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Sale and Leaseback Agreement: How It Works and When to Use It

A sale and leaseback agreement is when an owner sells an asset and immediately leases it back from the buyer. This lets the seller free up cash but still use the asset.It is common in real estate, but this method can apply to other business assets too. Both sellers and buyers can benefit from this arrangement.Everything You Need To Know About Sale and Leaseback Agreement In MalaysiaHow a Sale and Leaseback Agreement WorksWhen to Use Sale and LeasebackBenefits for Seller and BuyerSale and Leaseback in MalaysiaOther Assets You Can Use for LeasebackHow to Do a Sale and LeasebackLegal and Tax ConsiderationsKey Risks to ConsiderFree Printable Sale and Leaseback Agreement ChecklistConclusionOpinion: Should You Use a Leaseback for Short-Term Stay Property Investment?How a Sale and Leaseback Agreement WorksIn this agreement, the seller becomes the tenant after selling their asset. The buyer becomes the landlord and receives rent from the seller.The lease terms, duration, and rental rate are agreed upon upfront. This ensures clarity for both parties.When to Use Sale and LeasebackA sale and leaseback is useful when a business needs cash for operations or expansion. It is also helpful when a company wants to improve its balance sheet.Sometimes owners sell assets during periods of strong market prices. They can then continue using the asset while unlocking capital.Benefits for Seller and BuyerHere’s what each party gains from a sale and leaseback arrangement:PartyPotential BenefitsSeller / LesseeUnlock capital: Receive immediate cash from the sale of the property to reinvest in core business or other purposes.Continue occupancy: Retain uninterrupted use of the property without relocation costs.Remove ownership burdens: Free from property management, maintenance, and ownership risks (depending on lease terms).Improve financial ratios: Sale proceeds can improve balance sheet liquidity and reduce debt-to-equity ratio.Predictable occupancy costs: Lease terms provide clarity on rental obligations for budgeting and planning.Buyer / LessorSecure rental income: Immediate income stream from an established tenant (the seller).Long-term investment: Opportunity to acquire a stable, income-generating asset.Lower tenant risk: Lessee is typically a business familiar with the property, reducing tenant turnover risk.Potential capital appreciation: Ownership of property may yield capital gains over time depending on market conditions.Flexible asset use after lease: At lease expiry, option to re-let, redevelop, or sell the property.This shows why sale and leaseback is attractive for both parties. The seller/lessee gains liquidity while the buyer/lessor secures rental income and a stable asset.Sale and Leaseback in MalaysiaIn Malaysia, sale and leaseback is common for serviced apartments and commercial property. Developers sometimes offer it as part of "Guaranteed Rental Return (GRR)" packages.The agreement terms depend on market rent and lease periods. Legal documents must comply with the National Land Code 1965.Example: A buyer purchases a hotel suite and the developer leases it back for 5 years at 6% yield. After the lease, the buyer can renew or take possession.Other Assets You Can Use for LeasebackLeaseback can apply to many other assets beyond property. Here are common examples:Vehicles and fleets, used by transport companies to raise capital.Aircraft, often leased back by airlines after sale.Machinery and factory equipment, used by manufacturers to fund operations.Ships and marine assets, common in shipping industry deals.IT infrastructure, like servers and data centers for tech-heavy businesses.Renewable energy assets, such as solar panels sold to investors.These assets are essential for business operations. That makes them attractive for sale and leaseback deals.How to Do a Sale and LeasebackFollow these simple steps to execute a sale and leaseback deal: Get the property or asset valued professionally.Find an investor or buyer willing to lease it back.Negotiate sale price, lease term, and rent.Prepare legal documents: Sale and Purchase Agreement (SPA) and Tenancy Agreement.Register the sale with authorities and complete the transaction.Careful planning helps avoid legal risks. The lease agreement must clearly define rent, responsibilities, and rights.Legal and Tax ConsiderationsA sale may trigger Real Property Gains Tax (RPGT) in Malaysia. Rental income for buyers will also be subject to tax.Check all laws before signing. This ensures your leaseback agreement follows Malaysian rules.Key Risks to ConsiderThe seller no longer owns the property and faces future rental obligations. The buyer risks tenant default if the seller’s business weakens.It is wise to review the market and financial strength of the other party. This reduces exposure to loss.Free Printable Sale and Leaseback Agreement ChecklistTo help you plan your transaction, download this free printable checklist:Free Sale Leaseback Agreement ChecklistDownloadThis checklist will guide you through key due diligence points. Use it to avoid mistakes before signing any agreement.ConclusionA sale and leaseback agreement can be a smart tool to unlock capital and secure stable rental income. It gives both sellers and buyers flexibility while ensuring predictable occupancy and financial clarity.However, it’s not without risks. Investors must carefully assess the lease terms, rental yields, and the financial strength of the tenant or operator.Opinion: Should You Use a Leaseback for Short-Term Stay Property Investment?If you’re investing in a short-term stay property (e.g., hotel suites, serviced apartments), a leaseback agreement can seem attractive because it often offers “guaranteed rental returns” and hassle-free management.But you should proceed carefully. After the leaseback period ends, actual rental yields may depend on tourism demand, location, and market competition. The “guaranteed” return during leaseback may not reflect long-term rental potential.So:✅ If your priority is passive income with minimal management in the short term, leaseback can be a good option — provided the operator is reputable and terms are clear.⚠️ If you seek flexibility and higher returns in the open market after a few years, you need to research carefully to ensure the property remains attractive for direct short-term rentals after the leaseback ends.In short, a leaseback is best for investors seeking low-maintenance, predictable income in the short term but may not guarantee superior returns long-term.Looking for the best property investment?Submit your details below and our expert agents will help you find the right property and guide you on how to maximize your rental return.Get personalized advice today! Let us help you invest smarter![custom_blog_form]Continue reading:Is it Illegal to Run an Airbnb Service in Malaysia? We Have The Answer, Plus A Game-Changing Airbnb Hack5 Expert Tips to Negotiate with Homeowners for a Better Deal7 Things to Do Before Signing A Lease AgreementWhat is a lease agreement?

