Affectionately known as the Pearl of the Orient, Penang is one of the best-known and most-visited corners of Malaysia, and is the the only state in the country to have a Chinese majority population. The capital, Georgetown, attracts tourists from all over the world with its colonial architechture, street art, temples, museums, shopping and food. Circling the island, you'll discover a varied landscape of jungle and coast, farmland, plantations and fishing villages.
Penang might be the second smallest state in Malaysia, but it is one of the most popular place to invest. It is a first world city with a stable economy that is built on the manufacturing and tourism trade.
Foreign Direct Investments (FDIs)
Penang continues to be one of the preferred locations for FDIs in the electrical and electronic sector. Top tier multinational companies (MNCs) such as SanDisk, Hewlett Packard. Seagate and BOSE have been the driving the growth in Penang's manufacturing industry and during the first seven months of 2014, the state recorded more than 90 approved projects, with total investment of USD1.4 billion (data from Malaysia Investment Development Authority).
Penang has the third busiest airport in Malaysia and the tourism trade is heating up as the number of international tourists visiting Penang rose by 8.23% in the first two months of 2014 compared with the same period in 2013. Many are of course are attracted to the state's unique culture but there is also a growing number of visitors coming here to seek medical treatment as Penang is the leading medical hub of Malaysia (read this article for a deeper analysis on Penang medical tourism)
When it comes to the best places to stay in Penang for expatriates, that would be in the Northern part of the island - Batu Ferringhi, Tanjung Bungah, Tanjung Tokong and Gurney Drive.
With panoramic views of the sea as well as the lush tropical hills of Penang, Batu Ferringhi gives you a totally relax feel like you are always on an island holiday. The surrounding area is close to beaches, night markets, beach front hotels and The Interntional School of Penang (Uplands) is situated here to cater for the expats living in this area. The disadvantage of staying at this part of the island is the time to commute to town (Georgetown) which takes about 40 minutes and there are no big supermarkets here. So it really helps if you have a private car to drive around this part of the island.
Tanjung Bungah is an area that is en-route to Batu Ferringhi and is a favourite for foreigners to settle down because of the suburb neighborhood feel. Most of the apartments and condos here are situated near the beach or on a hillside with wonderful views of the sea. There are two international schools situated here, Dalat International School and Tenby International School. No big supermarkets here but basic amenities such as a wet market, convenience stores, cafes and restaurants serving a wide varity of cuisine makes are located in this area.
This is also another faviorite neighborhood among expats where a new township of bungalows, terrace houses, high rise condominiums with amazing facilites have been completed. Penang's first and only seafront retail marina, Straits Quay, can be found here along with big supermarkets like Tesco and Cold Storage. Additionally, there are a number of small businesses (banks, clinics, convience stores, etc) along Jalan Fettes making Tanjung Tokong an area where almost all the basic amenties can be found.
Gurney drive is a famous seafront promenade in Georgetown and it is the best place to base yourself if you don't want to bother with a car. Everything is within walking distance and you have the two biggest shopping malls here - Gurney Plaza and Gurney Paragon. Traffic tends to be rather heavy in this area so residents may beed to prepare themselves for traffic as well as noice pollution.
Last updated: Dec 2014
Penang Residential Market Outlook 2014/2015
Effects of the cooling measures put in place to drive out speculation is taking affect in the market. The total number transacted properties that are more than RM1,000,001 have registered a fall of 11.8% in the first quarter of 2014 compared to the previous quarter (data from National Property Information Centre) and it is expected to decline further over the next year.
However, Remember These Factors
1. The opening of Penang's Second Bridge and the state's government emphasis on making Penang open for business only means a brighter future. A number of big investments have been confirmed and that has resulted in much excitement. Swedish furniture icon, IKEA, will be opening up a full size store with an integrated development surrounding it. Singapore's Temasek Holdings is investing in a development for a technology park and BPO hub as many look at Penang as a sound alternative to expand in to Malaysia.
