These residential properties located in several states across Malaysia recorded gross rental yields ranging from 5.71% to as high as 11.1%.
Rental yield is one of the most important matrixes to property investors, especially for those who invest to rent – it measures the annual returns generated from a rental property in form of a percentage. This formula is useful during an investor’s decision-making process as it can be used to evaluate an investment property’s potential income. There is no definite good rental yield percentage as the property market is prone to fluctuations year-on-year, but generally, a rental yield of at least 4% is considered good in Malaysia.
In this article, we reveal the 7 properties with the highest rental yields in Malaysia for 2019. Utilising iProperty.com.my’s big data solution, iPropertyiQ.com, we share the top high-rise residential developments which offer the best rental revenue (yield) in proportion to the property’s price.
How to calculate rental yield?
Gross rental yield is calculated by taking the total annual rental income of your rental property and dividing it by the property’s total value. The result is then multiplied by 100, and the final number is the percentage of your rental yield. Below is the written formula, for easier digestion.
Gross Rental Yield Calculation = (Monthly median rental X 12)/Median property price X 100
*Monthly median rental = The (asking) median rent is obtained from iProperty.com.my property listing database. Only monthly rents within the evaluation period (January to December 2019) are used to determine the median for each property project.
*Median Property Price: Sales data sourced from the Valuation and Property Services Department (JPPH) and captured by Brickz.my from. This data set was compiled by iProperty.com’s big data solution, iPropertyiQ.com.
Net rental yield will take into account all the purchasing expenses such as legal fees, stamp duty, MOT and so forth, hence we will be using gross rental yield instead of net rental yield in this article
What is a good rental yield in Malaysia?
The typical rental yield in Malaysia is 3,72%. Therefore a rental yield that is 4% or above is considered to be good. Rental yields are however dependent on the property type and the property’s location. For example, holiday destinations with limited rooms or hotels for rent typically command a higher rental yield. Hence the importance of choosing the right property in the right location when it comes to investment.
Interesting observations for 2019 Rental Yield performance
Before we dive into the listicle, let’s first take a look at a few interesting observations:
1) Two of the winners – Le Renaissance in Negeri Sembilan and Jazz Suites in Kuching – were also one of the top condominiums in Malaysia which recorded the Highest Capital Growth in 2018.
2) Five out of the 7 properties have median prices which are lower than the 2019 Malaysian House Price Index (MHPI) of RM426,155 – the MHPI is an indicator of housing price trends in Malaysia and is reported annually by the National Property Information Centre (NAPIC).
3) Two of the property projects are located in popular tourist locations, namely Amber Court in Genting Highlands and Berjaya Times Square in Bukit Bintang, Kuala Lumpur.
4) Three of the high-rise residences are located above a shopping mall or a retail hypermarket chain – which goes to show that renters are attracted to the idea of convenience when selecting a rental property.
Now, on to the good stuff! The winners for 2019 are ranked in descending order:
*Please refer to the footnotes for further explanation on how we took into consideration the wide range of unit sizes (sq ft) within a building when calculating the rental yield figures.
1. Le Renaissance – Bukit Kepayang, Negeri Sembilan
»Rental Yield: 11.1%
- Built-up size which generated top rental yield: 1,367 – 1,500 sq ft
- Median property price for 1,367 – 1,500 sq ft: RM270,000
- Median rent in 2019: RM2,500
A 9-storey freehold condominium, Le Renaissance is located in the prime neighbourhood of Taman Bukit Kaya. We wrote about this building last year, where it was remarked that although it may be an old development, it is very well-maintained and bears the top property fundamentals – a great location which is close to the Seremban city centre, spacious units, good security and boasts a low-density environment. Hence, it is not surprising that this condominium, which was the only one to exceed the 10% rental return mark, was also one of the top condos in 2018 with great capital growth.
Le Renaissance serves as an attractive rental option for families considering its big built-up sizes which feature 4 bedrooms each, a safe and secure environment and proximity to various schools including St.Paul’s Institution, SMK Puteri, SMK Methodist, SK Puteri and SMK King George V. Plenty of commercial components are located within a 3KM radius, such as the Seremban Gateway Mall, Palm Mall, Tesco Extra and KPJ Specialist Hospital. Moreover, the Seremban Toll Plaza (PLUS Highway) located just 1KM away lends a connectivity appeal.
