Authored by the expert who managed and guided the team behind the Malaysia Property Pack
Everything you need to know before buying real estate is included in our Malaysia Property Pack
If you are a foreigner thinking about buying a property in Penang to rent it out, this guide gives you everything you need to know about rental yields, tenant demand, legal rules, and neighborhood performance.
We wrote this article specifically for non-professional investors who want clear, practical answers without the jargon.
We constantly update this blog post to reflect the latest market conditions, regulations, and rental data in Penang.
And if you're planning to buy a property in this place, you may want to download our pack covering the real estate market in Penang.
Insights
- Penang gross rental yields in 2026 typically range from 3.5% to 5%, but after costs most landlords actually see around 2% to 3.5% net, which means budgeting for strata fees and vacancy is essential.
- Short-term rentals on Penang Island are effectively banned for residential units, while mainland Seberang Perai still allows Airbnb-style rentals with registration requirements.
- The Bayan Lepas industrial corridor on Penang Island has some of the most stable long-term tenant demand because multinational employers keep the rental pool consistent year-round.
- Mainland Penang neighborhoods like Bukit Mertajam and Alma often deliver higher yields than island properties because purchase prices are significantly lower while rents remain solid.
- Furnished apartments in Penang typically rent 10% to 20% faster than unfurnished ones, especially in areas popular with expats and professionals on fixed-term contracts.
- Foreigners do not need to live in Malaysia to rent out a Penang property, but registering with Malaysia's tax authority (LHDN) is strongly recommended for proper income reporting.
- Typical vacancy in Penang runs around 6% to 9% annually, which means budgeting for roughly one month of empty time per year is a safe baseline for most landlords.
- Strata maintenance and sinking fund fees are the largest recurring cost for Penang condo owners, often ranging from RM 300 to RM 750 per month depending on the building.
Can I legally rent out a property in Penang as a foreigner right now?
Can a foreigner own-and-rent a residential property in Penang in 2026?
As of early 2026, foreign individuals can legally own residential property in Penang and rent it out, provided they meet state consent requirements and minimum purchase price thresholds.
Most foreigners hold Penang rental property under direct individual ownership after obtaining state approval, which is the simplest structure for residential investments.
The main restriction foreigners face is that Penang has different minimum price thresholds for different property types, and some landed properties on the island may be off-limits or require special approval.
It is also important to know that Penang rules differ between the island and the mainland, and this distinction affects both what you can buy and how you can rent it out.
If you're not a local, you might want to read our guide to foreign property ownership in Penang.
Do I need residency to rent out in Penang right now?
No, you do not need to be a resident of Malaysia to rent out a property in Penang, and many foreign landlords manage their investments entirely from abroad.
While not legally mandatory, registering for a Malaysian tax number with LHDN is strongly recommended because rental income from Penang is taxable regardless of where you live.
A local Malaysian bank account is not strictly required by law, but it makes collecting rent and paying local costs like maintenance fees and assessments much easier in practice.
Managing a Penang rental remotely is entirely feasible if you appoint a local property manager or agent to handle viewings, tenant issues, and routine maintenance on your behalf.
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What rental strategy makes the most money in Penang in 2026?
Is long-term renting more profitable than short-term in Penang in 2026?
As of early 2026, long-term renting is generally the safer and more predictable profit path for foreign owners in Penang because short-term rentals face heavy restrictions, especially on Penang Island.
A well-managed long-term rental in Penang might generate around RM 24,000 to RM 36,000 per year (roughly USD 5,000 to USD 7,500 or EUR 4,700 to EUR 7,000), while short-term rentals could theoretically earn more but face regulatory hurdles and higher vacancy.
Short-term renting tends to work better financially for properties in mainland Penang (Seberang Perai) or commercial-title buildings where the local council and strata rules actually permit Airbnb-style stays.
What's the average gross rental yield in Penang in 2026?
As of early 2026, the average gross rental yield for residential properties in Penang is around 4%, though this varies depending on location and property type.
The realistic gross yield range for most Penang properties falls between 3.5% and 5%, with mainland locations often hitting the higher end due to lower purchase prices.
Studios and smaller apartments typically achieve the highest gross rental yields in Penang because they have lower entry prices while still commanding decent monthly rents from young professionals and students.
By the way, we have much more granular data about rental yields in our property pack about Penang.
