Penang Property Insights: Beautiful Homes by the Sea, Upcoming Mutiara LRT Brings High Return Potential

Version: CN

Desmond Sin, a seasoned real estate agent with nine years of experience specializing in the Penang and Kuala Lumpur regions, contributed the contents of this article.

Penang (or Pulau Pinang), known for its colorful culture and beautiful oceanside views, has always been an intimidating area to invest in due to its high property prices and Airbnb restrictions.

However, investing in Penang can give you high investment returns if you know how to tackle these restrictions!

Prices are only going higher (plus the upcoming LRT in the area), so if you’re considering investing in Penang, continue reading to understand everything about the Penang property market.

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1. Who is buying property in Penang?

Young first-time homebuyers

Young first-time homebuyers

A rising amount of homebuyers come from those in their early 20s.

Some individuals started buying homes as they entered the workforce at a young age, started earning money, and felt ready to purchase property.

Since young homebuyers enter the market every year, there is no shortage of people buying houses, which means the demand for properties remains consistently strong.

Recently, a 21-year-old refreshed my record for the youngest client, so there’s no lack of people who want to buy a house every year.

Desmond Sin, IQI agent

Investors

Of course, investors are another audience for Penang property, local and foreign.

With different goals from the average homebuyer, they usually do their homework. Some are inclined toward, for example, sea-view properties, while others are specifically interested in below-market-price opportunities.

Investors tend to wait until the perfect opportunity arises before taking action.

2. What properties do people buy in Penang?

Penang is sought after for its sea-view properties

With Penang’s reputation for breathtaking sea views, there is significant interest in sea-view properties, which typically start at around RM1 million and can go up to RM2 million for the latest launches.

Due to these high prices, not everyone is prepared to invest.

Investors interested in sea-view properties usually have multiple properties already and will carefully evaluate their choices before making a decision.

Do people buy high-rise or landed property in Penang?

Depending on the buyer’s financial capacity, both landed properties and condos are being purchased.

Why do people choose landed homes?

For those with a budget over a million, a landed property in Penang is often preferred.

In central and strategic areas of Penang, an older single-story house that needs renovation might cost around RM800,000.

These properties often involve buying the land itself, with the house’s condition varying. Some buyers may opt for minor renovations, while others might choose to demolish and rebuild.

Why people buy high-rise properties

For condos, especially new projects, prices in desirable locations typically start at RM700,000 to RM800,000.

Buyers looking for better locations and lower-density options will find condos in this price range appealing.

Ultimately, it comes down to securing a prime location and choosing a reputable developer.

3. Reasons people invest in Penang property

1. Job opportunities

Batu Kawan is a hotspot in Penang that attracts interest not only from Penang residents but also from people in Kedah, Perak, and even KL.

Due to the high concentration of factories in the area, Penang is often the second-choice destination for engineering students after Singapore.

Batu Kawan is a more industrial area, and the Penang Chief Minister has recommended it for larger factories. Finding space for big factories in Bayan Lepas is relatively challenging.

Consequently, many large factories are relocating to Batu Kawan. The industrial zone there is already home to numerous factories, with more large-scale facilities expected to be established in the future, making it an ideal location for such operations.

2. Affordable price

First-time homebuyers often focus on properties in Batu Kawan. Homes priced below RM500,000 can qualify for a government stamp duty exemption, which can save them approximately RM9,000 to RM10,000.

Batu Kawan is an attractive area for these buyers, offering potential finds within this price range. Additionally, Batu Kawan is a rapidly developing area with significant future growth potential.

3. Booming international tourism

Penang, in particular, appeals to tourists due to its balanced lifestyle pace.

The extension of the visa exemption for Malaysians traveling to China until next year benefits both Malaysians visiting China and attracts more Chinese tourists to Malaysia.

During the recent durian season, a notable number of Chinese, Hong Kong, and Taiwanese tourists visited Penang to enjoy the fruit, indicating a growing interest in the region’s tourism.

The government is actively working to draw more Chinese tourists, as Malaysia offers relatively affordable spending options.

4. Relaxed MM2H requirements

Additionally, some individuals might consider investing in properties through the Malaysia My Second Home (MM2H) program.

With the relaxed requirements to purchase homes in Malaysia through the MM2H program, more international investors will turn to Penang for overseas investment.

4. Hotspots in Penang

Jalan Macalister is the place to be for Airbnbs

Currently, the top area for Airbnb remains around Jalan Macalister.

This location is highly popular due to its proximity to food, entertainment, and medical facilities, allowing visitors easy access to these amenities on foot.

It’s also a short walk to KOMTAR, Penang’s iconic building, and new attractions atop KOMTAR offer panoramic views of the entire Penang skyline.

Many tourists visit Penang for its renowned food, and you’ll frequently encounter Indonesian visitors. The journey from Indonesia takes only about 30 to 45 minutes, quicker than traveling to KL.

Bayan Lepas Free Industrial Zone brings in more residents

Bayan Lepas is also starting to show more growth potential in its industrial area, where many workers commute on foot and use alternative transportation methods like biking.

I’m very optimistic about that area because many people work there, and a lot of them prefer not to drive. Some even choose to bike to work. Essentially, every place has its own strategy, even if it’s just a small area.

Desmond Sin

5. Up-and-coming areas in Penang

Upcoming projects in Queensbay

Queensbay has already seen significant growth and is expected to continue expanding, especially with the upcoming Marriott Hotel and Marriott Hotel Residences adjacent to the property.

