Penang Property Market: Offering Great Variety And Value For Investors
The Malaysian state of Penang offers real estate investors an array of options and opportunities. Keith Hockton gives us an overview of the Penang property market, and tells us which locations in the state are emerging as residential real estate hotspots.
Written by Keith Hockton
After years in the shadows, the island of Penang is in the news these days for all the right reasons. George Town, its multicultural capital, is steeped in history, and has become a top destination for tourists from Mainland China and Singapore. It helps that a great deal of the island’s colonial architecture, both European and Chinese, has been preserved.
Tourists arriving here can see a lot of what their own countries have done away with. Two hundred year-old temples and churches and mosques are as they were. Street food sellers everywhere. And shophouses, most of which were built c. 1870, survive here in the thousands.
Malaysia also has relatively liberal property laws, and foreigners can buy property in the country freehold, on a tourist visa. That makes Malaysia a very attractive option for investors looking for value-for-money commercial and residential properties in the region.
A bird’s eye view of E&O’s Seri Tanjung Pinang development
Penang market overview
Just last year a Singaporean property entity, which could obviously see the value in Penang’s shophouses, bought over 400 of them in one swoop. Unrenovated shophouses here on average, depending on the area, sell for around RM1.5 million (US$350,000). In Singapore, a renovated shophouse, of a similar size, would sell for up to of RM18 million (US$42.3 million). An investment of 400 shophouses is quite a statement for an international investor, and ultimately sets a bullish tone for the future of the Penang property market.
This caused the Penang Government to try and slow foreign investment by placing a minimum investment floor of RM1 million (US$230,000) for condominiums and RM2 million (US$470,000) for landed properties. However, these regulations didn’t have the desired effect – as foreign real estate investors continue to flock to the state. Penang is far too attractive, and the Malaysian ringgit, far too cheap.
Penang is a small island, and landed properties will always be sought after. After all, there is only so much land available. And given time, it should always go up in value. And as long as the island continues to grow economically – and signs for continued growth are good – then the similarities to Singapore and Hong Kong just cannot be ignored.
Singapore and Hong Kong are both banking centres of excellence and industrial ports. Penang is one of Southeast Asia’s busiest ports, and the most sought-after industrial zone in Malaysia. Furthermore, the island’s industrial zones are expanding at a rapid pace across to the mainland, with some very large international companies vying for the land is currently available.
This is good news for the Penang property market, both commercial and residential. After its rapid rise in 2008, largely due to its UNESCO heritage listing, it plateaued in 2014. Property prices declined in 2015, plateauing at a lower level in 2016. Now, however, new luxury condominiums are selling quickly, while older ones are attracting new buyers who know value when they see it.
A good example of this is The Cove and 1 Tanjong, two condominium complexes in Penang’s ritzy suburb of Tanjong Bungah. This is one of the most popular areas for foreign investors. Landed houses here sell for up to RM6 million (US$1.4 million), while its beach houses, of which there are only a limited number, can sell for upwards of RM20 million (US$4.66 million) each.
Captains of industry and retirees proudly call this area home. It’s also a good area for families, with numerous cafés and restaurants all within walking distance of both condominium complexes. And DLAT, an acclaimed international school, is just down the road.
The Cove was completed in 2007. And with just one apartment per floor, these 6,000-square-foot beachfront condominiums offer unlimited sea and hill views. Two swimming pools, a state-of-the-art gymnasium, tennis courts, sculptured gardens; 24-hour security and covered parking complete the scene. Additional facilities include a wading pool and a BBQ area where you can privately entertain up to 50 friends. These apartments sell for as little as RM2.5 million (US$580,000). A similar apartment in Kuala Lumpur, in a similar neighborhood, would cost double that amount.
Right next door to The Cove is 1 Tanjong. Similar in size and design, these condominiums were completed in 2017. These new luxury condos sell for RM3.8 million (US$890,000). A 1 Tanjong penthouse, some 18,000 square feet of shining marble and polished steel, sold recently for RM20 million (US$4.66 million).
Sunset in George Town, Penang
Tanjong Bungah is a favourite, and its beach and parks and its proximity to George Town (it is just 5 kilometres away) mean that its star will continue to rise. It’s a good area for expatriates with school-aged children, while maintaining its status as one of the best beach districts on the island.
Pulau Tikus, a few miles northwest of George Town, has its fair share of mansions, bungalows, colonial buildings, and high-rise condos on Gurney Drive. But it also has leafy suburbs, and is home to several embassies as well as Penang’s Botanic Gardens. The area also has its own wet market where you can buy fresh vegetables, fruits, and meats at local prices.
And while landed houses in Pulau Tikus start at around RM3 million (US$700,000), reasonably priced apartments can still be had. The Desa Melor complex on the corner of Jalan Burma and Jalan Brown is just a few minutes’ walk from the wet market. Here a 2,000-square-foot apartment sold recently for just RM1.6 million (US$370,000). It included views of Penang Hill, a swimming pool, a gym, two car spaces and 24-hour security. The Botanic Gardens and Youth Park, the outdoor place for both adults and kids at weekends, are just a three-minute drive away, and Gurney Plaza (one of the ritziest shopping malls on the island), a mere seven-minute stroll away.
The beach enclave of Tanjong Tokong, a little further north, is going through a major transformation. The owners of the E&O Hotel chain, Eastern & Oriental Bhd, reclaimed a sizable piece of land in 2008 and decided to build luxury properties on it. This included a 40-berth marina. Seven years later, Straits Quay is abuzz with bars and restaurants, and the surrounding apartments and houses have since sold out. The mall itself is 80% tenanted, and has a net lettable area of 270,000 square feet.
Straits Quay has been a popular development, so much so that Eastern & Oriental have decided to build two islands just offshore, and reclaim what remains of the foreshore mangrove area stretching back to Gurney Drive. Totalling 740 acres, this is the largest development currently on the island. When completed, it will contain a mixture of houses, a state-of-the-art shopping centre, condominiums, a golf course, and numerous public parks.
Straits Quay itself is a quality, popular development with investors – helped by the fact that within walking distance is the newly built TESCO superstore, as well as numerous bars and restaurants. Just minutes down the road is Penang’s first shopping centre (also going through a renovation) and Cold Storage, one of the biggest and best supermarkets on the island.
The bottom line
There is still concern that Penang Island has an oversupply of residential projects, but with multinationals fighting for land on the mainland, its arguable that there is indeed a need for it.
Penang is suddenly good value again, and it’s not just investors from China and Singapore who are taking note.
We just sent you an email. Please click the link in the email to confirm your subscription!
OKSubscriptions powered by Strikingly