Why Malaysian Penang is the least risky place to invest in real estate

It is said that Penang Island was first recorded in the early 15th century by Chinese sailors of the Great Ming Dynasty. In that year, the Yongle Emperor set sail on an expedition to East Africa. The legendary Chinese Admiral Zheng He led a treasure ship that apparently came to Penang Island – then known as Penang Island (Chinese:槟榔岛).

The mythical footprints of the legendary Admiral Zheng He are surrounded by rocks in the hall of the Temple of the Footprints at Batu Maw Zambalang, Penang.

Apart from early encounters with the famous treasure ships, the history of modern Penang was largely shaped by British colonialism in the late 18th century – when the British East India Company seized a foothold on Penang Island and the North Rai Peninsula from the four-faced Sultanate. Kedah.

As with Singapore and Malacca, the East India Company’s trade problems led to the Penang state capital of George Town becoming a free port and an important stronghold for strengthening the company’s influence in the Straits of Malacca.

George Town is an outstanding example of a historic colonial town, showcasing a range of cultural influences. Once a trading port linking the eastern and western hemispheres, Penang inherited the cultures of Britain, Europe, the Malay Archipelago, India and China. Nearly 500 years of trade created a unique blend of cultures, represented by its architecture and people.
As one of the most intact historic urban centers in existence, Georgetown was designated a UNESCO World Heritage Site in 2008 in recognition of its storied past. This designation further enhances Penang’s status as a tourist destination and cements the state’s reputation as a bastion of tourism. A rich cultural heritage.

In terms of real estate investment, it is well known that real estate prices are subject to the laws of supply and demand – Penang’s real estate prices are among the highest in the country.

With a land area of 1,048 square kilometers and a resident population of 1.7 million, Penang is one of the most densely populated states in Malaysia with 1,720 people per square kilometer – second only to Kuala Lumpur with an average of 7,328 people living per square kilometer and the Federal Territory of Putrajaya with a population density of 2,118 people per square kilometer.

Given its long history and high population density, Penang is definitely a great location for real estate investment. Land scarcity is one of the key factors driving property rental prices and property values.

Penang properties do not only serve local residents as the state also offers great potential for tourists – many traditional houses have been turned into AirBnb homes for tourists, serving both the local and foreign visitor markets.

Through Malaysia’s “Tourism Malaysia 2020” campaign, Prime Minister Tun Dr. Mahathir Mohamad has set a target of 30 million international visitors for next year. The campaign focuses on ecotourism, arts and culture.

Yeo Soon Heng, Penang State Executive Officer for Tourism Development, Arts, Culture and Heritage, confirmed that Penang has a very important role to play in helping the country achieve its goal of receiving 30 million visitors by 2020.

One of the most interesting facts to note is that out of the total tourism revenue of RM84.1 billion in 2018, Chinese tourists accounted for about 15% (RM12.3 billion) of the total tourism revenue.

Tourists from China pose for a photo in front of the Ye Kung Temple in Georgetown on Armenian Street. Photo courtesy of Kuan Hua Daily.

In 2018, 2.9 million tourists visited Malaysia from China. According to Chinese Ambassador to Malaysia Bai Bai, 3.5 million Chinese tourists are expected to fly to Malaysia in 2019, an increase of nearly 20 percent.

Based on this fact, as real estate investors, we should be concerned about where the money is flowing to. If we know that there is money flowing into tourism and the main target group is mainly Chinese – then Penang with its rich Chinese heritage is one of the easily identifiable real estate hotspots where we should invest.

Penang has been declared a foodie haven and one of the best food cities in Asia by Thrillist and Culture Trip – Forbes has listed Penang as one of the top 10 cities for street food.

As part of the air-triangle investment model, any place with food also tends to be crowded – which bodes well for huge rental opportunities. Focusing on properties around well-known foodie havens would be a great option for finding real estate gems.

In 2016, George Town was named the most attractive commercial property investment destination in Malaysia by Knight Frank, even surpassing Kuala Lumpur. Statistics show that Penang beach hotels tend to have higher occupancy rates (around 70%) compared to city hotels (55%).

In addition to being a UNESCO World Heritage Site, Penang is also popular for its hotels, leisure facilities and medical institutions – Penang is also known as Malaysia’s leading medical tourism destination.

The Midland Park one-stop shopping center has been transformed into a “Bed and Breakfast”. Top floor units are often rented out to out-of-town patients. Many hotels have also sprung up near hospitals to accommodate medical tourism.

With Penang’s booming tourism industry, commercial real estate remains one of the best investment opportunities we can look at. Look for commercial opportunities around famous landmarks and monuments such as the former residence of Teo Pek Sik, the Palace of Ultimate Bliss, Kuan Yin Temple, the Snake Temple, the Clock Tower and Kompleks Tun Abdul Razak.

If you can’t afford a commercial property right now, be sure to check out traditional houses or high-rise buildings that can be converted into AirBnB units to capitalize on Penang’s reputation as a rich cultural heritage

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