The Malaysia Home Rental Index Report for Q1 2024, released by IQI Global, offers a detailed analysis of the rental market across the country. This second edition of the quarterly report IQI said complements NAPIC's Malaysia House Price Index and is based on over 67,000 residential rental transactions since 2018, making it the most comprehensive measure of rental trends in Malaysia.
The average rent across Malaysia has increased by 1.8% compared to Q1 2023, reaching RM1,920. However, the rate of increase has slowed, indicating a trend towards greater affordability for renters. The average rental price over the past two years was RM1,895, slightly lower than the current average.
In Kuala Lumpur, rents have risen by 7.6% year-on-year to RM2,735. Despite this increase, rents remain 27% lower than pre-pandemic levels from Q1 2020, providing a "Covid affordability bonus" as the market has not fully recovered. Meanwhile, average rents in Selangor have climbed by 10% annually, reaching RM1,879, a figure that has fully rebounded to pre-pandemic levels. Selangor's rents are notably more affordable than those in Kuala Lumpur and the national average.
The nationwide gross rental yield remains stable at 5.16%. Johor Bahru offers the highest yield at 6.25%, making it an attractive location for investors. The vacation rental market is experiencing rapid growth, with revenue projected to reach RM5.3 billion in 2024 and expected to increase to RM6.9 billion by 2028. This sector benefits from the rebound in tourist arrivals, which are nearing pre-pandemic levels. Malaysia saw 20 million tourist arrivals in 2023 compared to 26 million in 2019.
The report highlights several factors influencing the rental market, including the balance between supply and demand, seasonal trends, and the number of international students and long-term residents. As international travel continues to recover, Malaysia may see an influx of new residents and short-term occupiers, potentially driving higher demand for rental properties and creating opportunities for investors.
Looking ahead, rental rates are expected to climb moderately, with an anticipated increase of 0% to 3% over the next 12 months. The stable gross rental yields, coupled with Malaysia's affordable entry prices and high rental yields, make it an attractive destination for international property investors.
The Malaysia Home Rental Index Report is an essential resource for understanding the trends and dynamics of the rental market. It provides valuable insights for renters, landlords, and investors, helping them make informed decisions in a rapidly evolving market.