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Rental Demand Dropped By 5.6% During First Half Of 2020

Rental Demand Dropped By 5.6% During First Half Of 2020

At least things are looking better after the RMCO was implemented.

Hakim Hassan

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The national demand for rental property declined by 5.6% during the first half of the year amid the global COVID-19 outbreak, according to stats by iProperty.

The portal said that the Movement Control Order (MCO) which was enforced in mid-March 2020 brought various economic activities to a grinding halt – including property viewings.

With the rakyat still reeling from the effects of the pandemic, they see that consumers may limit on their spending to only essential items, which will affect property sales but the rental market may benefit as housing is still considered a necessity for most people.

Picture Credit: iProperty

After the MCO, to the Conditional MCO (CMCO) and subsequently the Recovery MCO (RMCO) the portal has seen a gradual economic and social recovery.

This observation is supported by the recovery in property interest during the CMCO
phase when the government relaxed various mobility restrictions. We began
to see an increase in rental visits and listings on as property
viewings were permitted again.

REA Group Asia General Manager Customer Data Solutions Premendran Pathmanathan

The portal said in the first month into the RMCO and by the end of the first week of July, organic searches for rental property listings saw an upward recovery of 25%.

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Picture Credit: Malay Mail

The upward movement towards the end of H1 2020 dampened the initial effects of the pandemic and contributed towards a lower overall decline of 5.6%. In H1 2020, lower-priced high-rise properties recorded a higher rental yield of above 4% compared to landed properties.

Condominiums and serviced residences recorded rental yields of 4.17% and 4.03% respectively while terrace houses recorded 3.43% yield.

On the other hand, condominiums was the most popular property type among consumers within the four major capital cities Kuala Lumpur (KL), Selangor, Penang and Johor. Eventhough condominiums recorded a year-on-year decline in demand, it is still the most in-demand rental property, in terms of visits volume.

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Picture Credit: Malay Mail

With the government announcing accommodative policies and several stimulus packages, such as the Bantuan Prihatin Nasional (BPN), the portal noted that it has soften the blow of the pandemic.

Under the Bantuan Prihatin Nasional (BPN), landlords or owners of private premises who reduced their rental rates by at least 30% for Small to Medium Enterprises (SMEs) from April to June this year (including three months after this period ends) will be eligible for additional tax deductions.

However, for residential properties any relief measures are at the discretion of the landlord. Hopefully, the six-month moratorium for landlords could be passed on to benefit the tenants.

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