residential properties to continue to climb in 2024 in view of future economic growth prospects and Bank Negara’s monetary policy.
“Given the historical resilience of the Malaysian rental market and the post-pandemic economic rebound, we project a sustained rental rate increase into 2024, particularly in high-yield urban centres such as Kuala Lumpur, Johor Bahru and Iskander Puteri,” he said in a statement.
Strong rebound in international travel and inward tourist arrivals may also attract an influx of long-term residents, occupiers of short-term rentals, and international students, contributing to the demand for high-rise rental homes.
“This demographic trend, coupled with the local shift towards renting, provides fertile ground for investors to capitalise on the rising rental yields,” he said.
Paul Khong, managing director and head of Savills Malaysia, said the revised criteria of the Malaysia MySecond Home (MM2H) programme is expected to attract foreigners’ interest to live and invest in Malaysia.
The revised MM2H, which will be on a trial run for one year, introduced a three-tiered system with more relaxed rules for interested applicants based on their financial eligibility and different types of entry visas will be provided for approved applicants.
For example, the applicants for the highest Platinum tier will require a fixed deposit of RM5 million and 60 days of residency in Malaysia (down from 90 days previously). They are also eligible to apply for permanent residence status.
“The property market in Malaysia will still be cautiously optimistic in 2024. We expect prices to continue moving upwards due to the ‘base costs push’ factors and the rising interest rates and inflation,” Khong said in a separate note on Jan 1.
With anticipation of higher housing prices, Ansari said this will lead to more Malaysians choosing to rent instead of buy. “That creates competition among renters for the available rental homes,” he said.
In another report released by Knight Frank Malaysia, the real estate consultancy firm expects the residential property market moving to a positive direction this year, despite inflationary pressures and elevated interest rates.
The projection is based on the improved performance of residential property transactions in 2023. For the first nine months in 2023, Malaysia recorded a total of 68,561 residential property transactions worth RM28.3 billion, a year-on-year growth of 1.3 per cent and 3.5 per cent, respectively.
“Fuelled by government support, particularly in light of the Budget 2024 announcements and strengthened collaboration between developers and banks to enhance homeownership, the residential market maintains a cautiously optimistic outlook as it enters 2024,” said Knight Frank Malaysia.
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