High-end residential property to face rent adjustment pressure

SPEEDHOME chief executive officer, Wong Whei Meng

According to internal data from residential rental platform, in the third quarter of this year, residential properties with a rental value less than RM2,000 have not changed much. But in the second wave threat of the epidemic, with little hope of the border opening in the near future, high-end apartments dominated by foreign professional tenants, are expected to face greater pressure to reduce rents.

Wong Whei Meng, Chief Executive Officer of Speedhome, stated that after MCO ended in the Klang Valley, the platform’s residential rental business returned to normal within one month, and houses with rents ranging from RM1,000 to RM2,000 remained very popular. The rental price has in fact not changed much.

Wong said, “In June and July, the supply and demand for residential housing in Klang Valley were in balance. During the loan delay period, the homeowners were still not in a hurry to find tenants, but after August, prices began to be reduced to rent out fast, especially properties with monthly rents higher than RM2000. If the rent had not been adjusted, the house vacancy period may as a result become longer.”

The high-end properties in Klang Valley that were primarily catering towards foreign professionals were considerably affected by the Covid-19. Some foreign tenants choose to terminate their contracts early and return to their home country. The monthly rent of this type of property will be reduced by 5 to 15 percent.

At the same time, the supply of residential real estate in Penang, a popular tourist destination, has doubled in the past two months in Speedhome platform. It is believed that many homestay operators choose to change their houses from short-term rentals to secured more stable rental income. This is in line with the management of apartment management’s control of short-term rental activities.

Johor is also facing greater pressure to reduce rents. The main reason is Johor has the most unsold properties in the country. In addition, the border closure between Malaysia and Singapore has caused many local workers to lose their jobs. The demand for local rentals has dropped sharply, the average rent fell by 10 to 20 percent.

Wong believes that after the loan moratorium ends, in order to find tenants faster, landlords will be more willing to accept any type of rental solutions that are in the market  . At present, the market acceptance of the zero-deposit rental model is also increasing. There are at least four companies in the market that replace the deposit rental platform with insurance.

He added, “Now that the economy is sluggish, there were not many Malaysians who had saved money. You want them to pay approximately equal to their income from 3 to 4 months, and give them a deposit and rent. This will make it more difficult to find tenants

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