These high-end developments could drive prices up to RM20-RM22 per square foot, given the strategic location.

Tanjung Tokong to become a more valuable area

Tanjung Tokong, where the Andaman development by E&O is located, also has a high potential for growth.

With Straits Quay 1 already completed, E&O is now reclaiming land for Straits Quay 2, which will eventually cover 70 acres.

Over the next 20 to 30 years, this area is set to become increasingly prominent. Investing during Phase 1 was ideal, as prices then were RM700-800 per square foot.

Currently, Phase 2 prices are around RM1,100, and Phase 3 could reach RM1,300-1,400.

Foreigners relocate to Tanjung Tokong for its environment

As for prospective buyers in Tanjong Tokong, it is likely to attract primarily foreigners.

Expatriates working in local factories might prefer the area for its relaxed environment.

Additionally, some foreigners may relocate here with their families for better educational opportunities, as international school fees in Penang are relatively affordable.

I’ve spoken to some parents who moved here to enroll their children in international schools, leaving behind their jobs abroad. Some even open businesses like Japanese or Korean restaurants to support their families.

Desmond Sin

Penang Turf Club boasts opportunities for developers just outside the city

The iconic Penang Turf Club, previously well-known as one of the very few legal gambling spots in Malaysia, holds opportunities for developers keen on leveraging suburban areas.

The 202-acre Malaysian institution located just outside of George Town, near Jalan Batu Gantong, is set to be sold for up to RM6 billion.

With its prime location and high potential ROI, the Penang Turf Club area is expected to attract many potential investors, locally and globally.

6. Are Airbnbs banned in Penang?

In Penang, not all properties allow Airbnb, especially those with a commercial title under the Housing Development Act (HDA).

Airbnb rates can differ significantly, with some units priced between RM1,000 and RM1,500 per night.

This might make some investors hesitant, especially considering the restrictions on Airbnb in Penang.

It’s crucial to check these details before purchasing, as restrictions could arise, making it risky to invest in properties with a commercial title under the HDA.

7. How will the new Penang LRT affect property prices?

The new Penang LRT eases commute

The Penang LRT will provide greater convenience, especially for those commuting from other states or individuals who rely on public transit.

Unlike buses, which can face delays due to traffic and accidents, LRTs are typically more punctual and efficient.

Property prices will continue to rise despite new LRT

Living near an LRT station could offer a significant advantage, possibly raising property values by around 20%.

However, property prices in Penang are increasing year after year due to land scarcity, regardless of the LRT’s impact.

Affordable housing in Penang you can consider

Penang, renowned for its breathtaking landscapes and vibrant culture, presents a variety of affordable housing options for those looking to settle on this picturesque island. The Penang state government has initiated several projects to ensure that housing remains accessible to its residents.

Areas like Bukit Mertajam and Butterworth on the mainland offer a range of affordable homes, while locations such as Bayan Lepas and Island Glades

Here’s 5 list of new under construction houses in Penang that are RM500k and below:

1. Elements Garden

2. Imperial Grande

3. Rubica @ Harbour Place

https://iqiglobal.com/project/butterworth-pulau-pinang/rubica-harbour-place

4. Emerald Residence

https://iqiglobal.com/project/teluk-kumbar-pulau-pinang/emerald-residence

5. Epic Avenue

https://iqiglobal.com/project/bukit-jambul-pulau-pinang/epic-avenue

8. What to take note of if you want to invest in Penang property

For Penang residents, it’s important to note that properties in prime locations are likely to be quickly acquired by foreign investors.

Penang’s government has extended opportunities for foreigners to purchase property until the end of this year.

Foreign buyers can now acquire properties valued at RM700,000 or above, which is a relatively modest amount for many international buyers, especially with the recent strengthening of the ringgit.

Additionally, there are savings on levies and fees; for example, the state consent fee might be as low as RM12,500, with some developers waiving it entirely.

Do you think that owning a property in Penang will be a worthwhile investment?

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Desmond Sin is a seasoned real estate agent with 9 years of industry experience, focusing on Kuala Lumpur and Penang. As team leader of IQI Elite, his outstanding performance has earned him several awards, including the Overall Champion in Project Sales in 2019 and the Million Dollar Achiever (Platinum) in 2023.

Leverage on the potential of high returns on investment or a future home for retirement in Perak! If you’re on the lookout to buying property, let our experts help you in your purchasing journey.

Frequently Asked Questions:

Yes, foreigners can purchase property in Penang. However, certain restrictions apply, such as a minimum purchase price of RM1 million. Additionally, foreigners are generally restricted from owning land in certain areas, especially cultural buildings and heritage properties in Penang, particularly around Georgetown.

The average property price in Penang can vary greatly depending on the location, type of property, and size. However, according to data from iProperty.com.my, the median transacted price for residential properties in Penang is RM 595,000, with a median transacted price of RM 520 per sq. ft.

Rental yields in Penang vary by property type and location. For instance, the average rental yield for apartments in Penang is approximately 5.74%. You may read about this research at Property Purchase and Rental Price In Malaysia Market

In the first half of 2023, Penang’s residential property market recorded strong annual growth of 5.6%, securing the second-best position in Southeast Asia. This growth is attributed to government initiatives, infrastructure development, and increased foreign investment. Read more about this at IQI Global

Continue reading:

1. Guide to Buying Property in Penang! | Real Estate 101
2. Penang Turf Club: From Racing Legacy to Future Land Prospects
3. Foreigner’s Guide To Buying Property In Malaysia