Industrial Property Rental Yield in Malaysia: How to Work Out Gross and Net Yield on a Factory
How to work out gross and net rental yield on a factory or warehouse in Malaysia, what to deduct, and the JPPH-registered rents and prices for Shah Alam, Klang and Rawang.
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- Peter TanREN 12771 · 016-666 6872
Key Takeaways
- Gross rental yield is the annual rent divided by the purchase price; net yield deducts quit rent, assessment, insurance, repairs, agent fees and empty months first.
- Work it out on your own unit's rent and total cost, not on area averages: industrial rents are quoted per sq ft of built-up area, while registered sale prices are per sq ft of land.
- JPPH-registered factory rents in the 24 months to August 2026 had a median of RM1.71 psf a month in Shah Alam, RM1.43 in Klang and Port Klang, and RM1.39 in Rawang and Kundang.
- Registered semi-detached factories sold at a median RM5.92 million in Shah Alam, RM5 million in Klang and Port Klang, and RM4.3 million in Rawang and Kundang over the same period.
- A long lease with a strong tenant and clear repair terms is often worth more to an investor than a slightly higher rent.
This guide explains how investors work out the rental yield on a factory or warehouse in Malaysia. It is general information, not financial advice.
What is rental yield on an industrial property?
Rental yield is the rent a property earns in a year as a percentage of what it cost. Investors use it to compare a factory with other properties, with fixed deposits or with the interest on a loan.
- Gross yield = annual rent ÷ purchase price × 100
- Net yield = (annual rent less yearly outgoings) ÷ total cost of purchase × 100
Gross yield is quick but flatters the numbers. Net yield is what you actually keep.
How do you work out gross yield? (illustration)
The figures below are made up to show the method:
| Item | Amount |
|---|---|
| Purchase price | RM3,000,000 |
| Monthly rent | RM15,000 |
| Annual rent | RM180,000 |
| Gross yield | 180,000 ÷ 3,000,000 = 6.0% |
How do you work out net yield? (illustration)
Net yield deducts what the landlord pays and adds the costs of buying:
| Item | Amount per year |
|---|---|
| Annual rent | RM180,000 |
| Less one month empty between tenants | RM15,000 |
| Less quit rent and assessment tax | RM8,000 |
| Less fire insurance | RM3,000 |
| Less repairs and maintenance | RM6,000 |
| Net income | RM148,000 |
Total cost of purchase: RM3,000,000 plus stamp duty and legal fees. If those come to RM120,000, net yield is 148,000 ÷ 3,120,000 = 4.7%.
Again, these are made-up numbers. Use your own quit rent and assessment bills (our guide to factory holding costs shows where to find them), your insurer's quote, and the stamp duty and legal fees from our legal fees calculator.
What about a loan?
If you borrow, compare net income with the yearly instalment. Our mortgage calculator gives the instalment for your loan amount, rate and tenure. Cash flow after the instalment matters more to most owners than the yield percentage.
Why can't you divide average rent by average price?
Because the two are measured differently. In JPPH-registered data, a factory's sale price per sq ft is per sq ft of land, while rent per sq ft is per sq ft of rented floor area. A detached factory on a large lot can have a low price per sq ft of land and a building much smaller than the land, so mixing the two gives a meaningless yield. Area medians also come from different units: the factories that sold are not the factories that were rented.
Use registered figures to check whether a seller's asking price and a tenant's rent are in line with the market, then compute the yield on the actual unit.
What are registered rents and prices in Selangor?
JPPH-registered transactions, 24 months to August 2026 (FactoryHub aggregation):
| Area | Median factory rent | Semi-D factory median price | Terrace factory median price |
|---|---|---|---|
| Shah Alam | RM1.71 psf/month (119 tenancies) | RM5.92 million (66 deals) | RM1.13 million (70 deals) |
| Klang and Port Klang | RM1.43 psf/month (780 tenancies) | RM5 million (172 deals) | RM850,000 (381 deals) |
| Rawang and Kundang | RM1.39 psf/month (25 tenancies) | RM4.3 million (129 deals) | RM670,000 (38 deals) |
By type, registered semi-detached factory rents had a median of RM2.12 psf a month in Shah Alam (RM17,300 a month for about 8,810 sq ft) and RM1.78 psf a month in Klang and Port Klang (RM15,000 a month for about 8,630 sq ft). These are the records available so far, not every deal in each area.
What raises or lowers a factory's yield?
- Tenant and lease. A longer lease, a tenant with a track record and a clear rent review clause reduce empty months. The typical registered term in these areas is 24 months.
- Who pays what. Agree in the tenancy who pays for roof, structure, electrical upgrades and reinstatement on exit.
- Specifications. Power supply, ceiling height, floor loading and loading bays decide which tenants can use the building, and so how quickly it lets.
- Location. Port and highway access matter to logistics tenants; staff access matters to manufacturers.
- Tenure. For leasehold land, check the remaining lease, because banks and future buyers will.
Frequently Asked Questions
How do I calculate rental yield on a factory?
Divide the annual rent by the purchase price and multiply by 100 for gross yield. For net yield, deduct empty months, quit rent, assessment, insurance and repairs from the rent, and divide by the purchase price plus stamp duty and legal fees.
What is a good rental yield for industrial property in Malaysia?
There is no official benchmark. Compare the net yield on the unit with your financing cost and other investments, and check that the rent and price are in line with JPPH-registered figures for the area.
Why do I need to separate built-up and land area?
Registered sale prices per sq ft are on land area, while rents per sq ft are on rented floor area. Mixing them gives a wrong yield, so always use the unit's own rent and price.
What are industrial rents in Shah Alam?
JPPH-registered factory tenancies in Shah Alam had a median rent of RM1.71 psf a month in the 24 months to August 2026, from 119 recorded tenancies.
Does a longer lease improve yield?
It reduces empty months and leasing costs, which raises net yield over time. A strong tenant on a longer lease also makes the factory easier to sell.
FactoryHub is dedicated to helping every client find the right factory or warehouse. For tenanted factories and rental advice, contact Peter Tan (REN 12771) at 016-666 6872.
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