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Key Insights from NAPIC’s Malaysia Property Market Q1 2025

In 2025, Malaysia’s property market opened with cautious confidence, as highlighted in NAPIC’s Q1 2025 report. Buyers, developers, and investors are recalibrating strategies around affordability, supply management, and resilience.For local investors, this environment offers opportunities to secure quality assets in high-demand areas. At the same time, they must balance rental yields with capital appreciation potential.For foreign investors, Malaysia remains attractive with clear ownership frameworks and relatively low entry costs. Key growth pockets include Kuala Lumpur, Johor Bahru, and Penang, but regulatory and market nuances require careful navigation.Whether you seek rental income, capital growth, or portfolio diversification, these insights will help pinpoint where to invest. We help you identify resilient sectors and position your strategy for today’s evolving landscape.What You Need to Know: 2025 Malaysia Property MarketTransaction Activity: A More Focused MomentumResidential Market OverviewServiced Apartments: Stepping Back to Move ForwardOverall Construction: Solid Starts, Slower DeliveriesAre We Seeing a Realignment or a Quiet Recovery?Is This a Good Time to Invest in Malaysia property?FAQs: Malaysia Property MarketSource: NAPIC JPPHTransaction Activity: A More Focused MomentumNAPIC’s report shows that properties priced under RM 500,000 continue to attract strong demand, particularly in growth-focused locations like Selangor and Johor.This reinforces the appeal of mid-market inventory across Malaysia, especially for first-time buyers and local upgraders.This suggests that home seekers are increasingly using property type filters and comparison tools on international sites and partner sites to assess value before making a move.Transaction activity in Malaysia’s property market is expected to maintain a measured yet resilient momentum in 2025, particularly within the sub-RM500,000 segment. This price band continues to attract strong demand, driven by first-time buyers and local upgraders seeking affordable yet well-located homes, with Selangor and Johor emerging as key growth markets.Moving forward, affordability pressures and ongoing infrastructure development will sustain interest in mid-market properties, while investors should anticipate increasingly selective buyer behavior, with greater reliance on digital platforms, property comparisons, and data-driven decision-making.For foreign investors, while direct participation in the sub-RM500,000 segment remains constrained by minimum price thresholds, opportunities exist in the adjacent RM600,000–RM800,000 bracket, particularly in urban and transit-oriented developments offering strong rental demand and long-term appreciation potential.Source: NAPIC JPPHResidential Market OverviewNew Launches and Supply: Strategic and AlignedResidential construction has taken a more measured path.Completions dropped significantly to 3,614 units in Q1 2025, compared to 7,072 in the previous quarter.Yet new starts increased to 14,761 units, pointing to long-term optimism and more balanced pipelines.QuarterCompletionStartNew Planned SupplyQ1 20245,4945,4585,164Q2 202410,0244,9058,147Q3 202411,16018,60110,096Q4 20247,07210,04716,698Q1 20253,61414,7614,024This shift in strategy reflects a market that's focused on accessing genuine demand and reducing mismatches between supply and expectations.Residential Overhang: A Challenge Being AddressedHigh-end homes remain oversupplied, but developers