Positive Outlook on Penang Property & Residential Market 2024
Penang Property & Residential Market Trends in Q1 2024
The Penang property market, especially its residential market, has shown continued expansion in the first quarter of 2024, according to statistics from NAPIC. The number of residential property transactions increased by approximately 4.0%, with properties in the range of RM 900,000 to RM 1 million seeing the highest growth at 57.3%.
Data from PropertyGuru's DataSense in June 2024 indicates that this trend will likely persist. The Demand Index, which tracks the number of visitors and their activity on PropertyGuru.com.my and iProperty, rose nearly 19% year-over-year in June 2024. Concurrently, the Supply Index, which monitors the number of property listings, has declined steadily over the past three months (Figure 1).
Figure 1 : Supply Index and Demand Index Trend for Penang All Residential
In June, the median price of properties weighted by demand was RM 749,000, with the 75th percentile price at RM 1,400,000. About 36.1% of property searches originated from Kuala Lumpur, 30% from within Penang, and 4.9% from Singapore, making it the top foreign origin for searches.
Plans for LRT in Penang
During the 12th Malaysia Plan Mid-Term Review, the Penang light rail transit (LRT) project and the expansion of Penang International Airport were among the 10 new projects shortlisted. Since the announcement, the demand index for residential properties has steadily increased. The Mutiara LRT line, previously known as the Bayan Lepas line, was introduced by the Penang State Government in 2015 but faced delays due to various factors.
In 2024, the federal government took over the LRT project, appointing MRT Corp as the developer and asset owner. The line was re-designated, and its alignment was redesigned, including a cross-strait link from George Town to Seberang Perai.
Impact of the LRT Line on Penang Property & Residential Markets
The construction of the LRT line is expected to reduce congestion and improve accessibility for residents near the stations. Reduced travel times to work will likely be capitalised into higher home prices, especially for properties close to the LRT stations. Urban economic literature has well-documented the capitalisation effects of proximity to rail transit stations on housing prices. For instance, a study by the National University of Singapore (NUS) showed that opening the Circle Line created an estimated S$1.23 billion housing wealth effect for households near the stations.
Similarly, our examination of the RTS link between Johor Bahru and Singapore revealed a strong correlation between housing demand and progressive announcements regarding the link.
In Penang, the most significant impact is expected on properties in Seberang Perai across the Straits. Homes on Penang Island already have high prices, reflecting strong economic fundamentals and comparative advantages. However, with the anticipated reduction in travel time across the Straits due to the LRT, we expect a boost in demand for properties in Seberang Perai, particularly for terraced homes.
The price differential between properties on Penang Island and Seberang Perai is significant, appealing to property seekers looking for more space due to remote working. In George Town, the median asking price weighted by visitors is about RM 1.3 million, with the interquartile range between RM 1 million and RM 2 million. In contrast, the median demand price in Seberang Perai is about RM 650,000. As the LRT shortens travel time, we anticipate narrowing this price gap.
As of June 2024, this hypothesis will likely be validated, with the Demand Index for Seberang Perai more than doubling since October 2023 (Figure 2).
Figure 2: Supply Index and Demand Index Trend for Seberang Perai Terrace House
With trade tensions remaining elevated and the expansion of demand for chips driven by generative AI, Penang's economy is poised to receive a timely boost from chip companies seeking a 'China plus one' strategy. The Seberang Perai residential market is expected to benefit significantly, with the LRT amplifying the growth in these sectors.
Stay Ahead with the Latest Penang Property Insights & Demand Trends with DataSense
PropertyGuru For Business provides property market intelligence for businesses and investors seeking detailed analysis and data-driven insights. Discover the hidden potential in your business, overcome challenges and make informed decisions confidently with DataSense - PropertyGuru Group's proprietary real estate data and insights platform. DataSense provides the real estate industry with actionable insights derived from accurate, credible, and up-to-date data sources.
DataSense. Helping you Navigate a World of Possibilities.
Get started with PropertyGuru For Business
