MALAYSIA: Malaysia’s rental market has reached its highest level in five years, with average rents rising to RM2,052 (S$619.29) in the fourth quarter of 2024 (Q4 2024), according to real estate firm Nuwai IQI, reported The New Straits Times (NST). This represents a 3.9% year-on-year increase and signals a continued recovery from the pandemic-era downturn.
While rental rates have rebounded to pre-pandemic levels, the pace of growth has moderated compared to the sharp increases seen in 2022 and 2023. According to Nuwai IQI’s co-founder and group chief executive officer, Kashif Ansari, national rents grew by 2.8% in Q4 2024 compared to the previous quarter, reinforcing the trend of steady but not excessive growth.
“The trend remains healthy but not overheated when compared to the rapid growth in 2022 and 2023. Rental rates boomed by 13.1% and 5.5% in those years, respectively,” Kashif was quoted as saying by NST.
The latest data also shows that new lease rents are now 24% higher than their 2020 low. However, renters are still paying RM442 less per month on average than in 2019, indicating that while the market is recovering, rents are more affordable than before the pandemic.
Kuala Lumpur rents stabilise but see annual decline
Kuala Lumpur’s rental market has been one of the most volatile in recent years, but the latest figures suggest it is now stabilising. In Q4 2024, average rents in the capital settled at RM2,847, reflecting a more balanced market after years of fluctuations.
Tenants gained as rents in Kuala Lumpur saw a significant 10.2% year-on-year decline, marking 2024 as the first year since 2021 in which the city ended with lower rental prices than it started with. “Despite the 2024 decline, Kuala Lumpur rents remain 35% above their pandemic low,” Kashif noted, as reported by NST.
The drop in rents could be linked to a combination of factors, including an increase in rental supply as new developments enter the market, changing demand patterns, and economic conditions influencing tenant affordability. While the decline may concern landlords, it provides renters with better leasing opportunities in the capital.
Selangor rental market sees mild recovery
In contrast to Kuala Lumpur, Selangor’s rental market experienced slight growth in Q4 2024. Average rental prices in the state increased by 1.0% compared to the previous quarter, rising from RM1,820 in Q3 2024 to RM1,839 in Q4 2024.
According to NST, demand in Selangor has softened slightly, with the state’s Home Rental Index peaking at 94.3 in Q3 2023. However, Selangor’s rental market remains higher than the national average, with an index score of 94.3 compared to Malaysia’s overall Home Rental Index of 76.2.
This suggests that while rental demand may have cooled slightly, Selangor continues to be a preferred location for tenants, possibly due to its relatively more affordable housing options compared to Kuala Lumpur. The steady demand could also be attributed to factors such as increasing urbanisation, better infrastructure, and the state’s appeal as a residential hub for those working in the Klang Valley.
Market outlook: A trend towards stability
The latest rental data suggests that Malaysia’s property market is entering a phase of stabilisation following the turbulence of the past few years. While rents are rising overall, the pace is more measured compared to previous spikes, allowing for a healthier and more balanced market.
Kashif’s insights indicate that rental prices are likely to continue their upward trajectory but at a steadier pace. “The Malaysia Home Rental Index in Q4 2024 reached its highest level since Q1 2020, when rents declined due to the Covid-19 pandemic,” he said, reported NST.
Looking ahead, factors such as economic conditions, government housing policies, and supply-demand dynamics will shape the rental market’s direction. For renters, this could mean more predictable leasing costs, while landlords may need to adjust their pricing strategies to remain competitive.
What this means for tenants and landlords
For tenants, the stabilising rental market means that while rents are higher than in previous years, they are not increasing at an unsustainable rate. This provides more certainty when budgeting for housing costs. However, with Kuala Lumpur rents declining, renters may find better deals in the city compared to previous years.
For landlords, the shift towards a more stable market may require strategic pricing to attract tenants, particularly in areas where rental demand is softening. Those in Kuala Lumpur may face pressure to adjust rents competitively, while landlords in high-demand areas like Selangor may continue to see steady interest in their properties.
A balanced rental market ahead
Malaysia’s rental market has rebounded to a five-year high, with steady growth rather than the rapid surges seen in recent years. While Kuala Lumpur’s rental prices have declined, the overall market remains resilient, with Selangor showing modest gains and national rents maintaining a stable upward trend.
As 2025 unfolds, the key question will be whether this stability holds or if external economic factors lead to further changes in rental pricing. For now, both tenants and landlords can navigate the market with greater confidence, knowing that extreme volatility has subsided.
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