What's the realistic net rental yield after costs in Penang in 2026?
As of early 2026, the average net rental yield for Penang residential properties is around 2.5% to 3%, which is what most landlords actually take home after all expenses.
The realistic net yield range for Penang landlords falls between 2% and 3.5%, depending on building fees, management costs, and how well you minimize vacancy.
The three main cost categories that reduce gross to net yield in Penang are strata maintenance and sinking fund fees (often RM 300 to RM 750 monthly), property management fees for remote owners (6% to 10% of rent), and the tax treatment of rental income which differs for non-residents.
You might want to check our latest analysis about gross and net rental yields in Penang.
What monthly rent can I get in Penang in 2026?
As of early 2026, typical monthly rents in Penang are around RM 1,700 (USD 360, EUR 340) for a studio, RM 2,300 (USD 490, EUR 460) for a 1-bedroom, and RM 3,200 (USD 680, EUR 640) for a 2-bedroom apartment.
A decent studio in Penang can realistically fetch between RM 1,400 and RM 2,100 per month (USD 300 to USD 450 or EUR 280 to EUR 420), depending on location and building quality.
A typical 1-bedroom apartment in Penang rents for between RM 1,800 and RM 2,800 per month (USD 380 to USD 600 or EUR 360 to EUR 560), with higher rents in expat-friendly island areas.
A standard 2-bedroom apartment in Penang commands between RM 2,400 and RM 4,000 per month (USD 510 to USD 850 or EUR 480 to EUR 800), with premium locations like Gurney Drive at the top of this range.
If you want to know more about this topic, you can read our guide about rents and rental incomes in Penang.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Malaysia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
What are the real numbers I should budget for renting out in Penang in 2026?
What's the total "all-in" monthly cost to hold a rental in Penang in 2026?
As of early 2026, the total monthly cost to hold a typical condo rental in Penang is around RM 700 to RM 900 (USD 150 to USD 190 or EUR 140 to EUR 180), excluding any mortgage payments.
The realistic range for most Penang rental properties is between RM 550 and RM 1,250 per month (USD 115 to USD 265 or EUR 110 to EUR 250), depending on building age and location.
Strata maintenance and sinking fund fees are typically the largest single cost for Penang condo owners, often representing 40% to 60% of total monthly holding costs.
You want to go into more details? Check our list of property taxes and fees you have to pay when buying a property in Penang.
What's the typical vacancy rate in Penang in 2026?
As of early 2026, the typical vacancy rate for rental properties in Penang is around 6% to 9%, which translates to roughly three to four weeks of empty time per year.
Landlords in Penang should realistically budget for about one month of vacancy per year, or two months if the unit is in an oversupplied building or poorly positioned.
The main factor that causes vacancy rates to vary across Penang neighborhoods is proximity to employment hubs, with areas near Bayan Lepas industrial zone experiencing lower vacancy than oversupplied high-rise clusters.
Tenant turnover in Penang tends to peak around December and January when work contracts end and families relocate, which means advertising early in Q4 can help minimize gaps.
We have a whole part covering the best rental strategies in our pack about buying a property in Penang.
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Where do rentals perform best in Penang in 2026?
Which neighborhoods have the highest long-term demand in Penang in 2026?
As of early 2026, the top three neighborhoods with the highest long-term rental demand in Penang are Bayan Lepas (driven by multinational employers), Tanjung Tokong (popular with expats), and Bukit Mertajam on the mainland (affordable family housing).
Families in Penang tend to favor neighborhoods like Air Itam, Tanjung Bungah, and Alma on the mainland because these areas offer good schools, parking, and day-to-day convenience.
Students create strong rental demand near Universiti Sains Malaysia (USM), particularly in Gelugor, Sungai Dua, and Minden Heights where smaller units and room rentals move quickly.
Expats and international professionals prefer premium coastal neighborhoods like Gurney Drive, Tanjung Tokong (including Seri Tanjung Pinang and Straits Quay), and Tanjung Bungah for their lifestyle amenities and international feel.
By the way, we've written a blog article detailing what are the current best areas to invest in property in Penang.
Which neighborhoods have the best yield in Penang in 2026?
As of early 2026, the top three neighborhoods with the best rental yields in Penang are Bukit Mertajam, Butterworth, and Alma, all located on the mainland where purchase prices are significantly lower.
