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The contents of this article were contributed by Desmond Sin, seasoned real estate agent with 9 years of experience specializing in Penang and Kuala Lumpur regions.
Penang (or Pulau Pinang) known for its colourful culture and beautiful oceanside views has always been an intimidating area to invest due to 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 thinking of investing in Penang, continue reading to understand everything about the Penang property market.
What to know about Penang property
- 1. Who is buying property in Penang?
- 2. What properties do people buy in Penang?
- 3. Reasons people invest in Penang property
- 4. Hotspots in Penang
- 5. Up-and-coming areas in Penang
- 6. Are Airbnbs banned in Penang?
- 7. How will the new Penang LRT affect property prices?
- 8. What to take note of if you want to invest in Penang property
1. Who is buying property in Penang?
Young first-time homebuyers
A rising amount of homebuyers come from those in their early 20’s.
Some individuals start buying homes as they entered the workforce at a young age, started earning money, and felt ready to purchase a property.
Since young homebuyers enter the market every year, there’s no lack 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 in mind from the average homebuyer, they usually do their homework; some are inclined towards, for example, sea-view properties, while others are specifically interested in below-market-price opportunities.
Regardless, 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 who are 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?
Both landed properties and condos are being purchased, depending on the buyer’s financial capacity.
Why 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 condition of the house 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
In Penang, Batu Kawan is a hotspot attracting interest not just from Penang residents but also from people in Kedah, Perak, and even KL.
For engineering students, Penang often becomes a top choice after Singapore due to the high concentration of factories in the area.
Batu Kawan is a more industrial area, and it has been recommended by the Penang Chief Minister for larger factories, as 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. For homes priced below RM500,000, they can benefit from a government stamp duty exemption, saving 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, as the journey from Indonesia is only about 30 to 45 minutes—quicker than traveling to KL.
Bayan Lepas Free Industrial Zone brings in more residents
Bayan Lepas also is starting to show more growth potential in its industrial area, where many workers commute more on foot and other 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, in Penang, property prices are increasing year by year due to the scarcity of land, regardless of the LRT’s impact.
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?
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.
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