2. There are many Penangites (estimated to be around 60,000) who work and stay in Singapore - however, a recent survey showed many of them would like to go back to Penang. Maybe they are homesickness, or whatever - but the high level of interest among the locals to return only shows how Penang is as a place. Should this happen, don't forget that they will be flush with Singapore dollar and once the demand gets higher, it's probably wise to invest or purchase at present.
3. Geographically speaking, Penang island is hilly in the middle and largely protected by the state government. Thus like Hong Kong, only a limited amount of land is available for development, which means that property prices will eventually go up.
4. Penang is one of the most livable cities in Asia and as long as the Malaysian government is actively promoting the 10 year residency visa under the Malaysia My Second Home (MM2H) programme, foreigners will continue coming and look at Penang as a great place to live.
How Much Do Penang Properties Cost?
With effect from 1st March 2014, foreigners must invest a minimum of RM 1 million in Malaysian properties so it does cost quite a bit.
1. For a luxury condominium like Andaman at Quayside, RM 1.4 million can get you a one bedroom apartment of appox 900 sqft (82 sqm). RM 3.6 million can get you a two bedroom of approx 2,035 sqft (189 sqm). RM 4.3 million can get you a three bedroom of approx 2,770 sqft (257 sqm).
2. For a beach front condo unit in Batu Ferringhi like By The Sea, RM 1.5 million (US$ 475,000) can get you a two bedroom apartment of approx 1000 sqft (90 sqm).
Other than the purchase price of the units, you would need to factor in the following:
3. Legal fees which ranges from 1% to 0.4% depending on the value of your property.
4. Stamp Duty for transfer of property, which is roughly 3%.
5. Real Property Gain Tax or Capital Gains Tax which applies for properties sold within 5 years or less. For foreigners, the rates are 30% of the property gain for disposal in the 5th year or earlier, and 5% for disposal in the 6th and subsequent years.
Unfortunately, rental yields are not very attractive on the island, hovering around 2.5% to 4% gross rental yield and it is tough to generate positive cash flow when interest rates for a housing loan start from 4.2%. Accordingly, as a foreigner, you may loan up to 80% of the value of your property.
The days of double digit gains in property prices in Penang are gone - there seems to be an oversupply of higher end residential properties, which has resulted in developers shifting their focus on developing affordable housing. However, just like Singapore and Hong Kong, land is limited in Penang and that means property prices would certainly go up.
Last updated: Dec 2014
Last updated: Dec 2014
Getting There & Away
Penang is easily accessed by road and rail from other parts of Peninsula Malaysia. The island also has ferry links to Langkawi and to Medan in Indonesia, and the airport has direct regular flights to most major cities in Asia (Kuala Lumpur, Singapore, Hong Kong, Bangkok, Jakarta, Krabi, Taipei, etc). The airport is the hub of two-low cost carriers, namely Firefly and AirAsia, making it a major centre for cheap airline tickets.
Georgetown is well served by bus and the fares around town starts from RM1.40 and goes up to a maximum of RM4.00. However buses from Georgetown to other parts of the island are less frequent and getting around the island by road is easiest with your own transport.
So if you're here for more than a week, I would recommend that you to rent a car. Last I checked, rates start at around RM180 per day (indcluding insurance) and if you're looking to rent on a longer term basis (minimum 3 months), drop me an email: firstname.lastname@example.org and I'll forward you the contact details of an agent that I personally have used that charge very reasonable rates (e.g. Nissan Sentra RM1,400 per month including insurance).
If you plan to take the taxi, it may be quite difficult to hail for one compared to Kuala Lumpur or Singapore but you can usually find taxis congregating at major shopping malls, hotels, the airport and bus terminals. For other locations, it's best to give a call to a taxi company and I would recommend calling Airport Taxi driver Stanley: +6019 412 2712 or Sri Radio Taxi: +604 642 5961. Please note that Taxis in Penang all have meters but most drivers refuse to use them, so negotiate the fare before you set off.
To be updated