The ban on short-term rentals in Penang has had an unexpected consequence: an increase in property values and rental yields. Eastern & Oriental Bhd (E&O) has reported these positive trends, noting that their property developments in Penang were never intended to be marketed primarily as investment opportunities.
According to Datuk Tee Eng Ho, the executive chairman of E&O, properties without Airbnb or similar short-term rental platforms have seen their prices rise, and rental income has improved significantly. Tee specifically mentioned E&O’s Andaman Island development, located off the Northeast coast of Penang, which is set to launch in the first quarter of 2024.
The ban on short-stay accommodations in Penang went into effect on May 25, 2023, making it the first Malaysian state to impose such restrictions. However, certain commercial property types, including serviced apartments, small office home offices (SoHo), small office flexible offices (SoFo), small office virtual offices (SoVo), office suites, and duplex offices, are exempt from the ban.
This unexpected outcome highlights the complex dynamics of the real estate market and the ways in which regulatory changes can have unforeseen effects on property values and rental income.