GEORGE TOWN — Penang’s longstanding property overhang issue, which has plagued the state’s real estate sector for years, is showing signs of improvement, with a reduction in the number of unsold properties.
However, industry experts warn that more proactive measures from developers and the state government are needed to permanently address the glut.
Recent data from the National Property Information Centre (NAPIC), reviewed by Scoop, highlights the ongoing struggles with property overhang in Penang. In 2019, the state ranked fourth nationally, with 3,353 unsold units valued at RM2.59 billion.
By 2020, Penang had dropped to fifth place. In 2021, the number of unsold properties surged to 5,493 units worth RM3.56 billion, ranking the state third nationally, behind Selangor and Johor.
However, by the third quarter of 2022, the number of unsold units decreased to 5,222.
In 2023, Penang saw a further decline, ranking fifth with 3,001 units worth RM2.61 billion in overhang. The trend continued in 2024, with 2,796 unsold properties valued at RM2.09 billion, placing the state fourth in the rankings.
Key factors behind the glut
Industry experts attribute Penang’s property glut to a number of key factors, including the location of housing projects and a mismatch between the types of properties being built and the market demand.
According to Datuk Khoo Teck Chong, Chairman of the Penang chapter of the Real Estate and Housing Developers’ Association (Rehda), properties priced between RM300,000 and RM500,000, as well as those below RM300,000, are particularly struggling. In contrast, high-end properties priced above RM1 million are less likely to remain unsold.
Penang Institute’s Wooi Leng Ong highlighted that properties valued above RM1 million are typically aimed at high-income earners, foreign buyers, or Penangites living abroad.
She noted that such buyers tend to prefer vibrant locations with sea views and community hubs.
“For other types of properties, a location with essential amenities—such as clinics, eateries, parks, and schools—would be ideal for young families,” she told Scoop.
“Properties lacking these amenities may face slower sales.”
Mismatched supply and demand
Universiti Sains Malaysia (USM) senior lecturer Norazmawati Md Sani @ Abd Rahim pointed out that a major contributing factor to the overhang is the mismatch between the types of properties being offered and the preferences of the local market.
“Developers often build luxury or high-end units that don’t align with the needs of many local buyers,” she said. “Speculative investments and overly ambitious projects can lead to oversupply and delayed absorption.”
Norazmawati also emphasised affordability as a key issue. “Economic factors and consumer confidence, particularly during downturns, limit the purchasing power of local buyers,” she added. “Additionally, inappropriate pricing strategies discourage potential buyers.”
Market research: Is it sufficient?
Khoo assured that developers do conduct market research before launching housing projects, as real estate is a significant investment. “For regular housing or serviced apartments, no developer would skip a market survey,” he said. “But the depth of the research and how aggressively developers evaluate the market can vary.”
However, Norazmawati raised concerns that many projects are initiated based on optimistic forecasts or speculative motives, rather than a thorough assessment of affordability and demand.
Solutions to tackle the glut
Khoo suggested that the Penang state government should identify specific areas where demand for affordable housing is high. “For example, if surveys show a need for affordable housing in Bayan Lepas or Gelugor, the state could work with developers to meet that demand,” he explained.
Such an approach would help ensure that new projects are built in areas where there is genuine demand, preventing overdevelopment and unnecessary glut.
Both Khoo and Norazmawati also recommended that the government intensify initiatives like the Madani Ownership Campaign, which offers a 5% discount for first-time buyers, and explore further measures such as stamp duty exemptions for young families and first-time buyers.
Wooi, meanwhile, suggested that developers should factor in the availability of job opportunities in Penang when planning projects. “By studying job markets, particularly in the multinational and expatriate sectors, developers can gain a clearer picture of potential buyers,” she said. “This will help tailor developments to attract the right buyers, including expatriates and those in the Malaysia My Second Home (MM2H) programme.”
As Penang’s property market continues to evolve, experts agree that more targeted and data-driven strategies will be essential in overcoming the glut and ensuring long-term success. – August 14, 2025