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Analysis Property

Use Data for Your Portfolio

This is gross rental yield vs transaction price for condominium and serviced residence property in Malaysia.

For real estate investors, using rental yield as yardstick to assess investment quality is the safest bet – especially for high-rise dwellings where capital appreciation is very hard to find in the current market.

It’s all about income – As a real estate investor, you must ascertain what is the realistic rental income of a target property can generate sustainability. The income figures are what matter the most.

The key to finding the best opportunity lies in the data. Data can tell you the best location, the sweet spot in-term built up size, the distance to to best amenities, the supply of units in the neighborhoods and, to avoid auction hotspots and places with negative sentiments.

By using KDE (Kernel Density Estimation) the chart below, we can see clearer the concentration of data points which in this case is gross rental yields% against price. In data science world, KDE provides vital display of information on data which include:

  • How the data is distributed around the measures of central tendency like mean and median
  • How the distribution is skewed
  • How the distribution is peaked

What other factors that influence gross rental yield? There are many variables that influences yield with wide variation in degree of significance. What we in the chart below is how main variables influences yield and does not mean it is the most significant variables.

Gross rental yield vs. Price vs. Built up size vs. (PSF) price per square feet.

Histograms show the density of each variables while scatter plots show individual data points. As you can see, Price and PSF have very clear inverse relationship with gross rental yield. The yield is lower for higher price and PSF. Lower rental yield indicates market excess and where supply is greater than demand.

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