Glossary
Gross vs Net Rental Yield
Gross rental yield is annual rental income divided by property price, expressed as a percentage. Net rental yield deducts all ownership costs (maintenance, taxes, void periods, agent fees) from gross income before dividing by price.
In Detail
In Malaysia, gross rental yield is the headline figure most commonly quoted — typically 3–6% for KL properties. However, net rental yield gives a more accurate picture of actual returns. The gap between gross and net yield in KL is typically 1–2 percentage points. For a condo with 5% gross yield, net yield might be 3.5–4% after deducting monthly maintenance fees (RM0.35–0.50 per sqft), quit rent and assessment, insurance, agent fees (1 month's rent), and void periods (1–2 months per year). High-maintenance properties like serviced residences or older buildings will see wider gaps. Investors should always calculate net yield when comparing opportunities, as gross yield alone can be misleading.
Investment Impact
Net rental yield is the true measure of cash flow profitability. A property with 5% gross yield but high maintenance costs may underperform one with 4.5% gross yield and low overheads. In KL, properties with net yields above 3.5% are considered strong performers. Factor in loan interest (currently 4.2–4.8%) to determine if the property is cash-flow positive or requires top-ups.