Arriving at Penang’s rather small and incredibly antiquated international airport, first time visitors to the island might be shocked by the lack of modern sprawl, especially if the plane came from Kuala Lumpur. Unlike the capital city’s luxurious and modern terminals, the first word that comes to mind might be underwhelming as you approach the poorly lit baggage carousels that lack modern digital signage. Stepping outside to the undersized and overcrowded parking area won’t change many viewpoints but after hopping in a taxi and travelling a bit, that’s where the old Penang ends. Unless your plane arrives before 7 AM or after 9 PM, expect to sit in a bumper to bumper mess of expressway-free chaos (albeit calm compared to other Southeast Asian cities) for about an hour (assuming your destination is Georgetown). Wondering why Penang hasn’t attempted multi-lane highways for its heavy traffic volumes, visitors and tourists may have traveled on large limited access freeways that connect the small nation but mysteriously end when you cross one of the bridges connecting the island to the mainland. At first, you might think Penang is still relatively undeveloped compared to the big city but reality sets in quickly as soon as the first monstrosity condo construction site appears. Welcome to the Penang, Land of the Highly Overdeveloped.
Taking advantage of countless Western investment dollars that flowed into all the emerging markets after The Great Recession, Penang embarked on a quest to build dozens of multi story luxury buildings that rival any other large city in Southeast Asia. Drastically unprepared for a surge in new residents, infrastructure sorely lacks and with no expressways, bypass roads or light rail, Penang followed the path of Calgary, Alberta during the George W Bush years when oil and gas boomed. Exhibiting the mantra “build it and they will come“, Malaysia appears ready to accept a rash of wealthy home seekers. Taking a back seat to multinational developers, nobody really worries too much about new roads, better transit and improved services. Unfortunately for Penang, there’s one little problem. Although it’s growing fast and considered the best middle class economy in the ASEAN, per capita income in Malaysia clocks in somewhere around $12,000 USD per year. With minimum price tags of over two million ringgit for almost every new luxury condo (about $500K USD), it doesn’t take a financially savvy investment adviser to figure out what percent of the nation’s population can afford these new condos. Clearly designing an entire island of luxury for foreign investors with no intention of living on the island, Penang in 2016 looks like the U.S housing market about a year before it all came crashing down but without any “no down payment adjustable mortgages“.
Needless to say, many large-scale luxury condo developments remain unsold and with mostly foreign ownership, there’s a glut of available rental units in every shape and size since investors usually like monthly income. Knowing this, Diane and I arrived last year with high expectations of meeting many of the items on our wish list. Finding a property agent with integrity proves very challenging in a market where everyone’s desperate to sell the same units to expats with deep pockets by Malaysian standards. Fortunately, we lucked out and through a recommendation, we established a working relationship with a professional English-speaking agent who keeps our best interests ahead of her profits. Initially disappointed with many units we viewed, almost all condo rentals in our budget felt surrounded by so much new construction noise, dust and dirt, we tempered our hopes of finding the quieter island environment we thought Penang was.
Eventually deciding we weren’t going to buy either a car or motorbike, we had no experience driving on the other side and noticed some of the worst and most inconsiderate driving habits we’d ever seen during our rookie week as pedestrians. Although inexpensive cars are available and all our expat friends have one, we prefer saving our money for traveling and not navigating the clogged narrow roads and parking illegally which is often the only option. Making the choice harder, ample bus routes crisscross the island but the heat limits the distance we’re willing to walk to the nearest bus stop. After witnessing views that mirrored scenes of the World Trade Center site right after 9/11, we rejected the fashionable but noisy Straits Quay area with its centrally convenient location. Also viewing units right in the heart of Gurney Drive (where most Americans prefer to live) and some others in Tunjung Bungah that offer convenience for parents whose kids attend an international school, we still didn’t see anything that fit our needs.