2. Amber Court – Bentong, Pahang
»Rental Yield: 8.8%
- Built-up size which generated top rental yield: 1,184 – 1,302 sq ft
- Median property price for 1,184 – 1,302 sq ft: RM340,000
- Median rent in 2019: RM2,500
Located in Genting Highlands, Amber Court is an old, 20-storey freehold apartment. This property proves the adage that ‘every dark cloud has its silver lining’. Although it is infamous for being poorly maintained with a rundown facade and there are numerous reviews online of the building bearing a creepy vibe (it was even used as the filming location for the horror film, Haunted Hotel!) – Amber Court’s winning proposition is its location. It is situated close to many tourist attraction spots and offers gorgeous mountain views to boot, thus why most of its units are being rented out as homestays. Recent Google reviews are a mixed bag, however, the tenants who are happy with Amber Court do not mind its sub-par conditions as they get to enjoy cheap rent prices in a holiday destination.
The lack of accommodation during peak tourist seasons could be the driving factor for Amber Court’s continued tenant demand. It was widely reported in the media last year that hotels/short-term accommodations in Genting Highlands would need 30,000 rooms to cater to the demand from future tourists. According to the GM of Grand Ion Delemen Hotel Genting Highlands, only 16,000-odd rooms were currently available at all hotels combined (as of October 2019), and there were still a shortage of 14,000 rooms to accommodate the influx of tourists to the popular hill resorts.
This continued interest by tenants who aren’t picky, coupled with Amber Court’s stagnant property median price which has not appreciated much over the years could be the reasons why its rental yield topped almost 9% in 2019.
3. Larkin Utama (Menara Metro Larkin) – Johor Bahru, Johor
»Rental Yield: 8.5%
- Built-up size which generated top rental yield: 1,078 – 1,448 sq ft
- Median property price for 1,078 – 1,448 sq ft: RM155,000
- Median rent in 2019: RM1,100
This mid-range leasehold apartment which was built over 2 decades ago in 1999 seems to be still holding its weight in the rental sphere. The property’s performance could be attributed to its strategic location which is right across from the Royal Johor Golf Club, as well as other amenities like KPJ Puteri Specialist Centre, Larkin Bus Terminal, Merdeka City Park and Danga Bay City Mall; along with educational institutions such as Larkin 2 National School and St Joseph Secondary School – all within close proximity.
Larkin Utama also stands out in terms of facilities, offering more than what the typical older, apartments have – such as a tennis court, squash court, gymnasium, swimming pool and sauna, mini-market, children’s playground and a barbeque area. Recent Google reviews indicate that the new management which came on board almost a year ago has further improved the building’s management, which makes for satisfied property investors and tenants. Residents are guaranteed 24-hour security too, with regular guard patrols.
CHECK OUT: 8 Residential properties in Malaysia with the Highest Capital Growth in 2020
4. Berjaya Times Square – Jalan Imbi, Kuala Lumpur
»Rental Yield: 6.02%
- Built-up size which generated top rental yield: 550 – 678 sq ft
- Median property price for 550 – 678 sq ft: RM578,000
- Median rent in 2019: RM2,900
Having been around since 2003, Berjaya Times Square has always been synonymous with the Golden Triangle in KL. This freehold integrated building in Bukit Bintang hosts a shopping mall, hotel, exhibition centre and serviced residences. It is within walking distance to numerous restaurants and malls including Sungei Wang Plaza, Lot 10, Low Yat Plaza, Fahrenheit 88, Pavilion Kuala Lumpur and Starhill Gallery.
What’s more, the Imbi monorail station is located practically at the building’s doorstep – making it convenient for residents and tourists alike to commute to other hotspots in the city centre. Berjaya Times Square’s location and accessibility is further bolstered by the fact that Jalan Imbi is well connected to other prime roads in the city including Jalan Sultan Ismail, Jalan Bukit Bintang and Jalan Tun Razak.
Facilities are aplenty too – there is a large outdoor swimming pool, spa pool, fitness centre as well as table tennis and squash facilities. Not to mention, residents are able to enjoy the many retail, food and entertainment conveniences offered by the mall located just below. Similar to Amber Court, Berjaya Times Square is able to leverage on its location being within a popular tourist destination and its ability to draw in locals on weekends.
