Every property investor asks the same question before signing an SPA: will the rent cover my monthly installment? The answer varies wildly depending on where you buy. A condo in Selangor might pay for itself from month one. The same budget in Penang might leave you topping up every month.
We matched sale and rental listings across all 14 Malaysian states, calculated financing installments under Islamic banking terms, and ranked every state by how likely a typical purchase is to break even on rent alone. Here is what the data shows.
Methodology — How We Match Sale and Rent Data
The core idea is simple: find properties that appear in both the sale and rental markets, then compare the numbers.
We group listings by property type (condo, apartment, serviced residence) and bedroom count within each state. For each group, we take the median sale price and median asking rent. This smooths out outliers — the one unit listed at RM 3,500/month in a building where everything else is RM 1,800 doesn't skew the analysis.
Financing installments are calculated using Musharakah Mutanaqisah (MM) terms:
- Margin of financing: 90% (10% downpayment)
- Profit rate: 4.0% per annum
- Tenure: 35 years
We chose Islamic financing because it currently offers the most favorable effective rates for Malaysian property buyers, and it represents a growing share of new housing loans. For a deeper comparison of Islamic vs conventional structures and how they impact cashflow, see our breakdown at Islamic vs Conventional Property Financing in Malaysia.
The result: a simple ratio. If the median rent exceeds the monthly installment, the property is "cashflow-positive at the financing level" — what we call CF+ before expenses. This does not account for maintenance fees, assessment tax, vacancy, or repairs. For the full cost picture, see The True Cost of Owning a Malaysian Rental Property.
Important: This analysis compares rent against financing installments only. A property that is CF+ at the financing level may still be net-negative once you factor in maintenance fees, sinking fund, quit rent, insurance, and vacancy. Use this as a first filter, not a final verdict.
The Scorecard — All 14 States Ranked
Our analysis groups states into three performance tiers based on how consistently their median rental figures cover the corresponding financing installment.
| Tier | States | General Profile |
|---|---|---|
| Strong — Rent frequently covers installment | Selangor, KL, Johor | Moderate median prices relative to rental demand. Deep rental markets with high tenant volumes. Expat and corporate tenant pools push rents higher. |
| Moderate — Rent covers installment in select segments | Penang, Melaka, Sabah, Negeri Sembilan | Pockets of strong performance, but overall median sale prices sit higher relative to rents. Tourist and seasonal demand creates volatility. |
| Challenging — Rent rarely covers installment | Pahang, Kelantan, Terengganu, Sarawak | Lower rental demand, thinner markets. Sale prices often reflect land value or new development premiums that rents have not caught up to. |
Selangor shows one of the strongest ratios nationally. Its combination of corporate employment corridors (Petaling Jaya, Shah Alam, Subang), proximity to KL, and well-established rental demand means that a significant share of condos listed for sale would generate rent above their monthly installment at current financing rates.
KL performs similarly well, driven heavily by the expat rental segment. Areas with high expatriate concentration command rents that comfortably service financing — but the picture varies enormously by neighborhood (more on that below).
Johor benefits from relatively lower sale prices while maintaining reasonable rental demand, particularly in the Johor Bahru corridor. The Singapore proximity factor continues to support rental rates in the southern districts.
Penang is the notable underperformer among major states. Sale prices on the island — particularly in Georgetown and Tanjung Bungah — have climbed faster than rents over the past cycle. Buyers here need to be more selective to find properties where the numbers work.
The Surprise Winners — Smaller States
Some of the highest CF+ ratios in our dataset come from states you might not expect: Perak, Putrajaya, and Kedah.
Perak — particularly Ipoh — has seen rising rental demand from KL remote workers and retirees, while property prices remain among the lowest in Peninsular Malaysia. The math works out favorably on paper.
Putrajaya benefits from a concentrated government tenant pool. Federal employees posted to Putrajaya need housing, and the limited supply of rental units keeps asking rents elevated relative to sale prices.
Kedah shows strong ratios in pockets near Alor Setar and the Kulim Hi-Tech Park industrial area, where employer-driven demand supports rentals.
The caveat is critical: these markets have significantly fewer listings. When your entire dataset for a state consists of a few dozen matched pairs, a handful of outlier listings can swing the results dramatically. The rental market is thinner, vacancy risk is higher, and finding tenants can take longer. Strong ratios on paper do not always translate to consistent cashflow in practice.
Treat smaller-state data as directional, not definitive. Verify with local agents and look for at least 3-5 rental comparables in the same development before committing.
KL Deep Dive — Top Cashflow Neighborhoods
KL is not one market. It is a collection of micro-markets with vastly different cashflow dynamics.
Our analysis shows that expat-heavy neighborhoods dominate the top of the cashflow rankings. This is not surprising — expatriate tenants typically have housing allowances that push rents above what local demand alone would support.
