Penang Real Estate: The Ultimate Guide

Buying a Condo in Penang: The Ultimate Guide

The Penang property market has become one of Southeast Asia’s most popular choices among foreign home buyers.

Known for its luxury condos, Penang is a top destination for investors and retirees alike.

If you’re researching Penang’s housing market, it’s important to first make the distinction between real estate in Penang province and the island.

When referring to Penang, people usually mean the island, which includes the large city of Georgetown, Batu Ferringhi, and practically all the other top neighborhoods to buy real estate in Penang.

The province, in contrast, includes Penang island along with parts of mainland Malaysia. Buying a home or investment property in these parts of Penang aren’t nearly as popular when compared to island itself.

In this guide, our focus is real estate on Penang island. We’ll discuss the process of buying property here by understanding:

  • Foreign real estate ownership in Penang;
  • How much a condo in Penang costs;
  • The best neighborhoods in Penang;
  • Fees and property taxes in Malaysia; and
  • Is Penang real estate a good investment?

Can Foreigners Buy Property in Penang?

Malaysia is one of the only countries in Asia where foreigners are eligible to own land directly. With rapid urbanization, population growth, combined with a rising middle class, large Malaysian cities like Penang should fill out, thus leading to higher real estate values.

However, there are still a few caveats. For instance, foreign condo buyers must adhere to a minimum purchase price of RM1 million (about US$240,000).

Additionally, foreign buyers are restricted from owning land in certain areas – especially cultural buildings in Penang and old shophouses with historical significance. You’re likely to run into this limitation in and nearby Georgetown.

Beyond that, it just takes a bit of paperwork before you’re on your way to purchasing a new condo in Penang.


How Much Does Penang Real Estate Cost?

Today, homes in Penang range from RM800,000 (US$190,000) to well above RM20 million (US$5 million).

While Malaysia was not exempt from the pandemic’s effect on real estate and the overall housing market, Penang has still fared fairly well.

If you’re looking to buy a condo here, you’re in luck since the price range for condos starts a bit lower compared to buying houses and land in Penang.

Condos in Penang are priced between RM400,000 (US$95,000) on the budget end, to RM5 million (US$1.2 million) for a penthouse unit in a luxury building.

If you’re a foreigner though, just make sure that the condo for sale meets the RM1 million requirement that non-Malaysian real estate owners must abide by.


Gurney Drive

Gurney Drive is the most expensive area of Penang in terms of real estate values. It’s located on prime beachfront land, a short walk away from historic Georgetown.

Best Neighborhoods to Buy in Penang

Penang offers a range of options for any foreign home buyer. From “Millionaire’s Row” on the island’s eastern side to beautiful beaches in the north, you’re sure to find an area that you fancy.

In this section, we’ll tell you about Penang’s top neighborhoods to buy real estate. While the southern part of the island is highly urbanized, it is the north that has some of the most popular beaches and residential communities.

And although the focus of this article is on Penang island, we’ll discuss one neighborhood on the mainland as well.


Georgetown & Gurney Drive

Once a British colony and major military and trade post, Georgetown is now Penang’s largest urban area. And it’s no surprise that Georgetown draws millionaires to its gorgeous beachfront properties.

A favorite location for expats and retirees, Gurney Drive is Penang’s most expensive street and often referred to as Millionaire’s Row. 

Roughly 1 kilometer long, this road directly faces the beach and is host to some of Penang’s priciest condos.

Many of the wealthiest families in not only Penang, but the entire country of Malaysia own property on Gurney Drive. Either that, or nearby in one of Georgetown’s rare, prime landed shophouses.

Your goal might be to buy land here, but you’ll also find much more. Georgetown is full of famous food stalls, is listed as a UNESCO World Cultural Heritage Site, and will meet any shopaholic’s needs with its flea markets and shopping malls.


North Penang – Batu Ferringhi

Batu Ferringhi is a suburb of Georgetown and located on the northside of the island. It is also the second most popular area among foreign investors in Penang, with its white sandy beaches.

While some of our suggestions are centered on buying condos, you’ll find less options for in places like Batu Ferringhi since it has a low population density. However, you’ll still find large houses and gated communities in the hills of this top locale.

Apart from its beautiful houses, Batu Ferringhi is also known for its delicious cuisine, lively night market, and adventurous jungle hikes.


Northeast Penang – Tanjong Tokong

Tanjong Tokong lies between Georgetown and Batu Ferringhi. While this area was once a fishing village, it has now been developed into a high-class residential suburb.