Compromising convenience for quietness and easy accessibility to the beachfront area, our agent showed us the first luxury condo you reach in Batu Ferringhi, the nation’s most popular beach town. (Unfortunately, the town often becomes the busiest place in Penang during any of Malaysia’s countless holidays and ethnic celebrations but at that time we didn’t realize this.) With only four units on a floor, the expensive ones feature 2,200 square feet of living space and beautiful views of the sea and surrounding area. Opting for the smaller unit, ours has 1,777 square feet, west-facing views and an open floor plan that features a large balcony wrapping around two sides and a panoramic view of the mountains, sea, infinity pool and the national park at the end of the island. Located at the top of a super steep hill assuring a dose of daily exercise for pedestrian expats, the bus to civilization stops right at the bottom of the access road and the town’s few amenities are within ten minutes walking distance. With just enough hawkers selling Nasi Campur for lunch, three fast food restaurants and a very small morning wet market, there’s often no need to leave the area especially during extended heat waves like the current one engulfing the nation for ten weeks.
Possibly the biggest advantage of living so far from everything is the lack of available space for large-scale construction projects. Sandwiched against the protected forest land and perfectly situated across the street from a small military base, there’s one smaller condo project slated that’s within eyesight but it’s not disruptively noisy and doesn’t affect our view. Nobody in the upscale Shangri-La Rasa Sayang resort objects should we choose to relax on their beachfront property across the street and they also have the island’s best buffet dinner and a large gym with membership options available for local residents. (Sadly, we haven’t eaten there or joined the gym yet because they’re both pricey by Malaysian standards and we recently spent a lot of cash traveling to Australia). Spending most late afternoons lazing at the infinity pool, we find ourselves settled in to a fairly simple lifestyle in between traveling and we use the bus and Uber for excursions to Tesco, Cold Storage, and the occasional dinner with friends.
Personally meeting with our landlord, she encouraged us to stay for ten years or more and offered a one year lease with an option to renew for one more year the same rent. Working out to about 30% of what we paid on our monthly California mortgage, the price is quite reasonable and the although we’re told the condo units are 100% sold, the occupancy rate hovers somewhere around 30 to 40% of capacity at any given time of year. Major holidays are more crowded and we assume many foreign investors use the condo as a vacation home, but there’s also units that sit unoccupied for months or years in between tenants because hardly anyone wants to be so far from everything. With advantages and disadvantages, we love having no upstairs neighbors, sharing the pool mostly with thirsty pigeons and never waiting long for the elevator. However, with most foreign owners taking no vested interest in maintenance, upkeep and concerns of any residents, things often break and stay unfixed for months and at five years old, the building is showing wear and tear that often goes unnoticed.
Plaguing the building with endless amounts of pigeon shit, the architects built extra ledges that act as breeding grounds for the world’s dirtiest birds and the mostly absent condo owners refuse to pay for any meaningful solution, leaving the first twenty floor’s ledges with filthy unreachable feces. Regularly laying eggs next to the air conditioning units outside our side windows, pairs of babies spend the first six weeks of their lives sitting in one place while the mother comes to feed them which explains why most people never see baby pigeons. As animal lovers, we let them be but would never think about purchasing a condo that won’t address ways to combat a filthy mess. Despite the negatives, we’re mostly satisfied with our living situation so naturally, here comes the greedy corporate asshole part of the story that reminds us Malaysia acts like any other fully developed nation, putting the interest of the citizenry way behind the chance for quick revenue.
Noticing a sign in the elevator, the condo’s management encouraged residents to attend a “protest meeting” across the street to show unity against the proposed development of a 15 story budget hotel on a miniscule piece of land tucked in between the army’s land and the Shangri-La hotel. Currently used as an access road to the beach, the area measures only seven tenths of an acre and violates the eight story cap on beachfront hotel development legislated by the town and Penang City Council. Having heard an occasional rumor, we never paid much attention because the spot is so ridiculously small, common sense dictates no developer would waste their time applying for permits. Totally out of line with the four and five-star hotels dotting the Batu Ferrenghi beachfront, the town usually attracts a relatively upscale vacation crowd that contributes heavily to the local economy. With no room for that type of property, this developer wishes to bring a backpacker crowd next door to the country’s most luxurious hotel chain and across the street from our a luxury condo and a more upscale serviced apartment tower.