These high-yield mainland neighborhoods in Penang typically deliver gross rental yields between 4.5% and 6%, compared to 3% to 4% in premium island locations.
The main characteristic that allows these neighborhoods to achieve higher yields is that purchase prices remain modest while tenant demand stays solid from local workers and families who prioritize affordability over prestige.
We cover a lot of neighborhoods and provide a lot of updated data in our pack about real estate in Penang.
Where do tenants pay the highest rents in Penang in 2026?
As of early 2026, the top three neighborhoods where tenants pay the highest rents in Penang are Gurney Drive, Tanjung Tokong (including Seri Tanjung Pinang), and Tanjung Bungah, all located on the island's premium coastal stretch.
A standard apartment in these premium Penang neighborhoods typically rents for RM 3,500 to RM 6,000 per month (USD 740 to USD 1,270 or EUR 700 to EUR 1,200), with luxury units commanding even more.
These neighborhoods command the highest rents because they combine sea views, walkable lifestyle amenities, quality building management, and easy access to international schools and healthcare.
The typical tenant profile in these high-rent Penang neighborhoods includes senior expatriate professionals, regional business managers, and well-off retirees seeking a comfortable, convenient lifestyle near the water.
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Malaysia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
What do tenants actually want in Penang in 2026?
What features increase rent the most in Penang in 2026?
As of early 2026, the top three property features that increase monthly rent the most in Penang are quality air-conditioning with good ventilation (essential in the tropical climate), covered parking with enough bays (island traffic makes this a dealbreaker), and reliable fiber internet for remote workers.
Quality air-conditioning is the single most valuable feature in Penang rentals and can add a 10% to 15% rent premium because tenants will not compromise on comfort in the heat and humidity.
One commonly overrated feature in Penang is a swimming pool, which many landlords invest in but tenants often do not pay much extra for unless the building is genuinely well-maintained and marketed to lifestyle tenants.
One affordable upgrade that provides a strong return on investment in Penang is installing a good quality water heater and ensuring all air-conditioning units are serviced, as these small improvements significantly reduce tenant complaints and turnover.
Do furnished rentals rent faster in Penang in 2026?
As of early 2026, furnished apartments in Penang typically rent about two to four weeks faster than unfurnished ones because expats, professionals, and students prefer move-in-ready units.
Furnished rentals in Penang command a rent premium of around 10% to 20% compared to unfurnished units, though this varies depending on the quality and style of furnishings provided.
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How regulated is long-term renting in Penang right now?
Can I freely set rent prices in Penang right now?
In early 2026, landlords in Penang have almost complete freedom to set initial rent prices because there is no modern rent control regime capping what you can charge.
Rent increases during a tenancy are not capped by law in Penang, but they are governed by whatever terms you write into your tenancy agreement, so clear renewal and increase clauses matter.
What's the standard lease length in Penang right now?
The most common lease length for residential rentals in Penang is 12 months, though 24-month leases are also popular among families and expats seeking stability.
The standard security deposit in Penang is two months' rent plus one month as a utility deposit (totaling around RM 5,000 to RM 12,000 or USD 1,060 to USD 2,550 or EUR 1,000 to EUR 2,400 for a typical apartment), though this is market practice rather than a strict legal cap.
Security deposit return rules in Penang are governed by your tenancy agreement terms rather than a specific statute, so landlords should clearly document any deductions for damage or unpaid bills before returning the balance.
We made this infographic to show you how property prices in Malaysia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
How does short-term renting really work in Penang in 2026?
Is Airbnb legal in Penang right now?
The legal status of Airbnb-style short-term rentals in Penang depends heavily on location: on Penang Island, residential units are effectively banned from operating as short-term rentals, while mainland Seberang Perai still permits them with registration requirements.
On Penang Island, you generally need a commercial-designated property to legally operate a short-term rental, and your building's strata bylaws must also permit it, which rules out most standard condos.
Penang does not use a simple "X nights per year" cap like some cities; instead, the rules focus on whether your property type and local council zone allow short-term accommodation at all.
The most common consequence for operating a non-compliant short-term rental in Penang includes enforcement action from MBPP (the island council), potential fines, and complaints from your building's management corporation that can lead to penalties under strata law.
What's the average short-term occupancy in Penang in 2026?
As of early 2026, the average annual occupancy rate for short-term rentals in Penang is around 40% to 45%, though this varies significantly by season and location.
