Asia’s global real estate agent network IQI, which is a member of Juwai IQI, today released the first-ever Malaysia Home Rental Index, which is intended to serve as a complement to NAPIC’s Malaysia House Price Index. “The Rental Index analyses over 58,000 residential rental transactions since 2018,” said Juwai IQI Co-Founder and Group CEO Kashif Ansari. “The data reveals that rents across Malaysia increased by 5.5% in 2023. Rents are now 7.4% higher than during the pandemic’s worst phase.”
“In the fourth quarter, rents fell by 1.2% compared to the third quarter, but they still ended the year 5.5% higher than in Q4 2022.
“The average residential rent in Malaysia is RM1,975 per month. That compares to RM1,851 in Selangor and RM3,192 in Kuala Lumpur.
“The data suggests a shift toward recovery, with the Malaysia Home Rental Index reaching its highest point in nearly three years — since early 2020. Factors influencing these trends include supply-demand balance, seasonal variations, seasonal variations in the transaction mix, and investor activity.
“The Rental Index varied significantly by region. The country-wide 5.5% increase in 2023 was lower than the increases in the Rental Index in Kuala Lumpur and Selangor
“Kuala Lumpur’s rental rates end 2023 at 28.4% above Q4 2022, although still 29% below pre Covid levels. Selangor’s market was more stable, ending 2023 with rents 10.7% higher than Q4 2022 and 5% above Q4 2019, indicating a steady market with expectations of modest growth.
“Investors are studying this data carefully, since higher interest rates have made homeownership more expensive, more Malaysians may opt to rent. That could create competition and potentially higher rents.
“The new Home Rental Index by IQI emphasizes the value of understanding long-term trends in rents and is a resource for real estate market consumers, industry, and government.
“For investors, rising rental rates can offset the costs that come with higher interest rates. Our data partner, Global Property Guide, reports that the average gross rental yield in Malaysia is 5.16% as of the second quarter.
“Investors can find the highest yields in Johor Bahru, Iskander Puteri, and Subang Jaya. Even the lowest yield is attractive by international standards, at 4.02% in Georgetown. Note that yields are a calculation of gross income after expenses for property investors. The average gross rental yield in Johor Bahru is 6.23%. The average gross rental yield is 5.67% in Iskander Puteri and 5.41% in Subang Jaya.
Forecast for 2024
“Based on the robust recovery in the 2023 Malaysia Home Rental Index, our forecast is for a continuation of growth in rental demand. 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 centers such as Kuala Lumpur, Johor Bahru, and Iskander Puteri.
“Furthermore, as international travel and inward tourist arrivals continue to rebound, Malaysia may see an influx of long-term residents, occupiers of short-term rentals, and international students, which may also contribute to a higher demand for rental properties.
“This demographic trend, coupled with the local shift towards renting, provides fertile ground for investors to capitalize on the rising rental yields. We believe the appetite for rental properties will grow and that rental yields may climb. Investors and landlords should monitor these emerging trends closely to make the most of the anticipated growth in Malaysia’s rental sector.”
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