iProperty.com.my has announced during an online virtual conference that Malaysia’s residential rental property demand experienced positive Year-on-Year (YoY) growth in H1 2021, increasing to +1.9% from -5.6%. The increase is due to significant YoY demand for terrace homes at +14.1% and for serviced residences at +8.0%, an interesting shift from H1 2020 where condominiums were the most in-demand residential rental properties.
Premendran Pathmanathan, General Manager for Customer Data Solutions & Quality, iProperty.com.my, said, “In the previous instalment of the Portal Demand Analytics, we noted that the pandemic had started the trend of property seekers looking for bigger living spaces. As a result, terrace houses have become the most popular property type in H1 2021. Moreover, the first half of 2021 continues to favour tenants as renting makes more financial sense due to a lower monthly commitment when compared to purchasing the same property, especially in times of high unemployment. Indeed, many landlords are absorbing some of the income shocks and are pricing down their rental units as they compete to attract a limited pool of financially stable tenants.
On a positive note, the ongoing vaccination programme has resulted in more than 80% of the adult population being vaccinated as of September 2021. This high vaccination rate announcement will serve as a great confidence booster for the property market. As we transition to an endemic phase by the end of October, we hope the property market will continue to recover for the remainder of the year and go into 2022.”
Rental demand improved in H1 2021, but rental yields decreased for all property types
Demand for residential rental properties in city centres began to build up in H1 2021 as lockdown restrictions were relaxed and various economic activities resumed as usual.
On the other hand, the Department of Statistics Malaysia (DOSM) reported that unemployment was 4.8% in June 2021, following four months of decreased unemployment rates. Due to the financial constraints of specific demographic groups, some landlords may continue to have difficulty finding tenants for their homes.
Rental yields across all building types have dipped. In 2020, the pandemic supported a tenant’s market, putting renters in a good position to negotiate rental prices. This trend has continued in H1 2021 where the drop in asking rental prices was higher than the fall in asking sale prices.
Johor Bahru District towns attract many rental visitors
Rental property demand in Johor increased to +6.6% in H1 2020, up from -19.5% the previous quarter, while median rental rates fell by RM200 to RM1200. Condominiums and serviced apartments, like Penang, saw the most dramatic price drop, with an RM300 drop from H1 2020 to RM1200 in H1 2021. According to DOSM, the number of residents living in their own homes in Johor Bahru District has declined from 73.2% in 2014 to 69.7% in 2019, while the percentage of renters has climbed from 23.4% to 28.4% in the same time period.
Pasir Gudang, Johor’s most in-demand area, attracted rental visitors looking for terrace houses priced between RM1,000 and RM1,500 (1500-2000 sq ft). Ulu Tiram came in second, with visitors looking for apartments ranging from RM700 to RM1000 (700-1,000 sq ft) and terrace houses ranging from RM1000 to RM1500 (1,500-2,000 sq ft).