ALTHOUGH the economy is showing signs of recovery after a Covid-19 battering, the same cannot be said about the property rental market, industry experts said.

The impact of the two-year long pandemic on rental of residential property is still being felt, Malaysian Institute of Estate Agents (MIEA) president Chan Ai Cheng said.

However, Chan and property agents like her are optimistic the market this year will stabilise.

Nevertheless, they do not foresee rental prices going up any time soon. Lay-offs, cuts in working hours and the uncertainties faced by employers have affected people’s income.

Chan said this in turn had also affected the landlords.

“With everyone facing economic pressure, it is extremely difficult for landlords to rent out their properties at premium rates,” she told The Malaysian Insight.

Even so, Chan said rent had fallen but not too much in the past two years, as worried landlords have in some cases dropped the rent to retain their tenants.

“Landlords have adopted the policy that their tenants will stay if they show some empathy,” Chan said.

“As the landlords hang on, there are signs the market has shown it is pulling up from the bottom.”

She said in the second half of last year, many new houses were snapped up as soon as they were completed.

“Demand is still rising but rent is not,” she added, using the example of a RM1 million property still going for RM2,600 a month, the same as it was two years ago.

She said in some cases, the rent is even lower, as low as RM2,000 a month, as landlords are giving “discounts” to hang on to their tenants.

In Penang, the recovery could be a little slower with the lack of expatriate residents at the moment, registered estate agent Christina Choong of IQI Realty Sdn Bhd said.

Choong said owners of high-end property and luxury apartments will continue to face difficulties finding tenants with border restrictions due to the spread of the Omicron variant.

“Most of the tenants for these high-end apartments are foreign nationals and they cannot return with all the restrictions.”

Choong said before the pandemic, rent for these luxury apartments ranged from RM10,000 to RM20,000 a month.

It fell by 10% to 20% during the pandemic and the units will remain empty for some time.

She said rent in the island’s heritage areas, which had plunged in 2020 without the arrival of tourists, had bottomed out in the first half of last year.

On the other hand, she said properties with rent of between RM1,500 and RM2,500 have been most sought after in recent months.

She predicted the landscape of the island’s rental market to change somewhat in the coming years as people have decided to buy their own property, now that the banks are offering low interest rates on loans and developers are offering attractive prices to buyers.

House price growth down

It is a similar situation along the east coast of the peninsula.

Principal Legacy Real Property Sdn Bhd’s (East Coast) Mohd Azlan Abdul Kadir said rent in this part of the country at the height of the pandemic fell by between 10% and 15%, while commercial leases fell by between 15% and 20%.

With the epidemic seemingly under control, movement restrictions effectively over and the economy showing signs of life, Azlan said businesses are returning in a number of areas, giving a positive outlook to the real estate sector.

He was optimistic rental rates could even return to pre-pandemic levels.

Azlan said in Kelantan, there is now demand for single- and double-storey houses from people posted to work in the state.

Azlan said the average rent for a single storey house was between RM400 and RM500 a month, while it was between RM500 and RM700 for the two-storey houses.

“We hope the government can effectively control the spread of the Omicron variant and if it does, then the outlook for the real estate market is bright.

“Rent for commercial properties is starting to pick up too,” he said.

According to the National Property Information Centre of Malaysia (Napic), in the first half of 2021, house price growth in the country slowed down from 2018, coupled with declining house prices in major regions, which in turn dragged down house prices nationwide.

Among the four major regions in the country, the steepest decline was in Kuala Lumpur, down 5.8% y-o-y (year on year) and 3.3% q-o-q (quarter-on-quarter), followed by Penang (down 1.5% y-o-y and 2.2% q-o-q).

Selangor house prices rose 0.6% y-o-y but fell 1.7% q-o-q, Johor rose 0.8% y-o-y but fell 2.1% q-o-q.

The Napic data showed that residential property transactions in the third quarter of 2021 totalled 42,620 units, down 23.7% from 55,843 units in the third quarter of 2020, and up 7.2% compared with 39,742 units in the second quarter of 2021.

In terms of transaction value, residential properties recorded a transaction value of RM17.8 billion in 3Q 2021, down 8% compared to RM19.4 billion in 3Q 2020, and up 19.8% compared to RM14.9 billion in 2Q 2021. – January 13, 2022.