Whether you’re the landlord or the tenant, let’s get yourself updated on the latest about the rental market in Kuala Lumpur.
Soften than expected is how PropertyGuru expresses the current predicament confronting the property market. Without belabouring on reasons we don’t already know – the resurgence in Covid-19 infections and political instability which remains unresolved – roiling the economy and consumer sentiment, there are other factors at play exacerbating the situation. It includes further supplies coming online.
All this culminates in wavering asking prices in sale and rent, working in favour of buyers and renters. We reach out to BlueDuck CEO Earnest Wong for a more insightful analysis of the rental market in Kuala Lumpur. BlueDuck is a licensed insurance agency with a focus on facilitating rental market transactions that give tenants financial alternatives to afford the houses they want.
The residential rental market remains soft due to the restricted movement and overall business environment causing a huge hit to residences for rent that are largely populated by university students. Some areas have even seen more than 50% drop in occupancy, as the need for accommodation physically close to the tertiary learning institutions is not nearly as high as before, considering colleges and universities have had to conduct their classes fully online.
Nevertheless, we still see a lot of transactions due to the lowered rental fees from landlords who are forced to do so to attract tenants. In 2020 specifically, my observation was that rental fees were mostly either stagnant or significantly lower thanks to the pandemic. This is also one way the landlords can enjoy consistent income despite the uncertain economic climate.
While we can observe that property transactions remain active within certain thresholds and in some areas, the property prices tend to be largely unaffordable for young professionals. I also notice the renting habits of younger generations no longer equate to their financial capacity. It would seem that younger tenants are more inclined to new experiences and increased mobility (where possible) and hence, they would like to rent different properties for much shorter periods.
If this is the case, I would highly suggest continuing to rent as there is an abundance of choice with lowered rental fees in the market. However, if different experiences are not what one is looking for, and they are financially stable, perhaps buying a home at an early age and taking advantage of lowered property costs could be a smart idea.
It is true that asking rent is lower in the city but unfortunately, the demand is lower as well. The work from home (WFH) culture has drastically changed the need for a space close to physical offices.
In fact, many large organisations have declared WFH for prolonged periods such as until the end of 2021, meaning the urgency of finding a place close to the office space has drastically reduced. Overall, WFH has changed renter’s behaviour towards space requirements. Convenience and space are the ultimate priorities for the younger generation of tenants nowadays.
Indeed, the idea of having your own property is never outdated, but the cost of owning is unfortunately unaffordable for large segments of the population. I predict that renting for life is going to stay and it is a growing trend. Perhaps, we can mirror developed countries like Germany, a renter’s nation.
Having said that, the next generation may have slightly different needs for buying a house because many well-to-do families own more than just one property now. Hence the need to buy a house is for investment (something that is optional) as opposed to completely necessary. However, for most Malaysians that struggle to own a home, rent-for-life is perhaps the most conducive solution.
Through BlueDuck, our main focus is improving cash flow for both tenants and landlords. We intend to create an ecosystem where tenant profiles and zero deposit will be the new collateral, replacing the need for rental deposits.
The market is gravitating to a tenants’ market due to the increased supply. Landlords are also becoming more mature and treating property income as more of a business than before as competition increases to capture the attention and interest of potential tenants.
The key for landlords is to be able to rent out their property as soon as possible or retain the existing tenant to ensure continued cash flow and passive income, as opposed to waiting too long for the right tenant to come along for the right price.