The Malaysian Reserve

Tenant market growing as rental drops on rising supply

Housing at Bangsar Kuala Lumpur

It is a tenant market right now as renters have plenty of choices, property expert says

By FARA AISYAH / pic by MUHD AMIN NAHARUL

The rising supply of residential properties, particularly condominium and apartment units, has expanded the rental market, but owners are taking “discounts” from renters as the glut continues to hit the sector.

Many landlords, especially in the central region, have also opted for short-term rental, like homestays and Airbnb-type of rental, to chalk up reasonable returns as rent rates continue to be competitive.

Zerin Properties Sdn Bhd CEO Previndran Singhe said it is currently a market for tenants as rates continue to be under pressure.

“It is still an active rental market, especially in Kuala Lumpur (KL), but it’s true that it is a tenant market right now as they have plenty of choices.

“There have been drops in rental in KL, generally around 10%,” he told The Malaysian Reserve. But he said the situation and drop in rental rates were not only due to the glut and bad market.

“Some owners have to reduce their rents because their units are already old and they will not be able to compete (in rental rates with new units) if they don’t upgrade their homes,” he added.

Previndran said some owners, who have stronger holding power, will venture into short-term rentals including Airbnb.

According to Knight Frank Malaysia’s “Real Estate Highlights for the First Half of 2018 (1H18)” report released in July, rentals of most high-end condominium or serviced apartment projects continue to hold steady, but asking rental growth in Bangsar is generally lower.

The report also noted that the cumulative supply of high-end condominiums/residences stood at 51,278 units following the completion of four projects in KL during 1H18.

The properties are Four Seasons Private Residences KL (242 units), The Residences by Tropicana (353 units), Anggun Residences (384 units) and Pavilion Hilltop (621 units).

Knight Frank said more projects in KL are scheduled for completion by 2H18. Collectively, these projects are expected to contribute some 2,084 units to the existing supply.

These schemes are The Ruma Residences (199 units), Pavilion Suites (383 units), Premium Residences @ KL Gateway (466 units), Dorsett Residences Sri Hartamas (707 units), One Kiara — Tower A (118 units) and Inwood Residences (211 units).

The Malaysian Institute of Estate Agents president Eric Lim said the rental market has stabilised since the 14th General Election (GE14), especially for the high-end sector.

“Post GE14, real estate agents have received more enquiries from foreign and local people, compared to pre-election. The enquiries in Bangsar has also increased following the launch of Alibaba Group Holding Ltd’s office in Bangsar South recently.

“I think what happened was that some of the owners of the earlier phases in one development have put higher rentals to get better yield. But when they realised that the rental rates were not working for them, they started to lower the rents to attract tenants and the enquiries in that area will start to pump in,” Lim said.