Penang property still drawing investors

Now that the dust has settled after the March 8 general election, the property market in Penang is expected to be stable and moderate for the time being, says Michael Geh, director of Raine & Horne International Zaki + Partners.

Although there is talk that planned mega projects under the Northern Corridor Economic Region (NCER) — the second Penang bridge, light monorail system, Penang Outer Ring Road (PORR) and Rapid Penang bus service — might be halted, Geh says local and foreign investors do not seem to be shying away from Penang. In fact, he says, it is the other way around; all these factors are attracting them to invest in a “cleaner and transparent” environment.

“This may be attributed to new government policies promoting equal opportunity, be it in education, politics or business. These are deemed as clean and transparent policies especially with regard to land issues,” says Geh.

Presenting The Edge Raine & Horne International Zaki + Partners Penang Housing Property Monitor for the period between January to March this year (1Q2008), Geh says factors such as low unemployment rate, steady GDP growth, as well as a balanced and equitable national economic development all point towards greater opportunities for the property development and investment market for this year.

“However, due to volatile uncertainties in the global market, foreign investors may, in the second quarter, be more cautious about investment opportunities,” he adds.

Geh also foresees a slow start for take-up rates of projects that had already been launched in the coming quarter as locals play wait-and-see because of the political restructuring.

“The people are curious to observe strategies implemented by the DAP-led government to boost Penang’s economy, especially in the property sector,” he shares.

Nonetheless, Geh says that 2008 will be a historical chapter in Penang’s property market as more and more people are willing, and able to afford, luxurious residential developments. Luxurious developments, especially the high-rises have been coming up in Penang since 3Q2007 and he sees this as “new branding” for Penang properties.

“Nowadays, people are looking at modern tropical facades surrounded by lush greenery and serene landscaping. Spacious and airy tropical homes that boast courtyard terraces are being offered. Homes have a resort feel to them and come with private seafront enclaves compared to the traditional 1,400 sq ft, 2-storey terrace demarcated with concrete fencing located just next to one’s working office,” Geh explains.

Research by Raine & Horne show that most of the newly launched projects are gated communities, with intercoms connected to a guardhouse, 24-hour CCTV surveillance and 24-hour security. Geh says this reflects the public’s awareness of rising crime. Hence the trend for luxurious residential properties in Penang.

According to him, in 1Q2008, Penang’s properties were gravitating towards international standards, with developers building luxurious residential properties to support demand from the expatriate community as well as local and foreign investors.

The target market for these luxury properties include upgraders, local and foreign investors looking to make a profit, and foreigners living in Penang under the Malaysia My Second Home (MM2H) programme, who are mostly retirees.

“Being one of Malaysia’s front-runners in property investment after Kuala Lumpur, Penang’s waterfront developments are now comparable to the international waterfront communities, including Sentosa Cove in Singapore and the Palms in Dubai or even Australia’s Sovereign Islands,” he says.

In response to the rising construction costs and growing number of foreigners pouring into the Penang property market, new developments carry “international” price tags. A survey done by Raine & Horne during the Penang International Property Expo 2008 revealed that at least 75% of the soft or officially launched strata projects comprised luxurious condominiums or super condominiums priced between RM350,000 and RM2.2 million.

Most of these projects are coming up in Northern Penang, especially around the tourist belt — Tanjung Bungah, Tanjung Tokong and Batu Ferringhi. Sales are doing quite well, according to Geh.

In Tanjung Bungah, Bolton Bhd’s luxury condominium, Surin, recorded 100% take-up rate for Block A while Block B is up to 80% sold. In Queensbay, Baystar by CP Landmark Sdn Bhd was 100% since March 2008 while Ferringhi Heights by Plenitude Heights Sdn Bhd, located in Batu Ferringhi, is 50% booked even before its soft launch next month.

Apart from these, Penang’s iconic developments are also attracting a wider range of potential buyers. For example, 80% of E&O Property Development (Penang) Sdn Bhd’s Seri Tanjung buyers are from Penang, Ipoh, Sungai Petani and Kuala Lumpur, while the remaining 20% are foreigners. Meanwhile, Hunza Properties intends to promote Alila 2 — a high-end landed and condominium residential project in Tanjung Bungah — to buyers from Europe, Hong Kong, South Korea, Indonesia and Singapore, says Geh.

He says limited supply of landbank in the northern side has shifted landed housing development to the south, especially to low-medium income areas such as Sungai Ara, Batu Maung and Balik Pulau. “As more and more small-scale contractors cum developers come into Balik Pulau, potential land prices have appreciated at least 10% compared to 4Q2007. We foresee Balik Pulau as a new housing gold mine for developers,” says Geh.

For landed properties, owners are advised not to rush, as the current RM755,000 for a 1,650 sq ft 3-storey home is still conservative, he says. “A similar unit at Changkat Sungai Ara area was transacted at RM765,000 in 4Q2007,” he adds.

Meanwhile, in the secondary residential market, there has been a slowing down of market activities with prices stabilising, says Geh. Prices of standard 2-storey terraced houses sized between 1,300 sq ft and 1,800 sq ft remain largely unchanged except for a slight increase in Sungai Nibong and Seberang Perai Selatan, with prices appreciating 1.89% and 2.86% respectively.

In Minden Heights, prices of 2-storey semidees sized between 3,000 sq ft and 4,000 sq ft increased by 2.56% while in Pulau Tikus, 2-storey bungalows sized 6,500 sq ft and above rose by 2.17%.

As for rentals, things were on the quiet side except for the tourise belt of Tanjung Tokong, Tanjung Bungah and Batu Ferringhi, where rentals have increased for both landed and strata properties.

In Tanjung Tokong, rentals of 2-storey bungalows sized 6,500 sq ft and above increased 1.92% while similar properties in Tanjung Bungah saw a 1.85% hike. Also in Tanjung Bungah, rental rates increased the most for 3-bedroom apartments sized 900 sq ft or more, recording a 3.57% hike.

Overall, rental rates for 3-bedroom flats sized between 700 sq ft and 750 sq ft in Green Lane increased the most, recording a 4.41% hike. - By The Edge Daily

1 comment

May 5, 2008 at 2:43 PMAnonymous

build a casino in pantai jerejak. this will boost penang property and atteact more inverstor from all over the world. this also create job oppotunity and additional attaraction/entertainment for foreigner..