Overseas property buyers eyeing Penang were dealt some bad news after the local government increased the real estate price floor for foreigners. Penang property prices have been on a slow decline in recent times and the move is the government’s latest attempt to halt the slide.
“Foreign buyers can no longer buy properties below the floor price. The limit for each property on the island (of Penang) is set at MYR 3 million (USD 742,000) for landed property and MYR 1 million (USD 257,550) for stratified unit,” State Housing, Town and Country Planning Committee chairman Jagdeep Singh Deo explained to the Malay Mail.
On mainland Penang, the new landed property price floor for foreigners is MYR 1 million and above while the stratified unit price floor has been set at MYR 500,000 (USD 123,770). Overseas property buyers investing in Penang prefer residences on the island due to its stronger tourism and historical appeal.
The local government has also enacted a couple of new fees. The first is an approval fee of 1.5 percent that any international buyer will need to pay before the transaction is complete. All real estate buyers, both foreign and domestic, are now subject to a two percent approval fee if they decide to sell a property within the first three years of buying it.
Is it worth buying property in Penang?
As a straight investment play, the Penang real estate market isn’t particularly attractive when compared to other areas around the region. There are positives, however. A total of 7.2 million tourist arrivals stopped by the island in 2017 and Malaysian Auditor-General’s Report named Penang as the best financially managed state in the country, but these have not been able to kickstart the sluggish real estate sector.
On the other hand, Penang makes a lot of sense as a retirement option. International Living named the island as number six on its list of ‘World’s Best Retirement Havens’ and George Town, Penang’s capital, finished 10thon Live and Invest Overseas’ ‘The World’s Best Places To Retire’ list.
A major factor in these rankings is the Malaysia My Second Home (MM2H) scheme that permits foreign retirees to own property in return for a ten-year visa. The financial requirements of this programme are investor friendly.
Retirees aged 50 or above who purchase a Malaysian property either need to open a fixed deposit account in Malaysia of MYR 350,000 (USD 86,640) with a local branch or show proof of monthly off-shore government pension of at least MYR 10,000 (USD 2,475) to qualify.
According to The Sun Daily, 35,381 applications from 127 nations have been approved for the MM2H programme since it began in 2002. The most application approvals came China with Japan, the United Kingdom, Singapore and Taiwan also ranking in the top ten.