The Star regional operations manager (north) Chung Chok Yin and Henry Butcher Malaysia (Penang) Sdn Bhd director Dr Teoh Poh Huat met up with developers at the Star Northern Hub in Bayan Lepas to ascertain the impact of a slower GDP forecast for 2011, rising interest rates, and escalating property prices amidst global challenges on the direction of the Penang property market.
The panellists included DNP Land Sdn Bhd (northern region) general manager K.C. Tan, IJM Properties Sdn Bhd general manager (north) Toh Chin Leong, Ivory Properties Group Bhd deputy chairman and executive director Datuk Seri Nazir Ariff, Lone Pine Group of Companies general manager Mabel Ooi, SP Setia Bhd (north) general manager S. Rajoo, Mah Sing Group Bhd general manager (northern region) Low Eng Hooi, Sunway City Bhd general manager Tan Hun Beng, and Real Estate Housing Developers’ Association (Rehda) (Penang) chairman Datuk Jerry Chan.
The roundtable talk on July 5 was a prelude to the ninth Star Property Fair 2011 in Penang that will be held at Gurney Plaza and the adjoining G Hotel from July 21 to 24.
The fair is organised by The Star in collaboration with Henry Butcher Malaysia (Penang) Sdn Bhd.
The following are excerpts of the discussion:
Q: Going forward, would the market be sustainable, and why?
Chan: If the job creation is there for Penang in the years to come, the demand for housing will follow. We just need to consider the kind of supply situation. After every recession, there is inflation, which drives property prices up. Everything else goes up – fuel prices, energy costs, raw materials, transportation, labour costs, cost of living, compliance costs, construction costs, fees, land prices. Inflation is not suddenly going away, and these costs are not coming down.
Rajoo: If you’re doing high rise, it’s all about pricing and location. We were selling our Reflections condominiums in Sungai Ara for over RM400,000. The last few units we had sold at RM550,000. And there is a long list of people waiting for sub-sale units.
H.B. Tan: The branding for Penang has been done even 40 years ago when Tun Dr Lim Chong Eu was the Chief Minister. He moved Penang forward with industrialisation. Penang also had the branding of the free port status before 1969. When it comes to property, Penang has this macro branding and there is micro branding among every developer in terms of the location and type of development. Having said that, every square foot that we build on Penang island means there will be another square foot of land gone. Yet, the demand for property is continuous.
Q: Do you foresee what has been described by the media as a property bubble forming?
Toh: A lot of people say that property in Penang is driven by speculators. If you actually look at it, the number of people who own two to three houses is very small compared to the population. So, there is no bubble. People will still buy if the location is good. They also look at the product — the lifestyle, design, innovation and features — and reputation. The market was hot for the last few years but there were still houses that never sold. Yet, people still queue up for other houses and these are snapped within days of the launching.
Rajoo: About six years ago, we thought the market was going crazy because it was already very high. But people have actually made money. A year ago, we launched our Setia View houses and priced them from RM600,000 to RM998,000. I thought the bubble was up. I was wrong, it was taken up overnight.
Low: Basically, we have all unanimously agreed that there is no bubble.
The trend is going for products that have value for money. If you have good branding, innovative design, good concepts, the price will probably hold.
Q: What do foreign buyers look for, and how can we make Penang appeal more to them?
H.B. Tan: Penang it is still very much a local market. Most of the “foreign buyers” in Penang are former Malaysians who come back to invest. It is not really an international market.
Ooi: Foreigners buy in Penang because it is a good location, the environment is relaxing, and we have international schools. Some would like to retire here one day. They also like to buy seafront properties. And the prices here are cheap in relation to what they would have to pay for such a big unit in their country. But there is a lot of improvement that can be made to attract foreigners — infrastructure, transport system, hospitals and schools.
Q: Does Rehda think there is a need to look into possible strategies to attract more foreign buyers?
Chan: There are certain projects that will have a higher demand for foreign buyers. However, most of them who stay here do not buy property as they find that the rental is so low. Then, there is the Penang diasphora. Malaysians who probably are not going to stay in Penang may want to invest in Penang because of confidence.
It is a two-edge sword to go out and encourage more foreigners buying property. That would create additional demand but cause a backlash when property prices go up, as you’re not catering to the local market first. People are already blaming developers for marketing high-end properties overseas.
Q: How can the local infrastructure support further development in Penang to meet demands?
Ooi: Plans for a monorail and the Penang Outer Ring Road (PORR) which were earlier conceived should be revived. Taxis should be made more pleasant and regulated. By having a more efficient public transport, people will not drive and this will relieve congestion.
Chan: If you want to remove congestion, you have to make it expensive to drive to reduce traffic congestion. Only then can you improve public transport. The cheapest, fastest and most convenient system is the tram, as you don’t need purpose-built stations.
The existing road system can determine the routes, so you don’t need to create something new. The bus system can run concurrently for longer distances but within greater George Town, the tram system can run on certain roads. But we need legislations for that. - Compiled by David Tan and Priscilla Dielenberg (The Star)
6 comments
do not publish any more sickening propagandas from bias untrustworthy developers a.k.a. greedy vultures, so boring & insulting, giving the same lame excuses for the incessant unjustified price hikes 'daylight robbery'. dont give prominence to them & evil intentions ...
better to highlight the complaints, grievances , sufferings ,hardships of the masses,the poor house buyers, the homeless .....
and what the govermen is going to do to help them...
Dear KS,
The main organizer for the upcoming property fair in Penang is the Star newspaper. They make money from the fair, from the advertisements, etc. When someone advertises with them, the Star is obligated to give them a nice write-up in the newspaper.
What can be nicer then gathering all the key people who make a living by selling properties (aka the advertisers), do some bullshit discussion to make it look like an intellectual discussion, and then say "Basically, we have all unanimously agreed that there is no bubble."...:D
Hhmmm....I wonder if I should stop subscribing to The Star....not only in protest of the above crap, but since the availability of online news, whenever I read the newspaper in the morning, everything in it seems like old news!! And also, the BN propagandas on the 2&3 pages are annoying indeed!!
Roundtable Talk ?? a sham, all garbage
more like a Mafia gangsters gathering ... planning the next grab ! ... lol
the great thing about crisis is that it is always not aware or not admitted by the ppl that it is taking shape. if most ppl agree or admit that the bubble is in place, then there won't be a crisis at all.
the saving rate of Malaysian is reducing tremendously in the recent years. many emptied their life savings and FD to dump into properties near-blindly in the hope that it will reap exorbitant return faster, bearing the idea that penang properties will never drop.
is there anything in this real world that will never drop?
when you hear everybody talking about investing in properties on the street or in the pasar, that's the time when you should take note... else, just sing along with the gangs of developers....
Dear beehui,
You are absolutely right!
If you had seen the hole right in front of you, then you would have stopped walking and avoided the fall into the hole. But your vision and judgement get distracted when you hear someone telling you there is a big pile of money in front; you try to focus your vision on the money but not the hole...:)
I think over the months things (property sales) have slowed down a bit. Some owners are starting to soften their selling price a little bit. Buyers are getting a bit cautious. Speculators are getting careful. Genuine buyers are not rushing. Good signs.
Interest rates are surely trending up. There a still room for the authorities to intervene in the market if they want to.
I think the best solution is to slow things down but not crash it. A balanced approach would be ideal in my opinion.
But of course, developers and agents always want you to believe the bullish story. Don't get personal. They are just doing their job. They have family to feed at home too you know!...:)