The realistic occupancy range for most Penang short-term rentals falls between 35% and 55%, with well-managed properties in tourist zones achieving the higher end.
Peak occupancy months for Penang short-term rentals are typically December through February (school holidays and Chinese New Year) and July through August (summer travel season), when rates can exceed 60%.
The lowest occupancy months are usually March through May and September through November, when tourism dips and occupancy can fall below 30% for many listings.
Finally, please note that you can find much more granular data about this topic in our property pack about Penang.
What's the average nightly rate in Penang in 2026?
As of early 2026, the average nightly rate for short-term rentals in Penang is around RM 280 (USD 60, EUR 56), though this varies by property type and location.
The realistic nightly rate range for most Penang short-term listings falls between RM 150 and RM 450 (USD 32 to USD 95 or EUR 30 to EUR 90), with premium beachfront or heritage properties at the top.
The typical difference between peak season and off-season nightly rates in Penang is around RM 50 to RM 100 (USD 10 to USD 20 or EUR 10 to EUR 20), with peak rates often 20% to 40% higher than low season.
Is short-term rental supply saturated in Penang in 2026?
As of early 2026, the short-term rental market in Penang is partially saturated, with intense competition in island tourist pockets but more room to grow on the mainland.
Active short-term rental listings on Penang Island have been constrained by MBPP restrictions, which has limited new supply growth but created fierce competition among the properties that remain eligible.
The most oversaturated neighborhoods for short-term rentals in Penang are Georgetown heritage zone and Batu Ferringhi, where many similar listings compete for the same tourist guests.
Neighborhoods with more room for new short-term rental supply include mainland areas like Butterworth and Batu Kawan, where regulations are more permissive and tourism infrastructure is still developing.
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What sources have we used to write this blog article?
Whether it's in our blog articles or the market analyses included in our property pack about Penang, we always rely on the strongest methodology we can, and we don't throw out numbers at random.
We also aim to be fully transparent, so below we've listed the authoritative sources we used, and explained how we used them and the methods behind our estimates.
| Source | Why it's authoritative | How we used it |
|---|---|---|
| NAPIC (National Property Information Centre) | Malaysia's official property data centre under the Ministry of Finance. | We used it as the backbone for understanding Penang's housing market trends and to verify any private-sector numbers. We treated it as the anchor for prices and market context when calculating yields. |
| Penang Institute Statistics | Republishes and visualizes official NAPIC data specifically for Penang. | We used it to quickly check Penang-specific supply and market indicators. We relied on it to test claims about vacancy and saturation. |
| OpenDOSM (Department of Statistics Malaysia) | Official open-data portal of Malaysia's national statistics agency. | We used it to frame cost pressure and rent inflation context. We treated it as a reality check so our rent growth assumptions matched official inflation signals. |
| LHDN (Inland Revenue Board Malaysia) | Malaysia's primary tax authority and definitive reference for tax residency. | We used it to explain residency requirements and non-resident tax treatment. We set expectations on how rental income is treated if you live abroad. |
| Income Tax Act 1967 (AGC) | Published by Malaysia's Attorney General's Chambers, it is the actual law. | We used it to ground the "rental income is taxable" point in legislation. We kept tax discussions conservative and compliant with what the law says. |
| PropertyGuru Malaysia | Malaysia's largest property portal with high listing volume and transparent prices. | We used it to triangulate realistic asking rents for different unit types. We took a range approach rather than cherry-picking outliers. |
| Global Property Guide | Long-running, method-transparent rental yield tracker for Malaysia. | We used it to benchmark normal gross versus net yield spreads. We checked Penang-specific estimates against their established methodology. |
| Free Malaysia Today | Major national news outlet with direct attribution to local authorities. | We used it to describe on-the-ground Airbnb rules for Penang Island and mainland. We cross-checked it against MBPP's role and legal commentary. |
| Chambers (Legal Analysis) | Legal-sector publication summarizing regulatory practice and compliance. | We used it to translate what the rules mean for investors. We reduced the risk of misreading headlines by adding a legal interpretation layer. |
| Airbtics | Dedicated short-term rental analytics vendor with published methodology. | We used it as one source for occupancy and nightly rate estimates. We cross-checked plausibility against regulatory constraints before using it. |
We have made this infographic to give you a quick and clear snapshot of the property market in Malaysia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
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