Residential rental market in Malaysia to recoup post-Covid

Oversupply of residential units over the years have led to the market’s decline for the past five to seven years 

As more properties entered the market and remained empty, rental rates became competitive. But in time, as units get taken up, things will start picking up again. shutterspeakstudio/Shutterstock

Property consultants in Malaysia expect the residential rental market to recover post-pandemic when the economy begins to open up completely, reported The Phnom Penh Post. 

Siders Sittampalam, managing director of PPC International, is optimistic that the yields will recuperate once the government lifts the lockdown restrictions and the daily rate of infections continue to drop. 

“The uncertainty is still there and this will increase the need to rent, rather than buy,” explained Siders. 

For the past five to seven years, the local residential rental market has been in a slump. 

“It has been on a decline but it has not been drastic. This is due to an oversupply of residential units over the years, especially high-rise.” 

He also mentioned that returns for landed residential units have been low for several years now. 

“As more properties entered the market and remained empty, rental rates became competitive. However, in time, as the units get taken up, things will start picking up again,” said Siders. 

An industry observer commented that the incentives introduced by the government, including the Home Ownership Campaign (HOC), will help incite the primary properyt market. 

“Why not extend some of the incentives under the HOC to the secondary property market as well,” he said. 

Samuel Tan, director of KGV International Property Consultants (M) Sdn Bhd, agreed that the stamp duty waiver, as well as other incentives under the HOC, should also be extended to the secondary market.

“This will incentivise the prospective buyers to look at the secondary housing market,” he said. 

The positive property outlook and the various incentives presented by the government bodes well for the future of the residential rental market, most especially for the winning developers of PropertyGuru Asia Property Awards (Malaysia), namely Tropicana Corporation Berhad, Fieldman Construction Sdn Bhd, Matrix Concepts Group, Mah Sing Group Berhad, and Ideal Property Group.

More: Influx of serviced apartments signals optimism to Malaysia’s residential market

On the other hand, Siders shared that student accommodations is one of the sub-sector that has taken a massive hit during the outbreak. 

“Demand for student accommodation has reduced drastically as many have gone back to their hometowns and learning is conducted online. Once things go back to pre-pandemic levels, things will improve,” he added 

During the National Property Information Centre (Napic) launch in April, Finance Minister of Malaysia Tengku Zafrul Abdul Aziz revealed that the overall real estate sector has registered 295,968 transactions valued at MYR119.08 billion (USD28 billion) in 2020 – a 9.9 percent year-on-year descent in volume and a 15.8 percent drop in value from 2019. 

Undeterred by the numbers, Tengku Zafrul is hopeful of the market’s future, stating that they expect improvements in 2021, thanks to the national vaccination roll-out and the multiple government incentives. 

Know of any developers and development projects in Malaysia that deserve to be named as the best in the country? Nominate them for the 8th PropertyGuru Asia Property Awards (Malaysia) on or before 27 August 2021. For more details, visit asiapropertyawards.com/award/asia-property-awards-malaysia. 

Gynen Kyra Toriano, Digital Content Manager at PropertyGuru, wrote this article. For more information, email: [email protected].

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