Why Penang’s Real Estate Market Is a Good Investment | Located in the northwestern coast of Malaysia, Penang has grown over the years into a tourism and industrial juggernaut with dozens of new real estate developments cropping up every year. As the city experiences an unprecedented level of growth and development, ordinary entrepreneurs are finding out that purchasing a Penang apartment through sites like Property Guru is one of the best investment decisions they could make.
The primary method that small time investors get their money’s worth from their real estate investments in Penang is through rental income. With Penang being deluged with thousands of tourists on a yearly basis, renting out apartments for short term stays has become quite popular among the local landlords. Prices range from $35 to $50 a night, depending on the size of the apartment and the amenities in the building. In fact, Penang’s new apartment complexes have been practically transformed into mini-hotels due to the sheer amount of demand. Landlords have also begun adding in bunk beds and wall dividers to maximize the number of people that they can place in the apartment.
As Penang’s local industries continue to grow, this has resulted in more foreign workers entering the country. To save on expenses, many foreign workers sleep in the same apartment through the use of bunk beds and cots. The landlords collect rent from each resulting in monthly incomes of $800 or more per one-bedroom apartment.
Yearly Increases in Real Estate Prices
With titles such as “Silicon Valley of the East” being attached to it, Penang continues to be a favorite destination for manufacturers, with companies such as Dell, AMD and Seagate having several of their facilities and offices in the area. As you can imagine, this has resulted in a considerable increase in local land prices as condo and office developers scramble to create enough apartments and office spaces for the number of workers and companies entering into Penang every year.
What does this mean for small time property investors? It means that investing in an apartment now and selling it later can yield significant dividends as local demand increases. In fact, if you were to purchase an apartment while it is still under construction, you can take advantage of the pre-selling discount which can sometime reach 50 percent of the total value of the unit.
Relatively Low Cost of Living Expenses
Despite Penang being an industrial and tourism juggernaut, the cost of living within the city is 55.78 percent lower than New York City. In fact, when compared to similarly booming cities like Manila, the cost of living in Penang is only six percent higher despite the average income being 20 percent greater than in Manila. What this shows is that locals in the city have more disposable income than their other counterparts in Asia, this makes it more likely that they would invest in an apartment in the city rather than opt for commuting long distances from a suburban town or province.
By investing into a studio apartment in the city center, you are targetting a demographic that not only has the necessary income to rent your apartment, but they also have sufficient money left over to see the sights of the city and to enjoy themselves. It is differences like this that make Penang a viable real estate investment location for people that want a relatively “safe” means of earning enough money for retirement.
What are the Most Common Real Estate Investments in Penang?
a.) Condo Units
With the sheer amount of developers within the city, condo units have become a favorite investment for small time investors. As mentioned earlier, local demand is quite high, and with the rather open and flexible rates given by the banks, a lot of people consider condo units as prime investments.
b.) Vacant lots
You may think that vacant lots are a terrible investment; however, various enterprising Malaysians have been converting large vacant lots in and around the city into parking areas. The problem with the sheer amount of growth Penang has experienced, is the massive increase in the number of personal cars on the road. Unfortunately, there are not enough parking garages to meet demand. One solution to this that local investors have developed is via purchasing a vacant lot that is relatively close to a business center and converting it into a pay-for-parking area. You can make a lot of money per day with relatively few expenses associated with this type of investment.
c.) Houses near the Coast
As a coastal city, Penang attracts plenty of tourists due to its beaches and resorts. It is due to this that many investors purchase homes near the beach so that they can convert them into rental properties. Through sites like Airbnb and Tripadvisor, these beach houses have transformed the local economy in those areas resulting in developers taking note of the demand and building more home developments along the coast.
All in all, Penang is a great place for investing in real estate. To make the right investment decision, look at what other people are doing and pursue an investment path that you think would suit you best.