Rents in Klang Valley are rising in line with the nationwide trend, but the pace is stabilising

KUALA LUMPUR, July 10 – Average rent across the country rose year-on-year in the first quarter of 2024, but at a much slower pace, rising just 1.8 percent, seen as a sign that rents have stabilised after the steep rise immediately after the pandemic, property consultancy IQI said in its Malaysia Home Rental Index report.

The company said the trend shows “increased affordability” as the rate of increase has slowed, with rent increasing to an average of RM1,920 during the January-March period compared to the first quarter of 2023.

“Although rents are higher today than in seven of the last 10 quarters, the annual rate of increase is declining. On a quarterly basis, average rents have declined in the last two quarters,” IQI said.

“This indicates a trend that is pushing up prices for renters. The performance of the Malaysia Home Rental Index in the first quarter suggests that demand growth for rental properties is slowing but remains at the upper end of levels seen in recent years,” it added.

“The average rental price in Malaysia over the past two years is RM1,895, slightly lower than the first quarter average price of RM1,920.”

There has been an upward trend in rents in the Klang Valley, albeit to varying degrees.

Rents in the capital rose 7.6 percent annually to RM2,735, but were still 27 percent below pre-pandemic levels in the first quarter of 2020. However, the average rent in Selangor rose 10 percent annually to RM1,879, fully recovering to pre-pandemic levels.

“Although Selangor is significantly more affordable than Kuala Lumpur or the national average, rents in the state have fully recovered from the pandemic and no longer offer a Covid affordability discount. First quarter rents are virtually identical to rental prices in Q1 2020,” IQI said.

Rental yield

Yields across the country are stable at 5.16 percent, with Johor Baru offering the highest yield at 6.25 percent, according to IQI. The lowest average gross yields were in George Town (3.5 percent), Kuala Lumpur (4.4 percent) and Ipoh (5.2 percent).

“Overall, the combination of a large, stable and liquid market, relatively affordable entry prices and high returns is attractive to international investors,” the company said.

“Malaysia’s gross yield of 5.16 percent is only lower than comparable figures in Thailand, Indonesia and the Philippines.”