Michael Geh gives an overview of the island’s hottest developments and what’s in store for the future
The island of Penang continues to have its own fascination - the food, its laid-back quality reminiscent of a Singapore 30 years ago, its frenetic night life. Whatever the reason, property continues to fly off the shelf as soon as it comes on to the market.
Even high-rise, low and medium-cost properties are fast selling. Standout example: Most of the newly launched schemes around the island’s north-east district were fully sold within a few months of their launch.
Meanwhile, high-rise apartments and condominiums are selling well as prices have shot up to record levels. That is also due to the fact that high-end properties around Gurney Drive, Tanjung Bungah and Batu Ferringhi (north-east district) are influenced by foreign buying into the market.
For all that, however, landed property is doing better than high-rise projects, with tremendous price escalations.
Consider the following examples. In Sungai Nibong, standard two-storey terrace houses have been transacted at around RM560,000 (S$244,730) for a plot size of 1,550 square feet. That is RM95,000 higher than in the first quarter of 2007.
Meanwhile, at Bukit Gambier - around the corner from Sungei Nibong - newly launched two-storey terrace houses are going for around RM700,000 for a 2,400 sq ft plot area with a built-up area of 1,400 sq ft. That is easily the price of a single storey semi-detached unit with a 7,600 sq ft plot area in the more established neighbourhood of Tanjung Bungah.
And prices will only go up once the Northern Corridor Economic Region (NCER) project, recently announced by Prime Minister Abdullah Ahmad Badawi, gets underway. So far, the announced projects under the NCER to promote Penang as a manufacturing, tourism, logistics and transportation hub are the Penang Outer Ring Road, the second bridge to the mainland and a monorail that will run around the island.
The NCER encompasses the four northern states of Kedah, Perlis, Penang and northern Perak, along the lines of the Iskandar Development Region that was launched earlier this year in southern Johor. Its aim is to transform and expand the agricultural, manufacturing, tourism and logistics’ sectors in the region.
Penang is poised to leverage on those developments by promoting new industries such as biotechnology and downstream agricultural activities amid the expansion of its existing electronics and electrical sector investments in Bayan Lepas.
Simultaneously, the island is being marketed as an international tourist attraction. The redevelopment of Pulau Jerejak, a former penal colony that is being rehabilitated, is expected to make Penang a destination for exhibitions and international conferences, as well as positioning it as a medical tourism destination. These strategies incorporating the ‘Malaysia My Second Home’ programme are expected to attract long-staying tourists to Penang’s property sector.
With all these things coming up, we estimate more development around the island’s south-west district, especially Batu Maung, Bayan Lepas and Sungai Nibong, to slake demand.
Coastal Towers, for example, offers renovated 803 sq ft apartments that are being transacted at RM235,000 a unit compared with RM180,000 previously.
The Cove Beach Condos (average unit: 5,820 sq ft), are selling for around RM1.45 to RM2.2 million. That’s already higher than 11 Gurney which was transacted at around RM1.75 million for similar sized units.
But perhaps the most ambitious development to date is the Penang Global City Centre, which is expected to be a top draw for investors to the island state. With an estimated gross development value of RM8 billion, the iconic development on 104 hectares on the existing Penang Turf Club is expected to be worth RM25 billion when it is completed in 18 years, its promoters say.
They also assure the ambitious ‘carbon zero development’ will see a significant jump in job opportunities and tourism upon the completion of the project. The Global City Centre will boast two iconic towers, a metropolitan park, the Penang Performing Arts Centre, high-end retail outlets, a convention centre and condominiums.
In summary, the island’s property development market is in a state of euphoria and is trending towards catering for the wealthy. Many projects in the pipeline are firmly upmarket and should position Penang as the luxury property and lifestyle destination in Malaysia.
Where should the canny investor put his money? Among the suggested places:
· Gurney Drive with yields of 5.5-9.1 per cent
· Tanjung Tokong, 6.8-8.1 per cent
· Batu Ferringhi, 8.6 per cent and above
· Gurney Park apartments - currently renting for around RM2,700 a month mainly by the Japanese
The writer is senior partner of Raine & Horne, Penang - By Business Times
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