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Penang's property market has shown remarkable resilience and growth potential in 2025.
The state has consistently outperformed Malaysia's national property market with stronger price appreciation, healthier rental yields, and robust demand across key segments.If you want to go deeper, you can check our pack of documents related to the real estate market in Malaysia, based on reliable facts and data, not opinions or rumors.
Penang property prices have grown 3-7% annually over five years, significantly outpacing Malaysia's national average of 1.4% in 2024.
The market shows strong fundamentals with healthy rental yields of 3.77-4.2% in prime areas and a robust supply pipeline of over 38,000 affordable units planned for the next decade.
| Market Indicator | Current Status | Outlook |
|---|---|---|
| Property Price Growth | 3-7% annually (vs 1.4% national) | 3-5% projected 2026-2027 |
| Median Apartment Price | RM580,000 | Stable with prime area growth |
| Median Landed House Price | RM475,000-RM486,000 | Moderate appreciation expected |
| Rental Yield (George Town) | 3.77-4.2% | Higher than KL (2.8-3.5%) |
| New Unit Launches (2024) | 12,000+ units | Continued strong supply |
| Unsold Unit Rate | ~20% of new launches | Improving absorption |
| Foreign Buyer Share | 4-7% of transactions | Premium segment focus |
What has been the average property price growth in Penang over the past five years, and how does that compare to Malaysia's national average?
Penang has significantly outperformed Malaysia's national property market with average annual price growth of 3-7% over the past five years.
High-end properties in prime locations have seen even stronger performance, with 6-12% annual growth in recent periods. This contrasts sharply with Malaysia's national average, which has been much more subdued.
Malaysia's nationwide property price growth averaged only about 1.4% in 2024, with the five-year historical average ranging between 2-4% annually. This means Penang has consistently delivered 2-3 times the national growth rate, making it one of Malaysia's standout performing property markets.
The long-term trajectory shows Penang's average property price rising from approximately RM300,000 in 2021 to RM475,000-RM486,000 as of September 2025. This represents substantial capital appreciation that has far exceeded national trends and inflation rates.
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What is the current median property price in Penang for apartments, landed houses, and commercial properties, and how has it shifted year-on-year?
As of September 2025, Penang's median property prices show strong differentiation across property types with healthy year-on-year growth.
Apartments and condominiums have a median price of approximately RM580,000, with prime areas experiencing 6-12% year-on-year growth. This segment has been particularly strong due to foreign buyer interest and urban professional demand.
Landed houses maintain a median price range of RM475,000-RM486,000, showing more moderate 3-7% year-on-year growth. Selected hotspots and well-connected areas have seen growth at the higher end of this range.
Commercial properties present a wider price spectrum, ranging from RM295 to RM1,350 per square foot depending on location and type. The commercial segment has remained generally stable with slight growth in strategic locations, reflecting steady business activity and infrastructure development.
The statewide average property price of RM475,000-RM486,000 represents overall market growth of 0.9% in Q1 2025, with premium and luxury segments driving higher-end performance across all categories.
How many new residential units were launched in Penang last year, and what percentage of them remain unsold?
Penang experienced substantial new supply in 2024 with over 12,000 new residential units launched across the state.
This represents a significant supply pipeline that reflects developer confidence in the market and ongoing urbanization trends. The launches included a mix of high-rise apartments, condominiums, and landed residential developments.
As of the first half of 2024, approximately 2,400 residential units remained unsold, representing nearly 20% of the new launches. This unsold rate, while notable, shows improvement compared to previous years as market absorption has strengthened.
Most unsold units are concentrated in high-rise apartment projects, with the market showing better absorption for well-located and reasonably priced properties. The overhang situation has been improving year-on-year as buyers become more active and selective.
The 20% unsold rate is considered manageable in the context of the large supply injection and reflects normal market dynamics rather than fundamental demand weakness.
What is the current rental yield in key areas like George Town, Bayan Lepas, and Tanjung Tokong, and how does that compare to Kuala Lumpur?
Penang offers significantly higher rental yields than Kuala Lumpur across all key areas, making it attractive for buy-to-let investors.
| Area | Rental Yield (%) | Property Type Performance |
|---|---|---|
| George Town | 3.77-4.2% | Heritage area premium |
| Bayan Lepas | 3.3-4.2% | Tech hub demand |
| Tanjung Tokong | 3.0-4.0% | Prime condos lower yield |
| Mainland Penang | 4.5-5.5% | Best yield potential |
| Kuala Lumpur (Comparison) | 2.8-3.5% | Lower than all Penang areas |
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What is the vacancy rate for residential and commercial properties in Penang right now, and how has it trended over the past three years?
Penang maintains healthy vacancy rates for residential properties with strong owner-occupancy patterns.
Residential properties show a healthy and stable vacancy rate, with owner-occupancy rates at approximately 70%. High-demand areas like George Town and Bayan Lepas maintain particularly low vacancy rates due to consistent rental demand from professionals and expatriates.
Commercial properties present a more mixed picture, with office spaces experiencing higher vacancy rates due to new supply coming online. However, these rates have stabilized and shown improvement as economic activity strengthens and businesses adapt to post-pandemic operations.
The three-year trend from 2022 to 2025 shows vacancy rates trending downward as market absorption has improved significantly. This reflects both stronger demand and more selective development, creating a more balanced supply-demand dynamic.
Ground floor retail and strategic commercial locations maintain lower vacancy rates, supported by Penang's tourism recovery and local business activity.
How many foreign buyers purchased property in Penang last year, and what percentage of total transactions did they represent?
Foreign buyers remain active in Penang's property market but represent a relatively small portion of overall transactions due to regulatory thresholds.
