Gradual rise in Penang property prices seen

The rise in residential property prices in Penang will be a more gradual this year, according to real estate valuers.

Henry Butcher Malaysia (Penang) director Dr Teoh Poh Hua t said this was because residential property prices on the island increased phenomenally last year by between 10% and 20%.

“The demand for residential properties from investors is expected to grow more gradually this year in view of the efforts by the central government to cool off speculation such as the cap imposed on the loan value ratio for third property loan onwards. We expect more genuine buyers rather than speculators due to such efforts ,” he told StarBiz.

Teoh said condominiums on the island were now facing competition from overseas properties, where prices had dropped more significantly and a strong ringgit had made acquisition of such properties more affordable.

“Large condominiums in particular are very difficult to rent out and are unable to generate attractive yields.

“The market demand will be more focused on smaller units that are competitively priced,” he said.

On Malaysia's second home programme, Teoh said the country needed a strong and consistent branding strategy to reach out to those parts of the world with interest of investing in a second or retirement home in Malaysia.

“This is lacking although a lot of work has been done to promote Malaysia as a second home destination at the private and government levels,” he said.

Raine & Horne senior partner Michael Geh also said that residential property prices would rise more gradually this year compared with 2010.

“Last year developers were targeting their properties, priced from over RM300,000 to over RM400,000, at bulk-buyers, who are speculators willing to buy three to 10 units at one go.

“So far this year we can see that developers are trying to reach genuine home buyers who are queueing up to buy their properties.

“This is probably because there is anticipation that the interest rates for housing loan will increase soon,” he added.

Real Estate and Housing Developers' Association chairman Datuk Jerry Chan said residential properties prices were expected to rise this year again due to higher land and raw material costs.

“Land prices in prime areas such as Pulau Tikus and the Jesselton neighbourhood have increased to about RM400 per sq ft, while the land in Tanjung Tokong and Tanjung Bungah are now priced from RM300 per sq ft onwards.

These prices are 15% to 20% higher than a year ago.

“Cement price had also gone up by about 6% recently to RM16 in mid-March,” he said.

“Cement producers have also withdrawn rebates, which are normally given to customers for prompt and early payment.

“The cost to build a terraced unit on the island would increase by 6% to 10% to about RM500,000, depending on th e location.”

Chan added that the rise in property prices last year took many people by surprise.

“They are now more discerning in their approach to buy properties,” he said.

Meanwhile, Wabina Holdings Sdn Bhd managing director Datuk Loh Geok Beng said in order to stay competitive in the business, developers were now coming up with innovative designs for their housing projects.

“The southwest district still has vacant land which allows developers to come out with innovative designs.

“For example, we are introducing the first high-end living condominium scheme, the Pavilon Tower, in the southwest district, which comes with a variety of life-style facilit ies,” Loh said. - By David Tan (The Star)

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