Is buying a Penang condo for Airbnb still worth it?

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Can you still legally run Airbnb from a Penang condo?

For an ordinary residential condo on Penang Island, buying specifically for Airbnb is currently a bad bet because short-term stays are heavily restricted.

Penang has spent the past few years moving short-term accommodation out of the grey zone. Under the rules applied by the Penang Island City Council, private short-term accommodation is prohibited in stratified residential properties. The state has also introduced a formal private-homestay licensing framework, giving local councils much clearer control over who can operate and where.

That immediately rules out a large part of the condo market that investors might instinctively browse on PropertyGuru or iProperty.

Commercial properties have more room. Serviced apartments, SOHO units and some other commercially classified properties may qualify, depending on their approved use, local-authority requirements and the building's own rules. Even there, the word "commercial" on a title is nowhere near enough evidence to buy.

For anyone underwriting a Penang Airbnb today, legality has to be checked before revenue.

Penang property type	Short-stay position	What has to be checked	Airbnb investment view
Residential-title condo	Generally prohibited on Penang Island	Local rules and building classification	Avoid for nightly Airbnb
Residential apartment	Generally prohibited on Penang Island	Local rules and building classification	Avoid for nightly Airbnb
Serviced apartment	Potentially permitted	Local licence + JMB/MC rules	Worth investigating
SOHO / commercial strata	Potentially permitted	Approved use + management rules	Case by case
Shophouse / shop office	Potentially permitted	Planning and licensing	Can work with proper setup
Landed property	Conditional	Planning approval and permitted use	Highly property-specific

Does a commercial title mean a Penang condo is Airbnb-friendly?

No. A commercial title alone does not make a Penang condo safe for Airbnb.

Malaysia's Federal Court made this very clear in the Verve Suites case. Verve Suites stood on land approved for commercial serviced apartments, yet its management corporation was still allowed to prohibit short-term rentals through its house rules.

That decision matters directly to a Penang buyer. A serviced apartment may clear the first regulatory hurdle and still fail the building-level one.

We would therefore want to see the latest JMB or management-corporation by-laws, AGM or EGM resolutions and any written rules covering short-term guests before treating a project as Airbnb-friendly. We would also check what actually happens at reception. If Airbnb guests are routinely stopped, asked for extra registration or caught in an ongoing fight with residents, the theoretical permission is not worth much.

These days, the building itself can make or break the Airbnb business almost as much as the location.

Why has buying a Penang Airbnb become harder?

Buying a Penang Airbnb has become harder because regulation now removes many of the easy properties before we even start comparing yields.

A few years ago, an investor could look at George Town tourism numbers, find a condo near the centre and assume that nightly letting was at least commercially possible. That assumption is much harder to defend now.

Penang has tightened short-stay rules for residential strata, introduced a clearer private-homestay licensing structure and given local authorities a stronger enforcement route. At the same time, Malaysian case law gives strata management bodies real power to shut short-term rentals down inside individual developments.

So the investable universe has shrunk.

That changes the buying process completely. We first need a building where short stays are legally and operationally possible. Only after that do occupancy, nightly rates and interior design deserve much attention.

Is Airbnb demand in George Town still strong today?

Yes. George Town still has healthy short-term rental demand, although current pricing tells us hosts are fighting harder for that demand.

AirDNA's latest George Town market read shows roughly 3,000 active listings in the dataset, about 55% occupancy and average annual revenue of around US$13,200 per listing. Occupancy is up around 9.5% year on year, while annual revenue is up about 6.9%.

Those numbers would normally look encouraging.

The awkward part is pricing. AirDNA currently puts the average daily rate near US$69, down roughly 21.5% year on year. Revenue per available night has fallen by about 15%.

Guests are still booking George Town accommodation, and occupancy has actually improved. Hosts are simply earning much less for each available night than the occupancy figure alone might suggest.

That is one of the clearest current warnings for buyers. Penang tourism demand is holding up better than Airbnb pricing power.

George Town short-term rental metric	Current level	Year-on-year change	What it tells us
Active listings	~3,000	Higher	Plenty of competing supply
Occupancy	~55%	+9.5%	Demand remains healthy
Average daily rate	~US$69	-21.5%	Hosts have lost pricing power
Average annual revenue	~US$13,200	+6.9%	Gross revenue is still edging higher
RevPAR	~US$38	-14.9%	Revenue per available night has weakened

Are George Town Airbnb numbers giving buyers the wrong impression?

They can. George Town's headline Airbnb numbers currently mix classic tourist stays with a huge amount of longer-stay accommodation.

AirDNA's supply data shows that the overwhelming majority of listings in one current George Town dataset carry minimum stays of 30 nights or more. That is a very different business from hosting weekend tourists.

