Press Release: iProperty.com.my – Rental Demand For Spacious Landed Homes Boosts National Demand Figure in H1 2021
– Terrace house is the most popular property type with +14.1% YoY demand growth.
– Rental yields have decreased across all building types in H1 2021.
– Improving consumer sentiment have boosted national demand growth and demand for rental property in city centres began to increase in H1 2021 from the lower base of H1 2020.
KUALA LUMPUR, 5 OCTOBER 2021 — iProperty.com.my today announced that Malaysia’s residential rental property demand experienced positive Year-on-Year (YoY) growth in H1 2021, increasing to +1.9% from -5.6% in H1 2020. In contrast to H1 2020, growth in user visits have outperformed the growth in rental property listings in H1 20211. The increase is due to significant YoY demand for terrace homes at +14.1% and for serviced residences at +8.0%. This is an interesting shift from H1 2020 where condominium was the most in-demand residential rental property. The announcement was made during an online virtual conference of the bi-annual iProperty.com.my H1 2021 Portal Demand Analytics (Residential Rental Market), which provides a macro view of current demand trends in the Malaysian residential rental market.
Premendran Pathmanathan, General Manager for Customer Data Solutions & Quality, iProperty.com.my, said, “In the previous instalment of the Portal Demand Analytics, we noted that the pandemic had started the trend of property seekers looking for bigger living spaces. As a result, terrace houses have become the most popular property type in H1 2021. Moreover, the first half of 2021 continues to favour tenants as renting makes more financial sense due to a lower monthly commitment when compared to purchasing the same property, especially in times of high unemployment. Indeed, many landlords are absorbing some of the income shocks and are pricing down their rental units as they compete to attract a limited pool of financially stable tenants.
On a positive note, the ongoing vaccination program has resulted in more than 80% of the adult population being vaccinated as of September 2021. This high vaccination rate announcement will serve as a great confidence booster for the property market. As we transition to an endemic phase by the end of October, we hope the property market will continue to recover for the remainder of the year and going into 2022.”
Rental demand improved in H1 2021, but rental yields decreased for all property types
Demand for residential rental properties in city centres began to build up in H1 2021 as lockdown restrictions were relaxed and various economic activities resumed as usual. In particular, some notable business and residential hubs in Kuala Lumpur and Penang have experienced double-digit YoY demand growth. These areas include Mont Kiara, Mid Valley City and Kuala Lumpur City Centre in Kuala Lumpur and Pulau Tikus, George Town and Bukit Mertajam in Penang.
On the flip side, the latest unemployment figures from the Department of Statistics Malaysia (DOSM) is 4.8% in June 2021, following four consecutive months of lower unemployment figures. With certain demographic groups facing financial constraints, some landlords will continue to face challenges finding tenants for their properties.
Rental yields across all building types have dipped. In 2020, the pandemic supported a tenant’s market, putting renters in a good position to negotiate rental prices. This trend has continued in H1 2021 where the drop in asking rental prices was higher than the drop in asking sale prices, thus reducing the rental yields. The rental yield for Terraced Houses decreased to +2.9% from +3.3% in H1 2020. Meanwhile, the rental yield movement for condominiums and serviced residences have declined by 0.3% and 0.2% respectively, whereas apartments have retained at +4.4%
Kuala Lumpur’s affluent suburbs are renter’s top choice
Kuala Lumpur’s YoY rental demand has improved from -2.9% to +2.6% in H1 2021. The affluent suburb of Damansara Heights is the most in-demand area in Kuala Lumpur. Most rental visitors were looking at bungalows and semi-Ds priced above RM5,000 (3,000 sq ft and above). Other affluent suburbs in Kuala Lumpur such as Mont Kiara, Bangsar, Desa ParkCity, KL Sentral and Sri Hartamas saw more than +10% YoY demand growth and generated rental prices above Kuala Lumpur’s median rental price of RM2,000. Meanwhile, in Pantai, visitors were interested in condominiums and serviced residences priced between RM2,500 to RM5,000 (1,000-1,500 sq ft).
In terms of preferred property types in Kuala Lumpur, many renters were looking for condominiums and serviced residences priced between RM1,500 to RM2,000 (1,000-1,200 sq ft). Apartment units priced between RM1,000 to RM1,500 (700-1,000 sq ft) are also popular.
Strong demand for Selangor’s terrace houses
Selangor was the only major state to record a decline in overall rental demand in H1 2021 with a -1.0% YoY drop. However, the decline was attributed to a slight increase in rental property listings, which surpassed user visits. Based on National Property Information Centre (NAPIC) Q2 2021 data, condominiums and serviced residences account for the highest overhang residential properties in Selangor, at 2,019 units and 2,025 units respectively. Nevertheless, the rental prices of terrace houses have held steady at RM1,700, in line with a strong +25.5% YoY demand, particularly for spacious and affordable units in suburban areas.
Rawang is the most in-demand area in Selangor with a +57% YoY demand growth. Together with Rawang, Tanjong Dua Belas had many rental visitors looking at terrace houses priced between RM1,000 to RM1,500 (1,500-2,000 sq ft). One area that is gaining popularity is Setia Alam, mainly contributed by the workers of several prominent glove manufacturing factories looking for affordable high-rise accommodation in the area priced between RM700 to RM1,000 (700-1,000 sq ft).
Mainland Penang’s high-rise homes trending higher
Penang’s overall rental property demand recovered from -13.7% in H1 2020 to register a +1.8% YoY growth. However, condominiums still registered negative YoY demand at -5.1% as the increase in rental property listings far surpassed the rise in user visits. According to NAPIC, Penang has a significant condominium overhang with 4,163 units as of Q2 2021.
On the pricing front, the state’s median rental dropped by RM100 to RM1,400. Serviced residences, in particular, recorded a significant decline from RM2,500 in H1 2020 to RM1,300 in H1 2021. This drop is due to reduced rental property listings on the island and an increase of affordable serviced residence listings on the mainland in Perai, Simpang Ampat and Bukit Mertajam. The rental prices for such units in these areas are between RM1,000 to RM1,500.
Simpang Ampat is the most in-demand area in Penang, with many rental visitors interested in condominiums and serviced residences priced between RM700 to RM1,000 (700-1000 sq ft). Meanwhile, in Bukit Mertajam, the second most in-demand area in Penang -, visitors were browsing for apartments, serviced residences and terrace homes priced between RM700 to RM1,000 (1,000-1,250 sq ft).
Johor Bahru District towns attract many rental visitors
Johor’s rental property demand jumped to +6.6% from -19.5% in H1 2020, while median rental prices dipped by RM 200 to RM1,200. Similar to Penang, condominiums and serviced residences recorded the most significant drop in pricing, with a RM300 price decline from H1 2020 to RM1,200 in H1 2021. According to DOSM, the percentage of people staying in their own property in the Johor Bahru District has decreased from 73.2% in 2014 to 69.7% in 2019, while the percentage of renters has increased from 23.4% to 28.4% in the same period.
As the most in-demand area in Johor, Pasir Gudang had rental visitors looking for terrace houses priced between RM1,000 to RM1,500 (1500-2000 sq ft). Coming in second is Ulu Tiram, which had visitors browsing for apartments priced between RM700 to RM1,000 (700-1,000 sq ft) and terrace houses priced between RM1,000 to RM1,500 (1,500-2,000 sq ft).
— End Of Press Release —
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