IQI Launches First Malaysia Home Rental Index, Reveals 5.5% Surge In 2023 Rental Rates

IQI, a global real estate agent network and a member of Juwai IQI, has unveiled the inaugural Malaysia Home Rental Index, providing comprehensive insights into the dynamics of the country’s residential rental market.

The index, analysing over 58,000 residential rental transactions since 2018, indicates a significant 5.5% growth in rental rates across Malaysia in 2023, showcasing a robust recovery and signaling a shift in the property landscape.

Juwai IQI Co-Founder and Group CEO Kashif Ansari emphasised the importance of this Rental Index, stating, “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.”

The detailed analysis further highlights that in the fourth quarter, rents experienced a marginal decline of 1.2% compared to the third quarter. However, they concluded the year 5.5% higher than in Q4 2022. The average residential rent in Malaysia is reported to be RM1,975 per month. A breakdown shows regional variations, with Selangor at RM1,851 and Kuala Lumpur at RM3,192.

The data suggests a shift toward recovery, with the Malaysia Home Rental Index reaching its highest point in nearly three years, dating back to early 2020. Several factors contribute to these trends, including the balance of supply and demand, seasonal variations, transaction mix fluctuations, and investor activity.

The Rental Index’s regional analysis reveals that the country-wide 5.5% increase in 2023 was surpassed by higher increments in Kuala Lumpur and Selangor. Kuala Lumpur experienced a remarkable 28.4% increase, although it remains 29% below pre-COVID levels. In contrast, Selangor’s market displayed more stability, 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 urged to scrutinize this data meticulously. Higher interest rates have made homeownership more expensive, potentially leading more Malaysians to opt for renting. This shift could result in increased competition and potentially higher rents.

The new Home Rental Index by IQI serves as a valuable resource for understanding long-term trends in rents and provides crucial insights for real estate market consumers, industry players, and government authorities.

“For investors, rising rental rates can offset the costs that come with higher interest rates,” said Kashif Ansari. Global Property Guide reports that the average gross rental yield in Malaysia is 5.16% as of the second quarter. Johor Bahru, Iskander Puteri, and Subang Jaya offer the highest yields, with Johor Bahru leading at 6.23%.

The forecast for 2024 remains optimistic, projecting a continuation of growth in rental demand. The historical resilience of the Malaysian rental market, coupled with the post-pandemic economic rebound, suggests sustained rental rate increases, especially in high-yield urban centers such as Kuala Lumpur, Johor Bahru, and Iskander Puteri.

The anticipated rebound in international travel and tourist arrivals may contribute to an increased demand for rental properties. Investors and landlords are advised to closely monitor these emerging trends to capitalize on the expected growth in Malaysia’s rental sector.”

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