It also helps explain why we need to be careful with market averages. If furnished monthly rentals sit inside the same dataset as two-night holiday stays, an "average Airbnb revenue" figure is no longer a clean measure of how a conventional tourist Airbnb performs.

The same issue affects supply growth. A jump in tracked listings does not necessarily mean thousands of new holiday apartments suddenly entered George Town. Some of that growth can come from monthly inventory, changes in platform coverage and listings being classified differently.

We would therefore never take the market's average annual revenue, divide it by a condo price and call the result an Airbnb yield.

Before buying, the better comparison is between units in the same building, with similar bedroom counts, similar minimum-stay rules and genuinely comparable guest types.

Is Penang tourism still growing enough to support Airbnb?

Yes. Penang's tourism base is currently strong enough that weak visitor demand is not the main reason to reject an Airbnb purchase.

Penang International Airport remains one of the country's busiest regional gateways, and its long-term capacity is being expanded from 6.5 million passengers a year to 12 million. Malaysia Airports is spending roughly RM1.55 billion on that expansion, with completion targeted for 2028.

That is a meaningful increase in the island's ability to absorb future visitor traffic.

Penang also has several demand sources working at once. George Town brings heritage and food tourism. Batu Ferringhi brings beach visitors. Bayan Lepas adds corporate and industrial travel. Penang's private hospitals attract medical visitors, while domestic tourism gives the island another large customer base when international flows slow.

We do not need a heroic tourism forecast to make the demand case. Visitors are already there, airport capacity is being expanded and Penang has several reasons for people to stay overnight.

The harder question is how much of that spending an individual condo owner can capture after competition, regulation and costs.

Are Penang hotels making Airbnb less attractive?

Yes. Hotels are becoming a tougher competitor for Penang Airbnb hosts, especially for studios and one-bedroom units.

Penang already has a deep hotel market, from inexpensive George Town properties to international beach resorts. Tourism Malaysia's accommodation data has continued to show strong hotel utilisation in major Penang tourism areas, while new branded hotel supply keeps entering the market.

Airbnb used to have two easy advantages: flexibility and price.

Regulation is reducing the first advantage, and today's lower Airbnb nightly rates suggest hosts are already using price more aggressively to compete.

For a couple staying three nights, a studio Airbnb increasingly has to beat a hotel offering reception, daily housekeeping, luggage storage, breakfast options and no awkward self-check-in.

Larger apartments have a much better argument. A two- or three-bedroom condo sleeping five or six people can replace several hotel rooms, particularly for families and groups.

That is why we would be much more interested in a well-priced family unit than another generic studio.

Is Batu Ferringhi actually better than George Town for Airbnb?

No. Batu Ferringhi can charge much more per booked night, but George Town currently produces far steadier occupancy.

AirDNA puts Batu Ferringhi occupancy around 38%, versus roughly 55% in George Town. Batu Ferringhi's average nightly rate is much higher at around US$122, and its RevPAR is about US$41.

That creates an interesting result. Batu Ferringhi fills far fewer available nights, yet the higher room rate brings revenue per available night close to George Town's level.

The latest trajectory is encouraging too. Batu Ferringhi occupancy is up roughly 16% year on year, with RevPAR up around 13%. But a buyer still needs to accept a more leisure-heavy demand profile.

George Town draws heritage tourists, food visitors, business travellers, medical visitors and longer-stay guests. Batu Ferringhi depends much more heavily on people choosing a beach holiday.

For leveraged owners, we generally prefer the broader demand base unless the Batu Ferringhi unit has something guests will genuinely pay extra for, such as a strong sea view, resort facilities or enough bedrooms for a family.

Market	Occupancy	Average nightly rate	RevPAR	Current Airbnb profile
George Town	~55%	~US$69	~US$38	Broad, more consistent demand
Batu Ferringhi	~38%	~US$122	~US$41	Lower occupancy, higher rates
Bayan Lepas	Building-specific	Building-specific	Building-specific	Corporate and medium-stay potential
Mainland Penang	Generally weaker tourism demand	Lower and project-specific	Lower overall	Cheap entry, weaker visitor pull

How much can a George Town Airbnb realistically make now?

A current market average is around US$13,200 a year in gross revenue, which is useful as a reality check but too crude to underwrite a particular condo.

At an exchange rate somewhere in the low-RM4 range per US dollar, that works out to roughly RM50,000 to RM60,000 a year.

Now compare that with the property price.

RM55,000 of annual gross revenue on a RM700,000 unit is almost an 8% gross revenue yield. The same RM55,000 on a RM1 million unit gives 5.5%. On a RM1.3 million unit, it falls to roughly 4.2%.