This was built by Eastern & Oriental, the developer behind the Seri Tanjung Pinang project. Known for building world-class communities, Eastern & Oriental have extended parts of this project to an artificial island.

You can find both luxury homes and low-cost condo suites, in this coastal mixed-use development project. Seri Tanjung Pinang also offers townhomes, villas, shops, a marina, and more to its residents.


Mainland Penang – Butterworth

Butterworth is the largest city in mainland Penang, or Penang province, and is connected to the island by two bridges. You’ll find a quieter lifestyle and less expensive prices here.

While it was once an agricultural town, Butterworth later grew into an industrialized city. It is now one of Malaysia’s busiest seaports and a major transportation hub.

Despite Butterworth’s busy port, there is room for a slower pace here. If that is more your speed, then in addition to low housing prices, you’ll find scenic views and coastline strolls.

Just be aware: land in Penang island has a scarcity which should drive up prices in the long-term. Yet Butterworth and the surrounding areas on mainland Penang don’t have such limits on construction.

Consider buying real estate in Penang island if your investment goals involve long-term capital appreciation or ease of rentability.

The main island’s demographics, and lack of available space to build a home, will naturally lead to a shortage of land in Penang in the long-term. The same isn’t true for Butterworth or the mainland though.


Property Tax in Malaysia

Well, we have both good and bad news about property taxes in Malaysia.

The good news is that annual real estate tax in Malaysia is extremely low. In fact, it’s so low that it’s practically non-existent.

The annual property tax in Malaysia is between 1 and 2 sen per square foot (US$0.002 – 0.004).

Besides annual taxes, other fees that are quite low include Malaysia’s “quit rent” tax and annual condo maintenance fees. The quit rent average is less than RM100 (or US$25).

Condo maintenance fees vary widely depending on the specific project you own a unit in. They’re used to pay condo staff and keep common areas (pool, gym, etc.) in good condition. Generally, maintenance fees run around RM4 (US$1) per square foot annually.

The bad news? Nearly every other real estate tax is quite high in Malaysia, including rental income tax and rental property gains tax.

For example, if you’re a non-resident in Malaysia, expect to pay a rental income tax of 25%. Albeit the rental income tax rate isn’t much lower even for residents at 20%.

Capital gains tax, payable upon selling a property, differs based on how long you’ve held the asset, and whether you’re a foreigner or not.

Foreign buyers who have owned a property less than five years must pay a whopping 30% capital gains tax upon sale. The rate drops to 10% if you’ve owned it longer than five years. This policy’s goal is aimed at deterring short-term buyers and speculation.


Is Penang Property a Good Investment?

Malaysia is still among the region’s top choices for anyone seeking a combo of value-for-money, ease of foreign real estate ownership, and quality building standards.

Specifically, Penang real estate could prove a solid long-term investment with the island’s limited building space and increasing demand. You’re also making a bet on the Malaysian ringgit’s long-term appreciation prospects.

Don’t forget about the MM2H (Malaysia My Second Home) visa either, which ranks among Asia’s best long-term residency programs. Buying a condo in Penang already means you’ve done a majority of the work needed to obtain a 10-year visa here.

Plus, Penang has a diverse range of neighborhoods to choose from. Whether you want to live like a millionaire, lay on the beautiful beach every day, or be part of a world-class expat community, Penang has plenty of options to offer.

Overall, we recommend Malaysian property if your investment horizon is at least five years. Rental yields are unfortunately rather low at between 2% to 3% gross returns.

Yet capital appreciation potential is why people buy a home in Penang – not because of high rental yields.

When it comes to investment, Malaysia’s housing market in general is very much a “buy and hold” game due to the country’s population growth and overall demographic trends. Real estate in Penang certainly isn’t an exception.



Can Foreigners Buy Land in Penang?

Yes, it's possible to buy land and houses in Penang as a foreigner. Malaysia is one of few countries in Asia that allows foreigners to own freehold land without many limits.

The only restrictions when it comes to foreign ownership in Malaysia are on shophouses, agricultural land, and property with a historical significance. These are for citizens only.

How Much Does Real Estate in Penang Cost?

You can expect to pay about $2,000 per square meter for a luxury home in Penang on average. The specific neighborhood you're buying in, along with several other factors, will determine the exact price though.

How High Are Rental Yields in Penang?

You should expect gross rental yields of about 3% on average for most types of properties in Penang.


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