ROI for selected apartments/condos in Klang Valley remains high despite pandemic

The gross return on investment (ROI) for high-rise residential buildings in some parts of Klang Valley remains high despite the current market challenges led by the ongoing Covid-19 pandemic.

According to SPEEDHOME chief executive officer Wong Whei Meng, the gross ROI in some areas are between 3.2 per cent and 5.2 per cent, higher than the banks’ 12-month deposit rate of 2.2 per cent.

Wong said based on the rental transaction recorded by the firm in the past year, the long-term rental demand for high-rise residential buildings in Selangor and Kuala Lumpur was not significantly impacted by the epidemic.

He said certain areas popular among those who prefer to rent such as Shah Alam, Petaling, Wangsa Maju, Damansara Perdana, and Cheras, have seen demand remaining high, especially for mid-range residential property where the rental income is between RM1,500 and RM2,000, a month.

For a two-bedroom and two-bathroom fully furnished high-rise apartment in Petaling Jaya, the rent ranges from RM1,700 to RM2,200.

Wong said the current selling prices range from RM400,000 to RM450,000, and the gross ROI is between 4.5 per cent and 5.2 per cent.

“Compared with lower bank interest rates, it is indeed very attractive,” he said in a statement.

For Shah Alam and Wangsa Maju, which are popular areas for students, the gross ROI has come under pressure, Wong said.

“These areas are student rental hotspots and usually there is a healthy ROI. If the Covid-19 situation does not improve and universities are still shut down, the long-term residential rental markets in Shah Alam and Wangsa Maju may face downward pressure on rents,” he said.

For the densely populated Cheras area, the gross ROI is at 3.75 per cent currently.

Wong said the primary reason for this is due to an over supply of residential properties and there are not that many large office buildings to take up the available units.

“Cheras is shaping to become a tenant market. For some older three-bedroom and two-living room property types, the monthly rent is only around RM1,250,” he said.

Source: NST