And that is before the owner pays for electricity, water, internet, cleaning gaps, linen, consumables, repairs, platform costs, furnishing replacement and possibly professional management.

Gross Airbnb revenue can look impressive because it includes expenses that a normal tenant would usually pay themselves.

Once we underwrite those costs properly, the purchase price becomes brutally important.

Does Airbnb still make more money than long-term renting in Penang?

Sometimes, but the extra profit is often much smaller than the gross Airbnb numbers make it look.

NAPIC's recent Penang market reporting gives us useful long-term rental benchmarks. Monthly rents at projects such as Summerton, Tropicana 218 and Arte S have been reported around RM2,800 to RM3,300, equivalent to roughly RM33,600 to RM39,600 a year.

Put that beside an Airbnb generating RM55,000 gross.

The short-stay property appears to be ahead by RM15,000 to RM20,000 a year. But the Airbnb owner may be paying utilities, internet, frequent cleaning, guest supplies, higher maintenance and a management company taking 15% to 25% of revenue.

A normal tenant handles much of that spending themselves.

After costs, an Airbnb generating RM55,000 could end up only modestly ahead of a long-term tenant paying around RM3,000 a month. In a mediocre year, the difference could disappear.

That is the number we care about. If short-term accommodation only adds a few thousand ringgit of annual profit, we would rather own the property that can be rented normally without constant regulatory and operational headaches.

Example annual economics	Conventional tenant	Short/flexible stays
Gross revenue	RM36,000	RM55,000
Owner-paid utilities	Low	High
Management cost	Low	Potentially 15–25% of revenue
Cleaning and turnover	Minimal	Frequent
Furniture wear	Lower	Higher
Plausible income after operating costs	~RM29,000–33,000	~RM33,000–40,000

What price makes a Penang Airbnb worth buying?

For a Penang Airbnb to look genuinely attractive, we would want the purchase price low enough to produce around a 5% to 6% net operating yield before financing, unless there is a particularly strong reason to accept less.

Take a unit that can realistically earn RM60,000 a year.

If 30% disappears into management and operating costs, around RM42,000 remains before financing and taxes.

At RM700,000, that produces a 6% net operating yield.

At RM900,000, it falls below 4.7%.

At RM1.2 million, we are down to 3.5%.

At that point, we would struggle to justify running a small hospitality operation unless the property also has an unusually strong appreciation case or personal-use value.

This is where many Penang Airbnb pitches fall apart. A beautiful unit can have excellent occupancy and still be a poor investment because too much of the expected Airbnb income was already baked into the selling price.

Purchase price	Gross revenue	Income after 30% operating costs	Net operating yield
RM700,000	RM60,000	RM42,000	6.0%
RM800,000	RM60,000	RM42,000	5.3%
RM900,000	RM60,000	RM42,000	4.7%
RM1,000,000	RM60,000	RM42,000	4.2%
RM1,200,000	RM60,000	RM42,000	3.5%
RM1,300,000	RM60,000	RM42,000	3.2%

Is Penang condo oversupply hurting Airbnb investors?

Yes, although the problem is concentrated enough that patient buyers can also use it to negotiate harder.

NAPIC's latest quarterly data counts 3,165 completed but unsold residential units in Penang, around 16% more than a year earlier. Condominiums and apartments make up roughly 2,215 of them, close to 70% of the state's residential overhang.

That is relevant to an Airbnb investor because high-rise apartments are exactly where much of the investment stock sits.

We should not pretend every unsold Penang condo competes with an Airbnb in George Town. It obviously does not. Much of the current overhang is concentrated in lower price bands and different locations.

Still, several thousand completed unsold units tell buyers something useful: there is no reason to chase interchangeable high-rise stock.

The better response to oversupply is to use it against the seller. Completed units let us inspect the actual building, talk to management, see whether guests are accepted, check lift congestion, compare dozens of existing listings and observe the real resale market.

For an Airbnb buyer today, a discounted completed project with proven operating rules can be much safer than paying a launch premium for projected tourism demand.

Should you buy a two-bedroom Penang Airbnb instead of a studio?

Usually, yes. Two-bedroom units give a Penang Airbnb a clearer reason to exist when hotels are everywhere.

AirDNA's George Town supply data shows one- and two-bedroom properties making up a large share of listings, with two-bedroom units particularly common. Three-bedroom apartments also represent a meaningful part of the market.

The economics make sense.

A studio mostly competes with hotel rooms. A two-bedroom apartment can accommodate a family or group that would otherwise need two hotel rooms. Add a kitchen, washing machine and living room, and the guest gets something meaningfully different from a standard hotel stay.

That difference gives hosts more room to defend their rate.