are responding by launching fewer luxury products and focusing instead on properties that are competitively priced and attractive to local buyers.The shift also aligns with growing demand among foreigners exploring sales in Malaysia, particularly on platforms with clearer locations and pricing filters.Source: NAPIC JPPHServiced Apartments: Stepping Back to Move ForwardServiced apartment completions dipped to 356 units in Q1 2025, down from 1,289 the previous quarter. New planned supply dropped to 498 units, reflecting a conscious pullback by developers.QuarterCompletionStartNew Planned SupplyQ1 2024201945858Q2 20247321,218755Q3 20246891,7401,351Q4 20241,2891,0492,713Q1 20253561,188498Developers are clearly adjusting their expectations and delivery timelines, agreeing with market signals that the supply-demand gap must narrow before new launches resume.Overall Construction: Solid Starts, Slower DeliveriesCompletions across all sectors dropped to 9,329 units, but new starts remained high at 28,344 units, a sign that confidence in the medium term remains intact.QuarterCompletionStartNew Planned SupplyQ1 20247,16821,39111,024Q2 202424,40420,16429,481Q3 202423,74932,23332,103Q4 202426,81432,44827,853Q1 20259,32928,3448,342This reflects a strategic choice to find balance: completing only what’s viable in the short term while keeping a clear line of sight on longer-term goals.Are We Seeing a Realignment or a Quiet Recovery?At first glance, the lower completions and persistent overhang may suggest caution.However, with stronger starts and lower speculative launches, the numbers suggest a comprehensive, data-driven reset.As buyers become more informed and developers become more focused, the market is recovering the right way: by prioritising value, timing, and location.Is This a Good Time to Invest in Malaysia property?Yes, but the Q1 2025 Malaysia property market shows signs of stabilisation, with developers adjusting supply to meet real buyer demand. This environment creates opportunities for investors to enter before supply tightens further or prices rise, particularly in growth locations such as Selangor, Johor, and transit-linked urban areas.While it can be a good time to invest, careful consideration is key — investors should focus on high-demand areas with strong rental prospects and engage a trusted agent to navigate current market dynamics and regulations.FAQs: Malaysia Property MarketWhat is freehold property in Malaysia? Freehold ownership grants perpetual rights, but not total control—under Malaysia’s Land Acquisition Act 1960, the government can acquire property for public use with fair compensation.How much salary to buy a 300k house in Malaysia? To afford a RM300,000 home in Malaysia, a net monthly income of RM3,500–RM4,000 is typically recommended. This is based on a 90% loan margin and a manageable debt service ratio (DSR).Can you get Malaysian citizenship by buying property? No. Malaysia does not offer citizenship through property purchase. Buying property does not qualify foreigners for citizenship or an automatic path to permanent residency. However, foreigners may apply for long-term stay under the Malaysia My Second Home (MM2H) program, but this is not citizenship.Are you looking for ways to start investing in Malaysian real estate? nquire below and let our trusted professionals help you make the right move![custom_blog_form]Continue Reading:The Ultimate Guide For 4 Best Places To Invest in Malaysia6 Expert-Backed Tips for Successful Property Investment in MalaysiaWhy Malaysia is the Perfect Destination for Foreign Investors?

