Buying and owning property in Penang as a foreigner

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

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.

How this content was created 🔎📝

At BambooRoutes, we explore the Malaysian real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like George Town, Butterworth, and Bayan Lepas. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

Can foreigners buy property in Penang, and how do the rules differ from locals or other nationalities?

Foreigners can legally buy property in Penang, including both condominiums and landed properties, but face significantly different rules compared to Malaysian citizens and MM2H visa holders.

The key differences include minimum price thresholds that are 3-10 times higher for foreigners than locals. For example, while locals can purchase condos at any price point, foreigners must meet a RM 1 million minimum on Penang Island. MM2H visa holders enjoy reduced thresholds of RM 500,000-RM 800,000 depending on property type and location.

Foreigners also face mandatory state consent requirements, which locals typically don't need. This approval process can take 2-6 months and involves additional fees of RM 10,000-RM 50,000. Agricultural land purchases are almost completely restricted for foreigners, requiring special state exemptions that are rarely granted.

Unlike some countries in the region, Malaysia allows full freehold ownership for approved foreign buyers. There are no citizenship or long-term residency requirements to purchase property, making Penang accessible to international investors and expatriates.

What types of properties are foreigners allowed or not allowed to purchase?

Foreigners can purchase most residential and commercial property types in Penang, with specific restrictions on agricultural land.

Property Type	Foreign Ownership Status	Special Requirements
Condominiums & Apartments	Allowed	RM 1M minimum (Penang Island)
Terrace Houses	Allowed	RM 3M minimum (Penang Island)
Semi-detached Houses	Allowed	RM 3M minimum (Penang Island)
Bungalows	Allowed	RM 3M minimum (Penang Island)
Commercial/Industrial Land	Allowed	State-specific regulations apply
Agricultural Land	Generally restricted	Special state approval required
Shophouses (George Town)	Allowed	Heritage guidelines may apply

Are there minimum price thresholds or restrictions that apply only to foreigners?

Yes, foreigners face substantial minimum price thresholds that are significantly higher than those for Malaysian citizens and MM2H holders.

On Penang Island, foreigners must pay at least RM 3 million for landed properties and RM 1 million for stratified properties like condominiums. These thresholds are 5-10 times higher than what locals face, who can generally purchase properties at market prices without minimum restrictions.

MM2H visa holders benefit from reduced minimums of RM 500,000-RM 800,000 depending on property type and can purchase up to two residential properties. On Penang Mainland, the thresholds are lower at RM 1 million for landed properties, with MM2H holders accessing condos from RM 400,000.

As of September 2025, these thresholds have remained stable, though they're reviewed periodically by state authorities. Properties in Special Economic Zones (SEZ) or Special Financial Zones (SFZ) may offer reduced thresholds for MM2H participants.

It's something we develop in our Malaysia property pack.

Do you need residency status or a specific visa to buy and own property in Penang?

No residency status or specific visa is required for foreigners to buy and own property in Penang.

Malaysia allows foreign property ownership regardless of visa status, making it one of the more accessible markets in Southeast Asia for international buyers. You can purchase property as a tourist, business visitor, or on any type of visa without needing permanent residency or long-term status.

However, MM2H (Malaysia My Second Home) visa holders receive significant advantages including lower minimum price thresholds and the ability to purchase up to two residential properties. MM2H holders must observe specific hold periods and other program rules but gain access to properties starting from RM 400,000-RM 800,000 depending on location and type.

Property ownership doesn't automatically grant residency rights or visa privileges. Foreign property owners still need appropriate visas for extended stays and must comply with Malaysian immigration requirements separately from their property investments.

Is it necessary to be physically present in Malaysia during the purchase process, or can it be handled remotely?

Physical presence in Malaysia is not strictly required as the property purchase process can generally be handled remotely through appointed lawyers and real estate agents.

Most documentation can be executed overseas with proper notarization and certification. Key documents like the Sale and Purchase Agreement (SPA) can be signed remotely, and initial deposits can be transferred internationally. Legal representatives can handle state consent applications, title searches, and most administrative procedures on behalf of overseas buyers.

However, some steps may require physical or certified presence for signature verification, particularly for loan agreement execution with Malaysian banks or final settlement procedures. Some banks prefer in-person meetings for mortgage applications, though this varies by institution and loan amount.