We still would not pay any price for the extra bedroom. If a two-bedroom unit costs 40% more but only earns 15% more revenue, the studio may produce the better return.

The sweet spot is usually an efficient layout that sleeps four to six people without carrying the purchase price and maintenance cost of a large luxury apartment.

Where in Penang makes the most sense for Airbnb now?

George Town is still our first choice for a general-purpose short-stay investment, while Batu Ferringhi and Bayan Lepas make more sense when the property fits their narrower demand.

George Town currently combines the deepest tourist market with business travel, medical demand, food tourism and longer stays. Its 55% short-term rental occupancy is comfortably above Batu Ferringhi's 38%.

Batu Ferringhi can work very well when the apartment feels like part of the holiday. Sea views, family-sized layouts and resort facilities matter much more there because guests are choosing the area primarily for leisure.

Bayan Lepas has a different customer. The airport, industrial parks and multinational employers create corporate and medium-term demand. With longer stays becoming increasingly visible across Penang's online rental market, that can be a useful fallback.

Mainland Penang gives buyers much cheaper property, but we would be careful about assuming cheap automatically means profitable. AirDNA's broader mainland market data has shown much lower annual short-term rental revenue than George Town. Tourist demand simply is not as deep.

So our location choice would follow the guest rather than the cheapest price per square foot.

Does a Penang Airbnb still make sense for a foreign buyer?

For foreign buyers, the Airbnb maths is harder because Penang's purchase thresholds can force us into a price range where yields compress quickly.

Current Penang market guidance generally puts the foreign-purchase floor around RM1 million on Penang Island, with a lower threshold on the mainland, subject to state consent and the exact property category. Foreign purchasers also face state-level charges on top of ordinary transaction costs, so the figure should always be confirmed with a Penang conveyancing lawyer before signing.

The RM1 million island threshold is especially awkward for Airbnb investing.

As we saw above, RM60,000 of annual gross revenue with 30% operating costs leaves roughly RM42,000. On a RM1 million acquisition, that is only a 4.2% operating yield before financing, tax and purchase costs.

A Malaysian buyer who finds similar cash flow in a RM700,000 unit gets very different economics.

Foreign buyers therefore need to be more selective. We would want either unusually high accommodation revenue, a genuinely discounted qualifying property, or a strong reason to own the unit beyond the Airbnb yield.

Buying a RM1 million-plus Penang condo simply because the listing says "Airbnb-friendly" is currently far too weak an investment thesis.

What should you check before buying a Penang condo for Airbnb?

Before buying a Penang Airbnb, we would want the property to survive a legal test, a building test and a conservative income test.

The first job is to confirm the title, approved property use and current local-authority rules. Then we would read the management corporation's latest by-laws and meeting resolutions rather than relying on what an agent says about Airbnb.

After that, we would inspect what is happening inside the building today. Are guests actually checking in? How does security handle them? Are there dedicated operators? Are residents trying to restrict short stays? Are dozens of identical units competing at almost the same nightly rate?

Only then would we build the revenue model.

We would use ordinary comparable units rather than the top-performing penthouse, reduce optimistic occupancy assumptions, include professional management even if we initially plan to self-manage, and compare the final income with what the same apartment could earn from a normal or monthly tenant.

A Penang Airbnb deal should still look reasonably acceptable when our revenue estimate is wrong by 15% or 20%. If that small miss destroys the return, we would walk away.

So is buying a Penang condo for Airbnb still worth it?

Yes, but only in a much narrower set of buildings, and we would reject most ordinary Penang condos marketed around an Airbnb story today.

Penang still has what short-term rental investors want on the demand side. George Town occupancy is healthy, tourism remains strong, Penang airport capacity is being expanded substantially, and Batu Ferringhi's latest rental performance is improving.

The investment conditions are much tougher. Residential strata restrictions remove many obvious condos from consideration. Commercial title alone cannot protect an owner from building rules. George Town's nightly rates have fallen sharply despite rising occupancy, and high-rise supply gives guests plenty of alternatives.

The deals we still like are quite specific: legally operable buildings, management that clearly allows short stays, efficient family-sized units, sensible acquisition prices and enough conventional rental demand to give us an exit route.

At around RM700,000 to RM800,000 with genuinely achievable RM60,000 gross revenue, the numbers can still become interesting. Push the same income stream toward a RM1 million to RM1.3 million purchase price and much of the Airbnb advantage disappears.

So yes, Penang Airbnb can still be worth buying. These days, however, the winning investment looks much more like buying a carefully priced small hospitality business than buying a condo and hoping tourists pay the mortgage.

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Penang. If you’d like to learn more about us, you can check our presentation page.