RENTAL rates on residential properties remains steady in the first three months of this year despite a weaker economic environment and bearish capital markets.
Malaysian Institute of Estate Agents (MIEA) president-elect Chan Ai Cheng said the ability to maintain rental rates is generally the preferred option among homeowners during unpredictable economic situations.
“A couple of years back, there was an adjustment in rental rates where they generally fell 20%. Rental rates have been steady since the past two years but have not gone back to where they were during good days,” she told The Malaysian Reserve.
For commercial properties, Chan said rental rates for offices depend very much on the location.
While new offices in prime locations continue to see growth in rental rates, she said, commercial units in second-tier locations are seeing some adjustments.
“It is an issue of the economy. When businesses are successful, they will expand which means they need bigger space. When the economy is bad and businesses are shrinking, there will be less demand for office space,” Chan said.
Generally, she said, people predict the outlook for the property market by looking at the performance of the local stock market.
The performance of Bursa Malaysia has been badly impacted by the spread of coronavirus pandemic.
The local bourse closed 24.4 points or 1.69% lower at 1,2419.43 yesterday, the lowest in nine years.
Commenting on the issue, Chan said the short-term rentals on Airbnb listings are the ones hit by the Covid-19 outbreak.
Zerin Properties Sdn Bhd real estate negotiator Natasha Gideon concurred that rental rates have decreased compared to three years ago.
“My client’s house in Subang was rented at RM4,500 three years back, but it is rented at RM3,100 today.
I do get a lot enquiries for rental because people know the market is bad so they are looking for good deals now,” she said.
Knight Frank Malaysia Real Estate Highlights for second half of 2019 (2H19) noted that generally in Kuala Lumpur (KL), most new developments offered rental discounts ranging from 5% to 10%.
The report said it was a mixed performance in the secondary market where asking rents on average were generally higher in the KL city and Mont Kiara, while the asking rents in Ampang Hilir/ U-Thant and Bangsar continue to hold steady.
“The weak leasing market is expected to prevail as there is a limited pool of tenants amid rising stock,” Knight Frank added.
The average achieved rentals for commercial properties in KL fringes and Selangor remained resilient at RM5.80 and RM4.31 per sq ft respectively.
In KL, the asking rentals of well-located Grade A offices range from RM6 per sq ft to RM12 per sq ft per month, while in Selangor similar grade office spaces command competitive rentals ranging from RM4.50 to RM6 per sq ft monthly.
