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Penang Backed by Healthy Fundamentals

The State of Penang, also known popularly as Pulau Pinang, Pearl of Orient, Prince of Wales Island, and Silicon Island of the World, encompasses an island and mainland (Seberang Perai), with total land area of 293km and 738km respectively. The population in Penang was approximately about 1.61 million as at 2012, with the island and mainland accounting for 45.8% and 54.2% respectively. The State, with a mix of beachfront, city heritage and hillside residential living, has been voted as an excellent choice to live, work, play, raise the family and retire.

GDP Growth of Penang
Penang is among the top three most developed and industrialized State despite being the second smallest States in Malaysia. The manufacturing and tourism industries are the two key engines of economic growth and have generated substantial employment opportunities for the State.

The State, with its open and export based economy activities which is highly dependent upon global demand, is now more vulnerable to the external economic climate compared with the country as a whole.

Key Developments in Penang

A New enabler – the RM4.3 billion 24km long Second Penang Bridge, will appear in the landscape of Penang soon in the first quarter of 2014. The bridge will provide a linkage between the Bayan Lepas free and Non-Free Industrial Zones (via Batu Maung) and the Batu Kawan new township and industrial park on the mainland (District of Seberang Perai Selantan).

The on-going SPICE development project, on a 27-acre development land, comprising a Subterranean Convention Centre, The SPICE Arena, SPICE Aquatic Centre, a 4-star Business Hotel, is strategically situated at the heart of South-West District in Bayan Lepas. The SPICE development project is expected to be completed on the last quarter of 2014/first quarter of 2016.

IKEA, a renowned Swedish home furnishing store is planning to open a store at Batu Kawan, as announced by the Penang State Government recently. A mixed development consisting of an integrated shopping mall (with IKEA as an anchor store), offices and residences, is a joint-venture development project by Aspen-Ikano. The IKEA store is expected to open in 2020.

Several other major development projects as announced in the last few months for Batu Kawan, include a RM1 billion project consisting of an upmarket outlet shopping mall, a 300-room international–class hotel and branch campus of Britain’s University of Hull.

Penang Property Market Overview
In tandem with national performance, the property market in Penang has consolidated in the first half of 2013 (see Penang – Volume and Value of Transactions, H1 2012 & 2013). The total number of properties transacted in Penang during the first half of 2013 was recorded at 11,550, a drop of 27.3% compared with the figure recorded at 15,891 transactions in the same period last year. Despite the drop, the residential sector still retained a dominant share of 74% from the total number of properties transacted. Nevertheless, the total transacted value of residential properties contracted marginally by 4.4% in the first half of 2013.

It is observed that the volume of transaction has softened since 2011, and it is likely that the trend will continue in 2012. On the other hand, of the total properties transacted in Penang, foreign transactions in 2010 and 2011 accounted for a small portion of 2.98% (or 774 transactions) and 2.2% (or 890 transactions) respectively.

Penang – Volume and Value of Transactions, H1 2012 & 2013



H1, ‘13

% Change


H1, ‘13

% Change


































Development Land



























Property Market Outlook 2014
What is the outlook of the Penang property market for the months ahead? Penang’s property market is expected to remain cautiously optimistic as the State is underpinned by healthy fundamentals such as fairly young population demographics (about two-thirds of Penang’s population are under age 40), shrinking average household sizes (about 3.5 per household), low unemployment rate, increased local and foreign investments, stable income levels and bright job opportunities. Property is a long-term investment and the new budget measure will bring positive notes to promote long-term investment and deter excessive speculation.

Astute investors, equipped with conventional wisdom, are of the opinion that buying properties in choice locations in Penang is the preferred mode of wealth creation. Consumer confidence in both local and international investors towards Penang’s properties remains buoyant. Therefore, we expect Penang’s property market to see more excitement this year.

Article written by Henry Butcher Malaysia Penang. The article represents their personal views.

source : Homefinder Magazine