The process is typically more efficient with at least one visit to Malaysia during the purchase timeline, but it's not a legal requirement. International buyers should ensure all overseas-signed documents are properly notarized and apostilled according to Malaysian requirements.

What is the step-by-step process to buy property as a foreigner, and which documents are required?

The foreign property purchase process in Penang involves several mandatory steps and specific documentation requirements.

1. **Check Eligibility & Rules**: Confirm minimum price requirements based on property type and location, verify foreign ownership eligibility for the specific property.2. **Property Search & Selection**: Engage a licensed Malaysian real estate agent to identify suitable properties meeting foreign ownership criteria.3. **Hire Legal Representation**: Appoint a qualified Malaysian lawyer experienced in foreign property transactions - this is strongly recommended rather than optional.4. **Sign Sale & Purchase Agreement (SPA)**: Execute the binding purchase contract and pay the standard 10% deposit to secure the property.5. **Apply for State Consent**: Submit application to Penang State Authority - this approval process typically takes 2-6 months and is mandatory for foreign purchases.6. **Secure Financing (if applicable)**: Apply for mortgage with Malaysian banks if financing is needed - foreigners can access up to 70-80% loan-to-value ratios.7. **Final Settlement**: Pay remaining balance, handle legal conveyancing, pay stamp duties, RPGT registration, and complete title transfer procedures.8. **Property Handover**: Receive keys and occupancy after full registration and payment completion.

Required documents include passport copies, signed SPA, proof of funds documentation, international bank statements, state consent approval, MM2H documents if applicable, tax registration forms, and lawyer's statutory declarations.

Do you need to hire a lawyer or can you handle the transaction yourself?

Hiring a licensed Malaysian lawyer is strongly recommended for foreign property purchases, though technically not legally mandatory.

The legal and compliance complexities make DIY transactions extremely risky for foreigners. Lawyers handle critical tasks including contract review, state consent applications, title verification, encumbrance checks, and final conveyancing procedures. They also ensure compliance with foreign ownership regulations and proper documentation for international buyers.

Legal fees typically range from 1-2% of the property price, which is a relatively small cost compared to the risks of handling complex property law, state approvals, and title transfer procedures independently. Malaysian property law involves specific procedures for foreign buyers that differ significantly from local transactions.

While locals might handle simpler transactions themselves, foreigners face additional requirements like state consent, higher documentation standards, and potential language barriers that make professional legal assistance practically essential rather than optional.

What are the taxes, fees, and costs involved in buying, owning, and reselling property in Penang?

Property ownership in Penang involves multiple taxes and fees that foreign buyers must budget for beyond the purchase price.

Cost Type	Rate/Amount	When Payable
Stamp Duty	Graduated rates up to 3-4%	Upon SPA signing
Legal Fees	1-2% of property price	During transaction
State Consent Fee	RM 10,000 - RM 50,000	With state application
Real Property Gains Tax (RPGT)	5-30% on gains (tiered by holding period)	Upon resale
Annual Property Tax	RM 1,000 - RM 10,000+	Annually
Valuation Fees	0.25-0.5% of property value	During purchase
Insurance Premiums	0.1-0.3% annually	Annually

It's something we develop in our Malaysia property pack.

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.

Can foreigners access mortgages in Malaysia, and if so, what rates, conditions, and tips should they know about?

Foreigners can access mortgages from Malaysian banks, but face higher rates and stricter conditions compared to local borrowers.

Current mortgage rates for foreigners typically range from 4.0-4.5% per annum, which is 0.5-1% higher than rates offered to Malaysian citizens. Loan-to-value ratios are generally capped at 70-80% for foreigners, compared to up to 90% for locals, requiring larger down payments.

Banks require comprehensive financial documentation including overseas income statements, tax returns, employment letters, and bank statements spanning 6-12 months. International banks with Malaysian operations like HSBC or Standard Chartered may offer more favorable terms for their existing customers.

Key tips include preparing thorough financial documentation in advance, considering multiple bank options, and potentially using MM2H status to access better rates. Some banks prefer financing properties above RM 1.5 million and may have minimum income requirements of RM 10,000-15,000 monthly for foreign applicants.

