Penang Property Market 1H 2007
Market Indications
The Government’s upcoming initiative to designate Penang as the hub of the new northern development region encompassing Perlis, Kedah and Perak coupled with the extensive infrastructure projects will have a big impact on the real estate sector of the State.
• With the entry of more Klang Valley based developers into the State, the greater competition among the big players will see the creation of higher quality developments with new lifestyle concepts and better designed homes.
• With affluent Penangites’ preference for landed housing, many developers have responded to this with the launching of several schemes such as E&O’s Seri Tanjung Pinang; Hunza’s Alila; SP Setia’s Setia Pearl Island and Mah Sing Group’s Southbay Villas.
• The relaxation of rules on purchases of residential units by foreigners has helped boost the high-end condominium sector of both new and completed projects as many foreigners have bought homes here under the Malaysia My Second Home (MM2H) programme.
• The waiver from Real Property Gains Tax with effect from 1st April 2007 has also contributed to higher activity in the residential sector.
• It was announced that construction work on the second bridge will commence in early 2008 with assistance from Export Import Bank of China (Exim Bank).
High-End Condominium
• The completion of The View and Bayswater Condominium in the south west of the island contributed an additional 560 units during the first half of 2007.
• Supply will be further increased when projects like The Cove, The Mayfair, Putra Marine are completed by the end of the year.
• The developer of the latest two high-end condominium projects, the “Infinity” and “Gurney Paragon” has reported good take-up by foreigners who reportedly purchased a third of the 10% sold during their soft launches.
• The “Infinity” is for sale from RM383 per sq ft and RM405 per sq ft for 3,700 sq ft and 4,700 sq ft units respectively whilst sale prices for Gurney Paragon start from RM400 per sq ft for 4,600 sq ft units and from RM460 per sq ft for 2,800 sq ft units.
• Prices of new projects within the sought after areas of Pulau Tikus and Tanjung Bungah range from RM350 to RM500 per sq ft.
• In Pulau Tikus, monthly rentals for fully furnished units range from RM4,000 to RM10,000 where sizes range from 1,800 sq ft to 5,000 sq ft.
Offices
• The supply of office space increased by 80,000 sq ft with Menara Great Eastern completed in the first half of 2007.
• In the south west district within close proximity to the Bayan Lepas Industrial Park and Penang International Airport, three new buildings namely Suntech, The CEO and IJM’s new corporate office are currently under various stages of construction.
• Occupancy rates of the better grade office buildings average 72%.
• No en bloc sales of office buildings were recorded in the first half of 2007.
• Capital values of prime office space generally remained unchanged from the second half of 2006 level of RM220 to RM260 per sq ft whilst those of secondary offices range from RM110 to RM150 per sq ft.
• With supply in excess of demand, market rentals of prime office buildings generally remained unchanged at RM2.20 to RM2.70 per sq ft gross whilst secondary buildings average RM1.50 to RM2.00 per sq ft per month.
Retail
• The retail industry is set to grow with the anticipation of more tourist arrivals projected by the government in which Penang enjoys a 33.8% of the market share.
• The supply of retail space increased by another 610,000 sq ft in the first half of 2007 with the recent opening of Sunway Carnival (NLA of 500,000 sq ft) in Seberang Jaya on the mainland and the neigbourhood Pan Palace Plaza (110,000 sq ft) in Sg Dua on the island, bringing the total to 5.422 million sq ft.
• Future supply will be further increased when the following three projects are completed:
• Occupancy rates of the prime shopping malls range from 85% to 95% whilst those of secondary complexes average 55% to 70%.
• Modern shopping malls are in demand from investors as evidenced by the sale of Island Plaza (320,000 sq ft net lettable area) to Asia Mall Private Ltd, a company formed under a US based insurance group.
• Gross rentals of ground floor retail space in prime centres generally remain unchanged from the second half of 2006 levels, ranging from RM15 to RM27 per sq ft per month depending on the location and size of the units.
Outlook
The overall outlook is good as the impending infrastructural works and relaxation of rules will have a positive impact on the property sector. The general residential sector is expected to remain strong although the sales performance of high end condominiums may taper off a little due to the increasing supply. The office market is not expected to change much whilst the retail sector will be increasingly competitive as more centres are completed. - Article from The Edge
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