Foreign buyers typically account for 4-7% of annual property transactions in Penang, with their activity concentrated in the premium and luxury segments. This percentage fluctuates based on economic conditions and currency exchange rates.
The RM3 million minimum threshold for foreign property purchases on Penang Island significantly limits the pool of eligible properties and buyers. Most foreign buyer activity occurs in high-end condominiums, luxury landed properties, and commercial real estate.
Foreign buyers are particularly active in areas like Gurney Drive, Tanjung Tokong, and prime George Town locations, where property values meet or exceed the minimum investment threshold. Their presence helps support the premium segment of the market.
Despite representing a small percentage of total transactions, foreign buyers contribute disproportionately to transaction values due to their focus on higher-priced properties.
What is the projected population growth in Penang over the next 10 years, and how is that expected to influence housing demand?
Penang is expected to experience steady population growth over the next decade, creating sustained housing demand across multiple segments.
The projected population growth is driven by several factors including continued urbanization, economic development in the technology and manufacturing sectors, and infrastructure improvements that make Penang more attractive to both domestic and international residents.
Infrastructure developments, including transportation improvements and the ongoing Penang South Reclamation project, are expected to attract both local and foreign residents. These projects will create new residential and commercial hubs, distributing demand across the state.
The combination of natural population growth, internal migration from other Malaysian states, and selective foreign immigration is expected to fuel continued demand for both affordable and high-end housing segments.
This population growth is expected to be particularly strong in areas with good connectivity to employment centers, leading to focused housing demand in well-connected corridors and transit-oriented developments.
What are the average construction costs per square foot in Penang today, and how much have they increased since 2020?
Construction costs in Penang have increased substantially since 2020, reflecting global material price inflation and local labor market pressures.
Current average construction costs for residential projects range from RM418 to RM631 per square foot statewide for condominium developments. This represents a significant increase from 2020 baseline levels.
Construction costs have risen by approximately 15-20% since 2020, driven primarily by increased material prices and labor costs. Steel, cement, and other building materials have seen particularly sharp price increases following global supply chain disruptions.
Labor costs have also contributed to the increase, with skilled construction workers commanding higher wages due to competition and project demand. This trend is expected to continue as the construction pipeline remains robust.
These higher construction costs are being passed through to property prices, supporting price appreciation trends and making affordable housing development more challenging without government assistance.
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 is the current supply pipeline for affordable housing projects, and how many units are expected to be completed in the next five years?
Penang has a substantial affordable housing pipeline designed to address middle and lower-income housing needs over the next decade.
Over 38,000 affordable housing units are scheduled for completion within the next ten years, representing one of Malaysia's most ambitious affordable housing programs at the state level.
Currently, more than 12,000 affordable units are in active development phases, with strong government support and private sector participation. Key development areas include Seberang Jaya and Batu Kawan on the mainland, where land costs allow for more affordable pricing.
The five-year pipeline specifically includes multiple phases of public and private affordable housing schemes, with completion rates expected to accelerate as planning approvals and infrastructure development progress.
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What is the loan approval rate for property purchases in Penang, and how has it changed alongside Bank Negara Malaysia's interest rate adjustments?
Property loan approval rates in Penang remain moderate, reflecting both stricter national lending standards and Bank Negara Malaysia's monetary policy adjustments.
Current loan approval rates for property purchases in Penang are stable at approximately 65-70% for approved loan applications, aligning with national trends. This represents a balanced approach by financial institutions to property lending risk.
Bank Negara Malaysia's interest rate adjustments have made loan approval more challenging, with banks applying stricter debt service ratios and income verification requirements. However, qualified borrowers with stable income continue to access financing.
The approval rates vary by property segment, with established locations and reasonably priced properties showing higher approval rates compared to premium or speculative developments.
Despite tighter lending conditions, the approval rates remain sufficient to support healthy transaction volumes, particularly for owner-occupier purchases and well-researched investment properties.
What percentage of Penang's GDP is tied to the real estate and construction sector, and how resilient has this been during recent economic slowdowns?
Real estate and construction represent a significant portion of Penang's economic activity, demonstrating notable resilience during economic challenges.
The real estate and construction sectors are estimated to contribute approximately 12-15% of Penang's GDP, making them substantial economic drivers alongside manufacturing and services. This percentage reflects both direct construction activity and related real estate services.
These sectors have demonstrated resilience during moderate economic slowdowns due to strong domestic demand, ongoing infrastructure investments, and Penang's strategic position as a regional economic hub.
The resilience stems from diversified demand sources including local upgraders, interstate buyers attracted to Penang's lifestyle, foreign investment, and continuous infrastructure development that supports both residential and commercial real estate.
Government infrastructure projects and private sector investments in technology parks and urban development have provided stability even during challenging economic periods, supporting employment and economic activity in construction and related industries.
What are international analysts and local property consultants forecasting for Penang's property price growth over the next three years, in terms of percentage increase or decrease?
Most analysts and property consultants are projecting continued positive growth for Penang property prices over the 2026-2027 period, though at more moderate rates than recent years.
The consensus forecast calls for annual property price growth of 3-5% over the next three years, particularly in prime locations and infrastructure-linked corridors. This represents sustainable appreciation that reflects economic fundamentals rather than speculative activity.
Affordable and mid-market residential properties are expected to see stable or modest growth within the lower end of this range, while luxury and commercial segments in strategic locations may surpass the average where strong demand persists.
The forecasts are based on continued economic development, population growth, infrastructure improvements, and Penang's position as Malaysia's most promising state for real estate investment prospects.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Penang continues to position itself as Malaysia's premier property investment destination, combining historic growth performance with solid fundamental drivers.
The combination of superior rental yields, controlled supply growth, and infrastructure development creates a compelling case for both investment and residential property decisions in the state.