KUALA LUMPUR, Dec 10 — Gross return on investment (ROI) in the long-term rental market for high-rise residential buildings in certain parts of the Klang Valley remains high despite the ongoing Covid-19 pandemic.
Speedhome chief executive officer Wong Whei Meng said the property gross ROI in certain areas, at between 3.2 per cent and 5.2 per cent, was higher than the banks’ 12-month deposit rate of 2.2 per cent.
“According to the company’s rental transaction records in the past year, the long-term rental demand for high-rise residential buildings in Selangor and Kuala Lumpur has not significantly been impacted by the epidemic.
“Some popular rental areas such as Shah Alam, Petaling, Wangsa Maju, Damansara Perdana and Cheras, with midrange residential property monthly rent ranging between RM1,500 and RM2,000, have seen demand remaining high,” he said in a statement today.
He pointed out that for two-bedroom and two-bathroom fully furnished high-rise apartments in Petaling, the rent prices ranged from RM1,700 to RM2,200.
“In contrast, the current selling prices range from RM400,000 to RM450,000, and the gross rental return rate is between 4.5 per cent and 5.2 per cent. Compared with lower bank interest rates, it is indeed very attractive,” he said.
However, areas such as Shah Alam and Wangsa Maju, which are the student rental hotspots and usually see a healthy ROI, have been under pressure.
“Due to the soaring housing prices and supply increase within recent years, the gross rental return rate is not too high — between 3.2 per cent and 3.75 per cent.
“If Covid-19 situation does not improve and universities are still shut down, the long-term residential rental markets in Shah Alam and Wangsa Maju, dominated by student tenants, may face downward pressure on rents,” Wong said.
On contrast, densely populated Cheras’ gross rental return rate is not too high at only 3.75 per cent.
“The primary reason for this is that the residential rental supply in the area has also increased rapidly this year, and there are not many large office buildings nearby.
“Cheras is shaping to become a tenant market. For some older three-bedroom and two-living room property types, the monthly rent is only around RM1,250,” he said.
He added that this was the gross rental return rate assuming that the house had no vacant period for 12 months a year, the tenants paid the rent on time, and there were no other expenditures.
“The vacant period for homeowners to find new tenants may last as long as one to two months.
“Although the general environment is uncertain, housing is a basic need of people, and there are no worries about (finding) tenants for a well-located house,” he said.
— Bernama