Which neighborhoods or regions in Penang are most popular with foreigners, and where are the best spots for living, renting out, or long-term capital appreciation?

Several Penang neighborhoods attract foreign buyers for different investment and lifestyle purposes.

**George Town** remains the top choice for foreign buyers, offering UNESCO World Heritage status, strong rental demand from tourists and expatriates, and gross rental yields of 3-6% for long-term rentals. The historic core provides excellent short-term rental opportunities with yields reaching 7-8% for well-managed Airbnb properties.

**Tanjung Bungah and Batu Ferringhi** attract buyers seeking coastal luxury condos with strong tourism demand. These beachfront areas command premium prices but offer good capital appreciation potential and strong short-term rental income from the established tourist market.

**Pulau Tikus** serves as an upmarket residential enclave popular with Western expatriates, offering excellent amenities, international schools, and stable long-term rental demand. **Bayan Lepas** near the airport provides good value for long-term rental income and appreciation, benefiting from industrial and tech sector growth.

**Penang Mainland** areas like Butterworth and Bukit Mertajam offer lower entry prices with strong logistics and industrial activity driving rental demand, making them suitable for value-focused investors seeking steady rental income.

What do the latest numbers say about livability, gross rental yields, rental income potential, tourism trends, and growth forecasts in Penang?

Penang shows strong fundamentals across multiple real estate investment metrics as of September 2025.

**Rental Yields**: Gross rental yields range from 3-6% for traditional long-term rentals in George Town condos, with tourist-focused short-term rentals achieving 7-8% in prime coastal locations. These yields compare favorably to regional markets like Bangkok (3-5%) and Singapore (2-4%).

**Livability Scores**: Penang ranks highly for international residents with excellent healthcare facilities, safety ratings above regional averages, moderate cost of living, and strong international school options. The state's infrastructure and English proficiency support expatriate communities.

**Tourism Trends**: Tourist arrivals have recovered strongly post-pandemic, with domestic and regional tourism driving consistent demand for short-term rentals. The heritage tourism segment and food tourism continue expanding, supporting rental property demand in George Town.

**Capital Appreciation**: Historical data shows 3-7% annual appreciation for prime properties, varying significantly by location and property type. Waterfront condos and heritage-adjacent properties typically outperform suburban developments.

**Growth Forecasts**: Analysts project continued moderate growth driven by Penang's manufacturing sector, regional connectivity improvements, and sustained expatriate demand, though growth rates may moderate compared to peak periods.

What are the classic mistakes and pitfalls foreigners should avoid when buying property in Penang?

Foreign buyers commonly make several costly mistakes when purchasing Penang property.

- **Underestimating state consent delays**: Many buyers don't budget for the 2-6 month approval timeline, which can delay settlements and create financing complications.- **Inadequate title verification**: Failing to thoroughly check property titles, encumbrances, and development approvals can lead to legal complications and unexpected costs.- **Misunderstanding MM2H requirements**: Some buyers assume MM2H eligibility or misunderstand program lock-in rules and investment requirements, missing out on lower purchase thresholds.- **Underestimating total transaction costs**: Buyers often focus only on property price without budgeting for stamp duty, legal fees, state consent charges, and ongoing property taxes that can add 5-8% to purchase costs.- **Skipping qualified legal representation**: Attempting DIY purchases or using unqualified lawyers creates substantial legal and financial risks for foreign buyers unfamiliar with Malaysian property law.- **Poor development due diligence**: Buying in poorly managed developments, those with restrictive strata management rules, or developments with incomplete infrastructure can significantly impact investment returns and property value appreciation.

It's something we develop in our Malaysia property pack.

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.

Sources

1. Housing Watch - How to Buy a House in Malaysia as a Foreigner
2. Penang Lands - Buying Real Estate in Penang Island as a Foreigner
3. EmerHub - Buying Property in Malaysia
4. Arab MLS - Can Foreigners Buy Property in Penang Island
5. Terra Group - Can Foreigners Buy Land in Malaysia
6. Titijaya - Foreigners Guide Buying Property in Malaysia
7. Penang Property Angel - What a Foreign Purchaser Needs to Know
8. FAR Academy - Minimum Property Price That a Foreigner Can Buy