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Oct 15, 2016

Malaysia: gross rental yields have moderated


Last Updated: Oct. 15, 2016
KUALA LUMPUR - Condominiums COST (US$) YIELD (p.a.) PRICE/SQ.M. (US$)
TO BUY MONTHLY RENT TO BUY MONTHLY RENT
120 sq. m. 219,240 827 4.53% 1,827 6.89
150 sq. m. 291,600 1,061 4.36% 1,944 7.07
KUALA LUMPUR - Bungalows
400 sq. m. 1,248,800 2,560 2.46% 3,122 6.40
600 sq. m. 1,911,600 3,984 2.50% 3,186 6.64
Districts researched
Ampang, Ampang Hilir, Bangsar Baru, Bukit Kiara, Damansara Heights, Jalan Ampang, Kenny Hills,
KLCC (Kuala Lumpur City Centre), Mont Kiara, Sri Hartamas, Taman Tun Dr. Ismail, Ukay Heights
Source: Global Property Guide Definitions: Data FAQ See also: Update Schedule

Condominium prices in Kuala Lumpur are reasonable at between US$1,800 to US$2,000 per square metre (sq. m.)

A stable country, a stable market.  The extraordinary stability of residential property prices in Malaysia – rising in some years by 2% or 3%, falling in other years by a few per cent – means that the observer is never shocked by a sudden boom or price-collapse. In inflation-adjusted terms, prices have been rather stable for the past 15 years.

Limits to capital appreciation. Given that Malaysia is a large place and relatively thinly populated, there are limits to capital appreciation prospects (arguably, except in ‘dormitory town’ areas neighbouring Singapore). Therefore, the prime attraction of property ownership in Kuala Lumpur is income.

Gross rental yields have however fallen significantly:

  • Condominiums of 120 sq. m. have gross returns of 4.5%, but two years ago, our researchers found that rental yields averaged over 8% for this size.
  • Bungalows have really low gross rental yields at around 2.5%, and again, have fallen significantly.

Conclusion: Malaysian property is less attractive as an investment than it has been for many years, given the falling rental yields.

Round trip transaction costs are very low in Malaysia. See our Malaysia transaction costs analysis Dubai transaction costs analysis and our Malaysian home buying costs compared with other countries in Asia.






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