Land price continue to be on the rise in Penang

Kuala Lumpur and Penang-based developers will launch approximately more than RM1.418bil worth of residential properties in Seberang Prai in 2015, a year in which the property market is expected to perform badly.

The developers launching the projects are Wing Tai Malaysia Bhd (RM300mil GDV), Tambun Indah Land Bhd (RM469.6mil), IJM Land Bhd (RM379mil), and Sunway Bhd (RM70mil).

The projects are located in the prime locations of Central Seberang Prai and South Seberang Prai, where land and property prices have increased significantly since 2006, just before the announcement of the second bridge project in late 2006.

Henry Butcher Seberang Prai’s associate director Fook Tone Huat says the prices of vacant land in the area, especially in south Seberang Prai where the second bridge is located, are now hovering between RM42 and RM60 per sq ft, a huge jump from 2006’s RM8 to RM9 per sq ft.

Land prices in Central and North Seberang Prai were then between RM20 to RM40 per sq ft, compared with today’s range of between RM50 and RM120 per sq ft.

The increase in land prices has translated into higher property prices.

“New landed properties such as double-storey terraced units in South Seberang Prai are now priced between RM360,000 and RM450,000 compared with between RM150,000 and RM200,000 prior to 2006,” said Fook.

Double-storey terraces in prime locations in Central and Northern Seberang Prai have doubled from RM200,000-RM270,000 range to RM400,000-RM630,000.

“We are also seeing a number of life-style condominium projects being planned in Bukit Mertajam this year with new units priced at around RM300 to 350 per sq ft,” sFook says.

As for the secondary or sub-sales market, double-storey terraced houses have a wide price range of between RM300,000 and RM600,000, depending on location.

Landed properties in the sub-sales segment command the best pricing in Bukit Mertajam and Butterworth town.

Wing Tai’s projects are in Alma, a prime residential neighbourhood in Central Seberang Prai, comprising high-rise serviced suites, terraced, and semi-detached properties that are priced from over RM400,000 for serviced suites and RM600,000 to over RM1mil for landed properties.

The projects planned for launching via Wing Tai’s subsidiary, DNP Land, next year are Mahkota Impian Service Suites, BM Utama Phase 5 and Jesselton Hills Phase 3, which has a collective RM300mil GDV.

IJM Land projects, Permatang Sanctuary and Senjayu, totalling RM379mil GDV are in Alma and Jawi, South Seberang Prai, which will be launched from mid-2015 onwards.

In Alma, the projects are semi-detached and detached properties priced from RM600,000 onwards, while in Jawi, the projects comprise terraced, semi-detached, priced respectively from RM480,000 and RM620,000 onwards.

Sunway’s RM70mil condominium project, to be launched in the first half of 2015, is located strategically in the older section of Bukit Mertajam town, Central Seberang Prai.

Tambun Indah Land Bhd will launch in 2015 1,106 units landed and high-rise properties with a RM469.6mil GDV for its Pearl City mixed-development scheme in Simpang Ampat, South Seberang Prai a stone’s throw away from the second bridge.

Fook said there won’t be much price appreciation expected due to cautious market sentiment and stringent financing policies.

“The volume of transactions is unlikely to improve, but property prices are expected to remain high for those residential cum commercial schemes at popular areas such as Butterworth, Bukit Mertajam and Simpang Ampat neighbourhoods.

“For the residential segment, the trend of development would shift towards high-rises in view of high land cost especially in Central Seberang Prai,” he said.

On whether a price war would erupt in Seberang Prai, DNP Land (North) general manager KC Tan said the property prices Seberang Prai is unlikely to undergo correction, as developers had to factor the higher land cost, additional infrastructural development and compliance charges that needed to be paid to the state government.

“We don’t expect substantial increases in pricing in 2015, as most developers will try to cap the prices at reasonable levels to generate better sales,” Tan said.

Moving ahead, Tan said developers might resort to building smaller size houses to cushion the hike in land cost and development charges.

“In this way, they could cap the price of properties within the affordable range,” he said.

As properties within the range of RM400,000 to RM700,000 is easier to be absorbed in the market, more high-rise properties within the RM400,000 to RM600,000 range would be introduced in Seberang Prai, according to Tan.

Meanwhile, Sunway senior general manager Tan Hun Beng said the group’s launches were targeted at those with a monthly household income of over RM10,000.

“Your income need to fall around this range in order to secure a housing loan these days, given the stringent guidelines nowadays.

“The rejection rate of housing loans is over 50% nowadays.

“The demand for properties will always come from those with the disposable income who want to find a home in a secured, clean, and green environment.

“As there is always such demand, it is difficult to foresee the prices of properties dropping substantially in the future,” he added.

According to the Penang Institute (PI), some 40% of the Penang population are in the middle-income category earning between RM3,500 and RM7,100.

Under the new loan conditions from banks, which take into account a person’s net income and other commitments, this middle-income group is eligible to take up loans for properties priced between RM130,000 and RM245,000.

Meanwhile, Rehda Penang deputy chief Datuk Toh Chin Leong said for some projects, the rejection rate of housing loans was as high as 50%.

“It is very common nowadays for developers to return the deposit payment when the loan facility is turned down.

“This is something you don’t see happening three years ago, but started to happen more and more often in past 18 months,” Toh said. - By The Star

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