Juwai IQI: Malaysia’s average residential rent increased 3.9% q-o-q in 2Q2024

• Kuala Lumpur has the highest average rent at RM2,863, or 44% higher than the country average (RM1,995) and 51% higher than Selangor’s (RM1,899).

KUALA LUMPUR (Oct 8): The annual growth rate for residential rentals in Malaysia has seen its first acceleration in a year, rising 3.9% quarter-to-quarter (q-o-q) and 2.9% year-on-year (y-o-y) in the second quarter of 2024 to RM1,995, according to the Malaysia Home Rental Index for 2Q2024 report by IQI Malaysia.

In a press statement released on Tuesday, Juwai IQI co-founder and group chief executive officer Kashif Ansari noted that the firm has revised the forecast for 1Q2025 in light of this better-than-expected performance.

“For the first time in a year, the annual growth rate has accelerated rather than slowed. The Malaysia Home Rental Index moves with the ebb and flow of rental property supply and demand, seasonal shifts, the influx of international students, and investor activity. Our earlier forecast was that rental rates would climb moderately by 0% to 3%, but the index has already increased by 3.9%, more quickly than expected. We now update our forecast and project that the Home Rental Index will grow at an annual rate of 5.5% by the first quarter of 2025,” Kashif said in the statement.

The report, which analyses over 70,000 residential rental transactions between 2018 and 2Q2024, stated that Kuala Lumpur has the highest average rent at RM2,863, or 44% higher than the country average (RM1,995) and 51% higher than Selangor’s (RM1,899). The capital city also saw the highest rental growth in 2Q2024, recording a 5% increase q-o-q and 5.7% y-o-y. The average rental price in Malaysia over the past two years was RM1,895, slightly lower than the first-quarter average of RM1,920.

“Selangor is significantly more affordable than Kuala Lumpur. Average rents in Selangor [was] 6.2% higher than a year earlier. The RM1,899 average rent in Selangor is 5% higher than the two-year trend. Looking ahead, we expect rents in Selangor to moderate from its current pace to [an] approximately 3% growth,” said Kashif.

Despite the increase in the rental index, the report pointed out that many renters still enjoy the “Covid discount”, with rents well below their pre-pandemic level, but this can vary, depending on location. This indicates that rents have not fully rebounded from the pandemic.

“The average Malaysian renter now pays RM499 less in rent, a 20% discount from before the pandemic. In Kuala Lumpur, the Covid discount is at a significant RM1,301, or 31%. The slower recovery could be due to the economic challenges the country faced during the pandemic era. Now that Malaysia seems to be moving into a new growth cycle, we may expect to see a recovery in rental rates and further improvements in employment, disposable incomes, and consumer spending,” said Kashif.

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