Penang’s property market remained relatively resilient in the first half of 2026, although market activity was more measured as buyers and investors became increasingly selective. According to Knight Frank Malaysia’s Real Estate Highlights 1H2026, the state’s established manufacturing base, continued investment, infrastructure development and tourism activity provided support to the property sector, while affordability, location and product quality remained important considerations.

The residential market was softer in 1Q2026, with transaction volume declining 16.6% year-on-year (y-o-y) to 3,443 units, while transaction value fell 13.2% to RM1.6 billion. Demand remained concentrated in the affordable and mid-priced segments, particularly properties priced between RM200,000 and RM400,000. Despite the lower transaction activity, residential values remained resilient. The Penang High-Rise Residential Price Index rose 3.4% y-o-y to 229.9 points.

High-rise residential supply also continued to expand, reaching 138,330 existing units in 1Q2026, up 6.9% y-o-y. Nevertheless, developers remained active, with approximately 1,998 residential units launched in 1H2026. Serviced apartments accounted for most of the new launches, alongside premium, low-density condominiums. Notable launches included AVEA in Andaman Island, The Fount in Batu Uban, Keeperz Suites and Merione Residences in The Light City, with gross selling prices ranging from about RM840 to RM1,857 per sq ft among these projects.

The industrial sector continued to stand out as a key growth driver. Penang recorded RM4.9 billion in approved manufacturing investments in 1Q2026, including RM3.4 billion in foreign direct investment. Industrial transaction volume and value also increased by 19% and 67.8% y-o-y respectively, reflecting continued demand for higher-value industrial assets. Major investment announcements during the period included Nexperia’s RM1.6 billion semiconductor investment, WaferWise Semiconductor’s RM700 million investment and Boston Scientific’s RM308 million project in Batu Kawan.

Penang’s office market expanded modestly following the completion of The Light Exchange in Gelugor, which added about 176,000 sq ft of net lettable area. Total privately owned office stock increased to approximately 8.2 million sq ft, comprising 6.7 million sq ft on Penang Island and 1.5 million sq ft in Seberang Perai. Occupancy continued to strengthen, supported by demand from global business services, technology and corporate occupiers.

The retail market remained relatively stable, with cumulative supply at approximately 21.1 million sq ft and an overall occupancy rate of 70.5%. The upcoming 1 million sq ft The Waterfront Shoppes is expected to introduce additional competition while benefiting from tourism and MICE-related activity.

Meanwhile, Penang’s hospitality sector continued to strengthen, supported by tourism activity, improving air connectivity and a growing MICE sector. The state has an active pipeline of 18 hotels, while recent openings have expanded its offerings across luxury, heritage and lifestyle segments. However, increasing hotel supply has also resulted in greater competition, particularly in the four-star segment.

Looking ahead, Knight Frank expects Penang’s high-rise residential market to remain relatively stable, supported by the state’s economic base, urbanisation and demand for well-connected locations. Major infrastructure initiatives, particularly the Mutiara LRT Line and Penang Silicon Island, are expected to enhance connectivity and support selected residential locations. At the same time, buyers are likely to remain cautious and place greater emphasis on affordability, practicality, connectivity and long-term value.