With Malaysia’s domestic travel scene rebounding and international tourism steadily growing, investors are eyeing homestay properties as a promising avenue for passive income. Two hotspots in the spotlight are Johor and Melaka—each offering unique advantages for short-term rental business. But when it comes to return on investment (ROI), which state makes more financial sense? Let’s break it down.
Melaka: Heritage, Tourists, and Weekend Demand
Melaka is a cultural gem with UNESCO World Heritage status, attracting steady tourist traffic from both local and international visitors. Tourists flock here for weekend getaways, school holidays, and cultural events. With attractions like Jonker Street, A Famosa, and the Melaka River Cruise, demand for affordable, centrally located homestays is strong.
- Occupancy Rates: Melaka sees solid weekend and holiday bookings. Average occupancy for well-located homestays ranges from 60–75%, with spikes during school holidays and public celebrations.
- Daily Rates: Typical nightly rates for 2–3 bedroom units fall between RM200–RM350, depending on location, amenities, and decor.
- Initial Costs: Property prices in central Melaka are still relatively affordable compared to larger cities. A decent homestay-ready condo or terrace unit may range from RM300,000–RM500,000.
- Estimated ROI: With smart pricing and steady weekend bookings, Melaka homestays can achieve an ROI of 6–8% annually—with potential for more if managed professionally and marketed well on platforms like Airbnb and Agoda.
Pros:
- Consistent tourist flow
- Strong local and Singaporean visitor base
- Cultural appeal boosts short-term demand
Cons:
- Limited weekday bookings
- High competition in central areas
- Older properties may need refurbishment
Johor: The Cross-Border Advantage
Johor, particularly Johor Bahru (JB), offers a unique market due to its proximity to Singapore. With ongoing development in areas like Iskandar Puteri and the upcoming RTS Link project, JB continues to attract attention for both tourism and business stays.
- Occupancy Rates: Weekday bookings are better here compared to Melaka, thanks to business travelers, medical tourists, and Singaporeans looking for quick getaways. Occupancy can reach 70–80% with proper positioning.
- Daily Rates: Homestay rates range from RM250–RM450, especially near hotspots like Mid Valley Southkey, Bukit Indah, or Legoland.
- Initial Costs: Property prices in JB vary widely, but decent condos or landed homes suited for homestays start from RM400,000 upwards.
- Estimated ROI: With the right unit and effective management, a Johor homestay can generate ROI of 7–10% annually, particularly if marketed to Singaporean tourists and families.
Pros:
- High short-term demand from Singaporeans
- Strong weekday and weekend traffic
- Infrastructure growth boosting long-term value
Cons:
- Higher entry cost
- Dependence on cross-border traffic
- Management and security can be challenging in some locations
Final Verdict: Worth It—With the Right Strategy
Both Johor and Melaka can be highly profitable for homestay investors, but the best ROI depends on your strategy. Melaka is ideal for budget-friendly entry and consistent weekend bookings. Johor, while more capital-intensive, offers stronger ROI potential due to higher nightly rates and more frequent bookings.
If you’re looking for long-term capital appreciation plus short-term rental income, Johor edges ahead. But for lower risk and easier management, Melaka remains a solid choice.
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