RM16bil worth of projects in Penang

Developers going for integrated property schemes over the next two years amid a tough economic environment

Major property developers in Penang are making plans to launch RM16.3bil worth of integrated property schemes over the next two years amid a tough economic environment and plunging residential sales.

The developers with new schemes include IJM Land Bhd (GDV: RM4bil), Eco World Development Group Bhd (RM10bil), and Sunway Bhd (RM2.3bil).

Meanwhile, Mah Sing Group (GDV: RM2.09bil), Tambun Indah Land Bhd (RM4.1bil), and Ivory Properties Group Bhd (RM2bil) are executing new projects for their on-going integrated schemes.

That property developers are focusing on integrated property projects does not come as a surprise. Developers are of the view that residential properties within an integrated project have a greater appeal because of the surrounding lifestyle amenities. Buyers are of the view that such projects have added value to it, compared with a stand-alone development.

As for the developers, they prefer such projects because the retail portion can be leased out, which provides a long term recurring income. This is especially so when the mixed integrated projects are in a strategic and prime location.

In order to enhance their projects, one of the developers is also laying the groundwork for a golf course, in addition to commercial amenities.

It is hoped that by providing these value-added features, their offerings will appeal to house buyers in a soft property market.

Recurring income

The Light Waterfront by IJM Land Bhd will offer the developer recurring income.

Senior general manager for the northern region Datuk Toh Chin Leong says the group is drawing up plans for the commercial area of The Light Waterfront. The fact that the area is located next to the Penang Bridge is an added feature.

“We can hold on to commercial properties such as retail outlets, hotels, mall and convention centre to generate recurring income. Amid a tough market we don’t have to worry about finding buyers and bank loan approvals.

“With the surrounding lifestyle amenities, the office and residential in the commercial area will appeal to high net worth investors,” Toh says.

The plan is to lease out offices to multinational corporations as The Light Waterfront is close to industrial parks, according to Toh.

“Given the high price of properties on the island, residential units can be leased to young executives who prefer to rent rather than own a property to stay on the island,” he adds.

Toh says residential units in the commercial areas are designed for working executives, which are different from the resort-themed units launched previously. He says rental rates for residential units in The Light Waterfront are between RM3,000 and RM8,000, depending on size, location and furnishings.

Toh says IJM will also leverage on its Singapore-based partner Perennial Real Estate Holdings Ltd to bring in reputable tenants for the mall and retail outlets.

The development cost of the project is over RM3bil, of which RM678mil will be for the residential component, RM270mil for the office towers, RM580mil for the hotels, RM330mil for the Penang Waterfront Convention Centre, and RM1.180bil for the mall and retail outlets.

Golf course appeal

While Penang’s residential transactions have plunged, sales of commercial properties have increased. The sales of commercial properties have increased to RM897mil (708 units) from RM444.9mil (633 units) in the preceding quarter.

The value of residential transactions in Penang, however, has declined to RM1.54bil in the first quarter of 2015 from RM2bil in the preceding quarter.

This has not deterred developers. Eco World Development Group Bhd will be offering its first residential phase at its RM10bil Eco Marina project in Batu Kawan in nine to 12 months. Batu Kawan is located on the mainland.

Group chief executive officer Datuk Chang Khim Wah says Eco Marina’s residential component comprises high-rised and landed units set in a gated and guarded scheme.

“The residential properties will be priced similar to those on the island.” Eco Marina, Chang says, will offer mid-end and high-end properties, despite the weak property market.

There will be a commercial component which will include a retail scheme, an international brand hotel, international schools and food and beverage outlets.

The highlight of the development, Chang says, will be a sea-fronting golf course overlooking the island. This will be located on a 60.7ha site, behind the residential and commercial components.

“There will be a 2.5km coastline on the north-western boundary of the project. The entire development will take over 10 years to develop,” Chang adds.

One of Malaysia’s largest developer, the Sunway group, is drafting plans for its Paya Terubong landbank.

Sunway Bhd senior general manager Tan Hun Beng said the RM2.3bil integrated development project on a 9.7ha would take 10 years to complete. The project is expected to start in 2017.

“We are undertaking such an integrated project because of our previous success in Penang. Integrated developments offer a lot of conveniences to its community as well as the Gen Y and Gen Z, who are always on-the-go.

“They are seen as properties with higher value due to the surrounding amenities,” Tan says.

Mah Sing Group Bhd concur with this view. Chief executive officer Ng Chai Yong says the group is planning residential and mixed commercial centres comprising retail shopping and hotel components in the RM2.09bil Southbay City project in Batu Maung, Penang.

The group has registered 90% take-up rate for Southbay City’s residential suites in Southbay Plaza and The Loft.

He says marriages – numbering about 200,000 a year – have increased the number of households, which has translated into demand for houses.

“We are working with the state government to bring investors into our development,” Ng says.

Mah Sing anticipates 11% sales contribution from Penang this year from its current and upcoming launches.

Penang-based developer Ivory Properties chief executive officer Datuk Low Eng Hock says it is carrying out construction work for RM611.5mil The Wave service suites. This project will be located at the RM2bil Penang Times Square mixed-development scheme which will have a mall, a cineplex and other lifestyle amenities. About 65% of serviced suites have been sold with units priced from RM1.3mil.

Tambun Indah Land will launch largely landed properties at Pearl City with a GDV of RM637.86mil.

The Pearl City Mall, currently under construction, will enhance the value of the residential properties. The mall, located on a 1.29ha site, will have 300,000 sq ft of gross floor area. It is scheduled for completion in the first quarter of 2016, says Tambun Indah Land managing director K.S.Teh.

Another Penang-based developer Asas Dunia Bhd is undertaking the construction of 283 units of landed residential properties in South Seberang Prai and Central Seberang Prai with a RM146.8mil GDV this year.

Single-storey semi-detached units are priced from RM256,000 while the price for 8,381 sq ft double-storey bungalows starts from RM2.4mil.

Asas Dunia managing director Datuk Jerry Chan says the bank loan rejection rate is currently about 50% in Penang. But Seberang Prai sales are doing better because of attractive prices.

“They are lower compared with those on the island,” he says. - By The Star

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