A recent fire at a homestay in Batu Ferringhi that left eight guests injured has reignited concerns over the safety and regulation of short-term rentals (STR) in Penang, prompting industry players to urge the government to expedite clearer rules for the sector.

The early morning incident occurred on March 1 at a three-storey homestay unit in Pearl Residence, Solok Sungai Emas. According to the Penang Fire and Rescue Department, an emergency call was received at 4.46am, prompting a response team from the Bagan Jermal Fire and Rescue Station.

Assistant director (Operations) John Sagun Francis said all eight women staying at the premises managed to escape before firefighters arrived. However, a 31-year-old woman suffered a broken right leg while seven others experienced smoke inhalation and breathing difficulties while fleeing the building.

The fire involved the ground-floor living room, covering approximately 140 square metres. Firefighters managed to bring the blaze under control by 5.20am and fully extinguished it 15 minutes later. The operation concluded at 6.26am.

All victims received initial treatment at the scene before being transported to Penang General Hospital for further examination.

While the fire did not result in fatalities, the incident has sparked renewed discussion about the safety standards of short-term rental accommodations, which have grown rapidly across Penang in recent years.

On March 4, the Malaysia Budget Hotel Association Penang Chapter (MYBHA Penang) called on authorities to fast-track regulations governing the STR sector.

Its chairman, Andy Lau Eng Leong, said the incident serves as a stark reminder of the risks posed by unregulated accommodations.

“This tragic fire is a grave reminder that guest safety cannot be guaranteed in unregulated short-term rentals. Immediate regulation is needed to ensure that proper fire safety standards, certifications, and inspections are in place for all STR accommodations,” he said.

Lau clarified that the association is not against short-term rentals themselves, acknowledging that the segment has become an integral part of the tourism ecosystem. However, he stressed that the sector should operate under a proper regulatory framework to safeguard guests and ensure fair competition.

Beyond safety concerns, Lau highlighted the economic implications of unregulated STR operations.

Without proper registration and licensing, governments risk losing potential revenue from tourism taxes, licensing fees, and other levies. At the same time, hotels and licensed budget accommodations that comply with strict safety, health and regulatory requirements face uneven competition from operators who bypass these obligations.

The debate over short-term rentals is not new in Penang. With the state being one of Malaysia’s most popular tourist destinations, STR units—particularly those operating in residential high-rise developments—have proliferated over the past decade.

While many property owners view STR platforms as an attractive way to generate rental income, concerns have frequently been raised by residents and property managers over security, building management, and neighbourhood disruptions.

The recent Batu Ferringhi incident may intensify calls for clearer and more enforceable policies governing STR operations, particularly in strata properties.

Industry observers note that establishing consistent safety standards, registration requirements and enforcement mechanisms could help balance the interests of tourism operators, property owners, residents and visitors.

Development of the Penang International Logistics Aeropark (PILA) at Penang International Airport has commenced in the first quarter of 2026, marking a key step in strengthening the state’s role in regional air cargo logistics.

During a Q&A session in the Dewan Negara yesterday, Deputy Transport Minister Hasbi Habibollah said the project is being implemented in phases to upgrade and expand the airport’s cargo handling capacity while improving overall air freight services.

Under the first phase, cargo handling capacity at Penang International Airport is targeted to increase from 0.16 million tonnes to 0.5 million tonnes annually. This will be achieved through the development of a new cargo terminal, construction of an additional taxiway, and the addition of two aircraft parking aprons.

The PILA project is expected to strengthen Penang’s position as a key logistics gateway for northern Malaysia, supporting growing demand from the state’s manufacturing and technology sectors.

Hasbi said the project aligns with the goals of the National Transport Policy 2019–2030, which aims to position Malaysia as a regional distribution hub. The Transport Ministry has also engaged with stakeholders, including Malaysia Airports Holdings Berhad, to develop strategies that enhance the efficiency and competitiveness of the air cargo industry.

Beyond infrastructure expansion, the ministry is also implementing reforms to modernise the air cargo ecosystem, including improvements to operational policies, procedures and the digitalisation of logistics processes. These initiatives began at Kuala Lumpur International Airport in late 2025 and will be expanded nationwide.

Penang Chief Minister Chow Kon Yeow has clarified that the revised land tax (quit rent) rates are calculated using a formula based on four factors: whether the land is classified as urban or rural, its size, its current use and the applicable tax rate.

Speaking at a press conference in Komtar, Chow addressed public concerns over cases where land tax bills appeared to increase sharply. He urged affected landowners to submit an appeal to the Land Office if they believe their assessment is incorrect.

“The bottom line is to come forward and appeal with your documents. If the case is genuine and the land classification needs to be corrected, we will reassess it,” he said.

Chow explained that the revised rates follow the framework gazetted under the Penang Land Rules (Amendment) (No. 4) 2025 on Sept 11 last year. Land tax is calculated by multiplying the land size with the rate assigned to its current use.

For example, residential land is taxed at RM0.70 per square metre for urban areas and RM0.50 per square metre for rural areas.

