Rents across Malaysia increased by 5.5% in 2023, according to data from a newly released index.
Rents were now 7.4% higher than during the pandemic's worst phase, suggests the Malaysia Home Rental Index by real estate agent network IQI, a member of Juwai IQI.
In the fourth quarter, it said that rents fell by 1.2% compared to the third quarter, but they still ended the year 5.5% higher than in Q4 2022.
The index also noted that the average residential rent in Malaysia was RM1,975 per month: RM1,851 in Selangor and RM3,192 in Kuala Lumpur when examined state-wise.
It said 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 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," said Juwai IQI co-founder/group CEO Kashif Ansari
It said yields are a calculation of gross income after expenses for property investors. The average gross rental yield in Johor Bahru is 6.23%, 5.67% in Iskander Puteri and 5.41% in Subang Jaya.
The rental index, which analyses over 58,000 residential rental transactions since 2018, is intended to serve as a complement to NAPIC's Malaysia House Price Index, says its promoters.
Based on what it said was 'robust recovery' in the 2023 Malaysia Home Rental Index, IQI's forecast was for a continuation of growth in rental demand.
Given the historical resilience of the Malaysian rental market and the post-pandemic economic rebound, it has projected a sustained rental rate increase into 2024, particularly in high-yield urban centers such as Kuala Lumpur, Johor Bahru and Iskander Puteri.
"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," he said.