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Penang: A Thriving Real Estate Market

With the second biggest concentration of expatriates in Malaysia after the Klang Valley, Penang is also a thriving economic hub and real estate market.

by / Published: 2 Jul 2013

Penang: A Thriving Real Estate Market

Investing in property in Malaysia is usually seen as a ‘grandpa’s investment’. However, there is an exception to it, and it’s Penang. Ask any property developer and they will acknowledge the situation. Due to its location and quality of life, Penang attracts foreign direct investments mainly from Singapore and Hong Kong, but is also a destination of choice for Malaysia My Second Home (MM2H) beneficiaries. Hence, property prices tend to appreciate over a relatively short period of time. Prime property locations in Penang include beachfront properties in Batu Ferringhi, Tanjung Bungah and Tanjung Tokong which are all located on the northeastern side of the island. Along Batu Ferringhi are numerous large hotels, restaurants, transport rental services and souvenir stores. Adjacent vicinities include Teluk Bahang and Tanjung Bungah.

Tanjung Bungah is another popular place for beachfront property. Many hotels over there offer rates to suit budget travelers. Indeed, the development of mid-class to high-end apartments and condominiums are rampant in the area. It is an ideal residential spot for foreigners due to its proximity to the Dalat International School and The International School of Penang (Uplands). The Penang campus of Tunku Abdul Rahman College (TARC) is also situated here.

Pulau Tikus, located in George Town, central Penang, is also one of the upcoming prime property locations on the island. One of the luxury condominiums there is the Silverton, situated along Gurney Drive. This freehold property is priced from RM1 million. Lying southeast of the island is Batu Maung. Around 20 years ago, Batu Maung was a small fishing village accessible only from Bayan Lepas. However, in the past few years, Batu Maung has been experiencing rapid development due to its proximity to the Bayan Lepas Free Trade Zone. In 1994, a new four-lane highway—known as the coastal highway—was opened, linking Batu Maung to Gelugor. Travel time from Batu Maung to Penang Bridge, which had previously taken almost one hour, was significantly reduced to approximately 15 minutes. The nearly completed second bridge, landing in the area, is just another factor behind the thriving development of this lesser known part of the island. In fact, local developer Mah Sing’s RM1.28 billion Southbay Penang project in Batu Maung registered some 1,500 interested buyers for its first phase when it was launched.

Penang, towards the future
Economists and the Malaysian government alike foresee a growth in property development with the proposed Second Bridge Link, monorail, and Penang Outer Ring Road projects, to be implemented soon. Many foreigners, especially Japanese, Australian and British nationals, have invested in second homes on Penang Island. In a recent survey, Penang was voted as one of the best Asian cities to live in by Asiaweek. Since the late 1990s, Penang has always been in a good position according to different surveys conducted by various specialised magazines. The island was regularly ranked in the top 10 according to a survey involving 255 cities in Asia by Employment Conditions Abroad Limited (ECA International). Some of the barometers by which these cities were gauged included weather, air quality, infrastructure, health services, housing, security and politics. Property prices in the south of Penang have increased by approximately 20 percent compared to only a year ago. Generally speaking, Penang properties generate good investment value because of their location, concept, design and quality.

It is no wonder then that the real estate market in Penang is now frequently compared to some of the best schemes around the world, making the state a key focus for domestic and international buyers alike.

According to Joshua Cheah, Head of Zerin Properties Penang, “Astute local and foreign real estate investors have complemented Penang’s progress in offering not just some of the most attractive product designs but developments as well at attractive prices” as well as Penangites who have migrated to other states and countries to work and are also keen to invest in property in Penang.

The best example to illustrate this phenomenon is the current demand on heritage buildings. Prices have increased starting from RM700,000 to a couple of millions depending on the location and the extent of preservation.

Penang has also been identified as a preferred place to live in due to its low cost of living, its haven of delicious cuisines, choices of international schools, the widely spoken English language and stabilised political and economic environment.

Compared to nearby countries like Singapore, Thailand and Hong Kong, property prices in Penang are also relatively low. This has made Penang an attractive place to invest property in, whether as an investment opportunity or merely as a second holiday home.

Penang Island’s residential property consists mostly of high-rise (stratified) properties rather than landed property due to a scarcity of suitable and large land-banks. Several luxury condominiums and suites have recently been developed along Gurney Drive towards Tanjung Bungah and Batu Ferringhi. Prices for these properties range easily from RM800,000 onwards.

This price includes nice sea views, beach frontages for some properties, close proximity to international schools, easy access to food and beverages outlets, and short distances to existing shopping complexes such as Gurney Plaza, Island Plaza and Tesco hypermarket.

Future Outlook: The New Brand of Penang
Penang is already a brand name that is instantly recognisable abroad. Penang’s 7C—cuisine, culture, care, choice, community, cost and connectivity—could be further strengthened to reaffirm and rejuvenate Penang to emerge as one of the major destinations for property investment. Compared to the neighbouring cities, Penang offers very competitively priced properties and relatively lower cost and comfortable living with the facilities of developed cities. Competitive pricing of properties in Penang in particular and Malaysia generally, being much lower than Hong Kong, Singapore and even Vietnam, is anticipated to continue to drive investment interest. There is good potential capital appreciation in Penang’s property sector based on a mid to long-term view. The state’s property has the second highest capital gain in the country after Kuala Lumpur. The declaration of George Town as a World Heritage Site has given Penang another advantage to promote local properties with the inflow of tourists and potential MM2H participants.

What to Expect in Terms of Prices
Setia V Residences
(along Gurney Drive)—Launching soon
Built-up area: Approx. 2,600 sqft–8,000 sqft
Selling price: Approx. RM2.3million onwards
Tenure: Freehold

Harmony Residence
(along Tanjung Bungah)—Completed
Built-up area: 5,000 sqft (standard unit)
Selling Price: Approx. RM2.8million onwards
Tenure: Freehold

Beachfront Luxury Suites
(in Batu Ferringhi)—Launching soon
Built-up area: 1,030 sqft–3,038 sqft (2 rooms to 4 rooms)
Selling price: Approx. RM875,000 onwards
Tenure: Freehold

Landed properties
Beverly Hills
(in Batu Ferringhi)—Completed
Property type: 3-storey terrace house
Built-up area: Approx. 2,900 sqft
Land area: Approx. 1,770 sqft
Selling price: Approx. RM1.1million onwards

Legenda @ Southbay
(Teluk Kumbar)—ongoing
Property type: 3-storey and 4-storey resort bungalow (gated)
Built-up area: Approx. 6,460 sqft–7,300 sqft
Land area: Approx. 7,500 sqft onwards