Malaysia Household B40 M40 T20 Target Tenants

My household studies objectives:

  1. Potential market size of targeted tenants.
  2. Estimate monthly rental value of targeted tenants.
  3. Derive properties price suitable for the targeted tenants.

To achieve the studies objectives, I need to have facts on

  1. Number of households in Malaysia and specifically for Selangor as I invests mostly in Selangor.
  2. Estimated income level of each household

Malaysia Income Level

Malaysia households are categorized into three major income groups.

  1. B40 – or bottom 40% with median income of RM3,000 (Y2016)
  2. M40 – or middle 40% with median income of RM6,275 (Y2016)
  3. T20 – or top 20%  with median income of RM13,148 (Y2016)
malaysia household b40 m40 t20 household income
malaysia household b40 m40 t20 household income

Number of Household In Malaysia

In 2010, number of household is around 6.35 millions. Lets say I estimate by 2018  the number of household is around 10 millions.

In 2016, 19.9% Malaysian population resides in Selangor. Hence number of households in Selangor is 10 millions x 19.9% = 1.99 millions.

malaysia number of household
malaysia number of household
malaysia population distribution
malaysia population distribution

 

Rental Affordability for Each Household Group & Targeted Property Price

Assumptions:

  1. All household group only willing to spend one third of their income for rental.
  2. Property price is estimated based on monthly loan equal to monthly rental affordability and calculated based on 4.5% interest, for 30 years tenure and with 10% deposit.
NoHousehold GroupMedian Income (RM)Malaysia Total NumberSelangor Total NumberRental Affordabilty (RM)Property Price (RM)
1B403,0004,000,000800,0001,000220,000
2M406,2754,000,000800,0002,100460,000
3T2013,1482,000,000200,0004,400900,000

Conclusions:

  1. I target mostly to B40 household group. Hence, I need to purchase properties within RM220,000 range.
  2. I don’t target M40 or T20 as they can afford to buy they own house, hence vacancy rate will be higher than targeting B40.

References:

All statistics are from Department of Statistics, Malaysia.