He noted that some examples circulating online — such as taxes rising from RM6 to RM19,400 or from RM745 to RM489,775 — were likely due to changes in land use classification. If land previously used for agriculture is now categorised as industrial, the tax payable would naturally increase.

Chow cited an example where a five-hectare parcel used for paddy cultivation could see its annual tax increase from about RM50 to RM162,500 if reclassified for industrial use.

He stressed that the revision aims to create a fairer and more equitable system by aligning tax rates with actual land use while removing disparities between First Grade and non-First Grade lands. Penang’s land tax rates had not been reviewed for more than 30 years, with the last revision carried out in 1994.

The state government has also introduced transition measures to ease the impact, including rebates of up to 50 per cent, a full waiver of late payment penalties and more flexible grounds for appeals.

Meanwhile, Penang Land and Mines Office director Datuk Dr Faizal Kamarudin said about 300 appeals have been received so far, with roughly 100 involving First Grade lands. This represents less than one per cent of landowners in the state.

Faizal added that only two states in Malaysia — Penang and Melaka — have First Grade land classifications.

A proposed residential development is planned on a site off Jalan Batu Ferringhi, in the vicinity of the Batu Ferringhi Police Station and near Ferringhi Delima. The location is within walking distance of Batu Ferringhi Beach and approximately a 30-minute drive from George Town.

The development is proposed as a 33-storey condominium with a two-level facilities podium. It will comprise 98 residential units and include six levels of car parking.

The project is currently at the planning stage, with further details expected to be released upon its official launch.

Project Name : (to be confirmed)
Location : Batu Ferringhi
Property Type : Condominium
Tenure: (to be confirmed)
Land Area: (to be confirmed)
Built-up Size: (to be confirmed)
Total Units : 98
Indicative Price : (to be confirmed)
Developer : (Follow us to find out more)

DISCLAIMER: This article is solely based on research done using publicly available data. This is not an advertisement. Any claim, statistic, quote or other representation about a project or service should be verified with the developer, provider, or party in question.

The Northern Region property market recorded a moderate performance in 2025, with mixed signals across the four states of Penang, Perak, Kedah and Perlis. According to the Northern Region Property Market Report 2025 by the Valuation and Property Services Department (JPPH), the region registered 104,689 transactions worth RM37.36 billion.

While overall transaction volume declined by 2.8% year-on-year, total value increased by 2.3%, indicating continued resilience in pricing and high-value transactions.

Penang: Highest Value Contributor in the Region

Despite recording a 3.9% drop in transaction volume to 23,474 transactions in 2025, Penang remained the region’s top contributor in terms of transaction value. The state accounted for 40.5% of the Northern Region’s total value, amounting to RM15.13 billion.

This reinforces Penang’s position as the most valuable property market in the north, supported by its strong industrial base, limited land supply and sustained investor interest.

Residential properties continued to dominate the market, forming 57.2% of total regional transactions. However, Penang’s residential sub-sector saw a 4.9% decline in volume and a 7% drop in value year-on-year. Nevertheless, the state maintained the highest average house price in the region at RM497,857 in 2025, with its All House Price Index rising by 2.7%.

New Launches and Unsold Situation

The primary market in Penang softened during the review period. New residential launches declined by 27% compared to 2024, contributing to an overall 8.6% drop across the Northern Region. Condominiums and apartments remained the main contributors to new supply in Penang, reflecting its urban and high-density development pattern.

On the overhang front, there was a mixed outcome. Unsold completed residential units in Penang improved slightly, with both volume and value declining. However, unsold units under construction increased by 1.3%, while serviced apartment and SOHO overhang rose significantly. Unsold completed serviced apartments climbed to 1,263 units worth RM771.56 million, compared to 549 units the previous year.

This suggests continued caution in the high-rise and investor-driven segments.

Industrial and Commercial Highlights

Penang’s industrial segment remained active, reflected by multiple high-value factory and warehouse transactions recorded during the year, particularly within established industrial zones such as Bayan Lepas, Valdor and Seberang Perai. These transactions underline sustained demand linked to the state’s electrical and electronics ecosystem.

In the commercial sector, transaction volume declined across the region, with Penang’s commercial transaction value dropping by 24.9% year-on-year. Nevertheless, shop properties remained stable in pricing, with landed shops in prime areas transacting as high as RM5.1 million.

Retail occupancy in Penang moderated to 70.9%, slightly lower than 2024, while the purpose-built office segment saw occupancy ease to 81.4%. Despite this, new office completions such as Ideal MSC Tower and the Ministry of Human Resources building in George Town added fresh supply to the market.

Outlook

While 2025 reflected a cooling phase in transaction activity, Penang continues to lead the Northern Region in terms of value and pricing strength. The moderation in new launches and rising high-rise overhang indicate a more selective market environment, particularly in investor-oriented segments.

That said, strong industrial fundamentals, continued infrastructure expansion and sustained house price growth suggest that Penang’s property market remains structurally resilient, albeit moving into a more measured and demand-driven cycle.