5. PLAZA 393 – Jalan Peel, Cheras
»Rental Yield: 6%
- Built-up size which generated top rental yield: 718 – 732 sq ft & 902 – 980 sq ft
- Median property price for 718 – 732 sq ft & 902 – 980 sq ft: RM 301,500; RM360,000
- Median rent in 2019: RM1,500; RM1,800
A mid-range leasehold apartment, Plaza 393 is located along Jalan Peel in Cheras, Kuala Lumpur. This 18-year old property project provides its residents with a retail benefit – it is perched right atop a NSK Trade City Hypermarket, which makes for easy grocery shopping and stocking up of basic necessities.
Plaza 393’s main selling point is its central location. There are a few popular malls located within a 1.5KM radius including Sunway Velocity Mall, Viva Mall, MyTown Shopping Centre, IKEA Cheras and AEON Taman Maluri. Moreover, abundant amenities are within walking distance – from local eateries to banks, pharmacies and the Cheras multi-purpose hall. Not to mention, the Cochrane MRT station is a mere 600M away, a facility which would greatly benefit working professionals.
The project itself is sufficiently equipped with amenities – a mini-market, jogging track, children’s playground, cafeteria and round-the-clock security.
READ: What is the impact of COVID-19 on Malaysia’s property market?
6. JAZZ Suites @ Vivacity – Kuching, Sarawak
»Rental Yield: 5.83%
- Built-up size which generated top rental yield: 1,004 – 1076 ft
- Median property price for 1,001 – 1,076 ft sq ft: RM535,000
- Median rent in 2019: RM2,600
Jazz Suites was another condominium which came out as the top property with highest capital growth in 2018, alongside Le Renaissance. This leasehold condominium stands out from the rest of the winners on this list in terms of property age, which is fairly new, with its first phase launched in 2016.
The property shares the same retail variable as Berjaya Times Square and Plaza 393, being located right on top Vivacity Megamall, which is reputed to be the biggest and most popular mall in Kuching. It is a popular homestay and short-term rental accommodation option amongst tourists, holidaying families and business travellers; as evident by the many homestay listings and guest reviews available online. The Kuching International Airport is roughly 7KM away as well, further boosting Jazz Suite’s appeal as a convenient accommodation option.
A slew of facilities are available such as gymnasium, swimming pools, library, entertainment room, sauna and landscaped rooftop garden. Residents get to use all clubhouse facilities for free too. They also love that Jazz Suites is nestled within a bustling section of Kuching – top locations within easy reach include Swinburne University, Sunway College, Borneo Medical Centre, Kuching Specialist Hospital and King’s Commercial Centre.
7. The Palladium – Keramat, Kuala Lumpur
»Rental Yield: 5.71%
- Built-up size which generated top rental yield: 1,141 – 1,238 sq ft
- Median property price for 1,141 – 1,238 sq ft: RM420,000
- Median rent in 2019: RM2,000
The Palladium is a freehold condominium comprising four 9-storey residential tower blocks. Although it is the oldest property in this list at 27 years old, The Palladium is doing well on the rental front. This could be attributed to it being situated within a good tenant “catchment area” – it is strategically sandwiched in between various commercial components and amenities. There are three higher education institutions within 1KM radius, namely UniKL Business School, Universiti Teknologi Malaysia and TM Multimedia College (MMC). Several hospitals are within a 5-minute drive away; the National Heart Institute (IJN), KL General Hospital and Hospital Pusrawi.
In addition, top shopping destinations such as Suria KLCC, Intermark Mall and Avenue K are located a stone’s throw away too. Just like Plaza 393, an LRT station is within walking distance to the condominium – the Damai LRT station is 900M away. Facilities are decent with a squash court, swimming pool and mini-market made available to residents. Based on Google reviews, The Palladium’s residents give the building’s cosy environment a thumbs up – despite bearing a city postcode, it maintains a peaceful aura as it’s nestled within a green and quiet suburb.
FOOTNOTES:
1) As most high-rise residential buildings feature a selection of units with a few size ranges, median rent and median property prices can differ greatly within the same building. We have taken this into consideration when calculating the rental yield figures to avoid any distortion of data. For each winner, the specific built-up size range which garnered the top rental yield is highlighted. The rental yield figure presented is not an indicator for the overall building performance in 2019, but instead, it is only for the specified unit size range.
2) Residential projects with less than 5 transactions were not taken into consideration when selecting the top 7 winners.
3) The data from JPPH officially record a property transaction once the stamp duty for the Sales and Purchase Agreement is paid, and analytics are based on the data available at the date of publication which may be subject to revision as and when more data becomes available.
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