Aside from the obvious lack of space, this proposal instantly puts an end to every reason we described above for living in our condo, ruins the view for the first 15 floors, creates a bottleneck jam in an already dangerously windy two land road and destroys the natural habitat of monkeys, birds and other local wildlife. Worse than that, we’ve heard they already filed several objections with the city council which were all rejected, giving the developer a green light to ask for contracting bids. In addition, the city council is also proposing knocking out a chunk of forest at the end of our access road to allow alternate entry into the new large condo that’s already halfway built. So much for the notion that forest land is all protected on the backside of Penang Island. Directly affecting us, both projects would create the same nightmare scenario of noise, dust, dirt, insects and rodents that we avoided by moving out here where they practically guaranteed we’d be sheltered from this type of ridiculous development.
Holders of MM2H visas probably noticed prohibited activities when they received their approval and the first and most prominent rule is “no participation in any local political rally or other events interfering with local or national policy“. As foreigners, this makes perfect sense to me as we have no say in how they run their economy and we’re also free to leave at any time. Touching a grey area, Diane and I decided we’d have a quick look at the meeting but felt participation in any way is inappropriate given the rules of our visa. Surprisingly, the article written on page ten of the nation’s leading newspaper the next day led off by quoting an MM2H holder voicing their concerns. Furthermore, we saw some neighbors that not only attended but held signs that landed them front and center in the article’s headline picture. Maybe we’re overly cautious, but we don’t recommend engaging in rallies that defy the city council and then posting your participation on social media.
Ironically, a few weeks ago our landlord informed our property agent she wishes to sell our condo unit. Unable to evict us until the end of our first year’s term in July, we’re hoping to stay for another year before moving to Chiang Mai, Thailand so we started negotiating additional clauses into our renewal option including methods of vacating early without financial hardship should the proposed construction projects begin before next summer. (Highly unlikely given the speed that things move in Malaysia like a five month minimum close of escrow, but way take chances?) Like most condo owners, news of the proposed developments usually catches them off guard since they don’t live in Penang and a budget hotel and access road ruining the view greatly diminishes the chances of finding a buyer, especially at the prices they ask. Working diligently to get our terms squared away, we think renegotiating puts us in the driver’s seat given a negative decline in many Malaysian’s financial situations brought on by a weakening currency, implementation of the GST and the decline of commodity prices.
Unsure what the housing market will look like in the next few years, there’s no way to predict the outcome of Penang’s quality of living given the unreasonably high amount of expensive over-development obviously built for Singaporeans, and other wealthy foreigners. Predicting a housing bubble seems reasonable given similarities to other markets which probably bodes well for renters. Almost feeling cheated with the proposal of a low-budget hotel that ruins the entire area’s quality of life, we’ll try to wait it out knowing that Chiang Mai offers an even more inexpensive brand of urban growth that’s more in line with our lifestyle.
Looking more like Hong Kong and San Francisco with its relentless quest to create luxury, Penang appears hell-bent on creating an atmosphere similar to other expat havens for westerners and wealthy folks with gated communities separating the local population from the new brand of elites. Wondering how many more nations might offer decent infrastructure and affordability, we think the rise of populism and right-wing political movements due to an increased disparity of wealth will continue to take hold around the world. Hopefully, Penang’s great experiment in Singaporean style luxury somehow trickles down to the average citizens. But I’d doubt it.
I’m seeing a surge in views from the USA, possibly in response to the current sad state of affairs known as The Trump Campaign. Questions and comments about overseas living are always encouraged. Thanks for reading.