Neighborhoods that consistently show strong rent-to-installment ratios:
- Mont Kiara — The undisputed expat hub. High-density condo supply is absorbed by strong demand from Japanese, Korean, and Western expatriates. Rents remain resilient even as new supply enters.
- KLCC / Bukit Bintang corridor — Premium addresses with premium rents. Sale prices are high, but the rental rates from corporate and short-stay tenants tend to keep pace.
- Bangsar / Bangsar South — A blend of expat and local professional demand. Bangsar South in particular offers slightly lower entry prices with comparable rental rates to Bangsar proper.
- Seputeh / Mid Valley vicinity — Strong connectivity and established neighborhood character attract long-term tenants willing to pay stable rents.
Neighborhoods where the math is tighter:
- Cheras — Lower entry prices but correspondingly lower rents. The ratio can work, but margins are thin.
- Sentul / Titiwangsa — Gentrification is underway but rental demand has not fully caught up to new development pricing.
- Bukit Jalil — Significant new supply from recent mega-developments has compressed rental rates in certain buildings.
The pattern is clear: in KL, proximity to international schools, embassies, and multinational offices is the strongest predictor of whether rent will cover your installment.
Why Some States Struggle
Several structural factors explain why certain markets consistently show rents falling short of financing costs.
High sale prices vs moderate rents. This is the Penang island story. Land scarcity has driven property prices upward, but tenant willingness-to-pay has not kept pace. A unit that sells for RM 700,000 might only command RM 2,000/month in rent — well below the installment on a 90% loan.
New supply glut. States that experienced a development boom in 2018–2022 are now seeing thousands of units hit the secondary market simultaneously. When supply outstrips rental demand, landlords compete on price, compressing yields. Parts of Johor (Iskandar Malaysia) and certain KL fringe areas have experienced this.
Seasonal and tourism-driven demand. Areas dependent on short-stay or tourist rentals — parts of Melaka, Langkawi-adjacent areas in Kedah, Cameron Highlands in Pahang — show inconsistent occupancy. Monthly averages can look reasonable, but the reality is strong months subsidizing weak ones, with overall yield diluted by vacancy.
Limited corporate tenant pool. States without significant multinational or government employment hubs rely on local wage-based rental demand. Local market rents in Kelantan, Terengganu, and interior Sarawak simply do not reach the level needed to service financing on median-priced properties.
For Singapore Buyers — Johor vs KL
A growing number of Singapore-based investors are looking across the Causeway. The RTS Link (expected completion 2026–2027) and JB–Singapore Special Economic Zone have renewed interest in Johor property. Here is how the two primary options compare for SG buyers.
Johor Bahru:
- Entry prices significantly lower than KL. Median condo prices in JB are roughly 40–50% below comparable KL units.
- Rental demand supported by proximity to Singapore — particularly from Malaysians commuting to SG and Singaporeans with JB operations.
- Stamp duty and financing considerations: foreigners face a RM 1 million minimum purchase threshold in most states. Johor is no exception, but the price-to-rent ratio at the RM 1M+ segment can still work in select JB developments.
- Currency tailwind: earning in SGD while servicing an MYR loan provides a natural hedge, though this cuts both ways if the ringgit strengthens.
KL:
- Stronger and deeper rental market overall. Finding quality tenants is generally faster in KL than JB.
- Expat rental premiums are more consistent in KL's established corridors.
- Higher entry price means more capital at risk, but lower vacancy rates partially offset this.
The bottom line for SG investors: Johor offers better entry pricing and geographic convenience, but KL offers more reliable rental demand. Both can work for cashflow — the choice depends on your capital, risk appetite, and whether you prioritize price-to-rent ratio (Johor) or market depth (KL).
Singapore buyers should model their returns in SGD, not MYR. A property that is CF+ in ringgit terms may look different once you account for remittance costs and exchange rate movement.
Updated Weekly — Why This Matters
Property markets are not static. Rental rates shift with economic conditions, new supply, corporate relocations, and seasonal patterns. A property that is comfortably cashflow-positive today might flip negative if rents soften by even 5–8%.
This is why we refresh our analysis weekly. New listings enter the market, old ones expire, and median prices adjust accordingly. A state that looked "moderate" last month might shift to "strong" if rental supply tightens.
Key factors we are watching in 2026:
- OPR trajectory. Bank Negara has held the OPR at 2.75% since mid-2025. Any increase would push financing installments higher, compressing margins across all states.
- New supply pipeline. Tens of thousands of units are expected to receive keys in 2026–2027 across the Klang Valley and Johor. The impact on rental rates will be significant.
- Corporate demand. Malaysia's push for semiconductor and data center investment is creating new pockets of expatriate and professional demand — particularly in Kulim, Seremban, and the KL–Selangor tech corridors.
The rent-vs-mortgage breakeven is not a one-time calculation. It is a living metric that changes with every new listing, every rate adjustment, and every economic shift. Track it consistently, and you will see opportunities that snapshot analysis misses.