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Juwai Cambodia: Restructured, Rebranded & Ready for the Future! 

JUWAI IQI is pleased to announce the strategic restructuring and rebranding of our Cambodian operations under a new entity: Juwai Cambodia. This transformation marks an important step toward aligning our presence with future growth opportunities, evolving market demands, and international standards.  Juwai Cambodia is a revitalised platform, designed to better serve the Cambodian real estate sector and cross-border investors through a more focused, agile, and brand-aligned approach. As part of this new chapter, we are seeking a committed and entrepreneurial local partner to lead the newly restructured Juwai Cambodia.  This is more than a business opportunity. It is a chance to co-own and build a strong national brand under a globally recognised name, with full strategic support from the wider Juwai IQI network. We welcome expressions of interest from established professionals or emerging leaders in the Cambodian property or investment space.  We are looking for someone with deep local market knowledge and the ambition to take this brand forward. ? To explore this opportunity in confidence, please reach out to: ? info@iqiglobal.com ? 1800 222 155 ? Click here for the websiteJuwai Cambodia Restructured. Rebranded. Ready for Growth. With the Right Partner. Continue Reading: Can Foreigners Buy Property in Cambodia? A Clear Guide to Laws and RegulationsUnlocking Profits: The Untapped Land Opportunities in Cambodia5 Simple Steps to Invest in Cambodia

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Rents Cool Down in Q1 2025, Easing Pressure on Tenants | Juwai IQI

Malaysia’s rental market is finally showing signs of slowing down after more than a year of rising prices!  According to a new report by real estate group Juwai IQI, average home rents either stayed the same or dropped slightly in the first quarter of 2025. The report shows that the average rent across Malaysia fell from RM2,052 in Q4 2024 to RM2,020 in Q1 2025. This is the first time in over a year that rent prices didn’t go up, which is welcome news for many Malaysians, especially those living in big cities like Kuala Lumpur. Kuala Lumpur, which had some of the biggest rent increases last year, is now seeing prices level off.  This means less pressure on renters who have been struggling to keep up with rising living costs. What’s Behind the Change? Juwai IQI Group CEO, Kashif Ansari, explained the trend clearly: “What we’re seeing is a healthy cooling-off period after an aggressive rental surge in late 2024. Economic indicators remain strong, but the market is adjusting as supply and demand find new balance.” He also added,  “Stable rental prices bring predictability. That’s good not just for tenants, but also for developers and property investors looking to plan long-term.” Juwai IQI Group CEO, Kashif AnsariKashif mentioned that while the general rental market is slowing, luxury properties are still in demand, especially in areas like the Klang Valley.  He said, “Economic indicators remain strong, but the market is adjusting... while rents have slowed down, demand in the luxury and high-end rental market remains resilient.” Why This Matters This slowdown in rent growth could help ease the cost of living for many people.  With prices no longer climbing as fast, renters may find it easier to plan their finances and manage other expenses. Looking Ahead Juwai IQI believes this trend could continue through the year, depending on inflation and interest rates.  If the market stays balanced, renters and landlords alike can expect a more stable year ahead. Juwai IQI was featured in The Malaysian Reserve. Juwai IQI is the world-renowned property company that provides insights on property, locally and globallyClick below to get more expert property insights from our blog!MORE INSIGHTS

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