City & Country: Increase in property prices expected to be gentler

The property market in Penang continues to be buoyant, with both the primary and secondary markets posting stronger sales in 1Q2010 than in 4Q2009.

However, Raine & Horne International Zaki + Partners’ director Michael Geh expects a gentler increase in property prices in the next few months considering the rising interest rate environment. This is unless there are unexpected events on the property scene to boost home purchases.

“Major retail banking policies and international and national economic trends will determine movement in the property market,” says Geh when presenting The Edge/Raine & Horne International Zaki + partners Penang Housing Property Monitor for 1Q2010.

Furthermore, “homeowners are busy shifting into their new homes, property investors are busy finding the right tenants and speculators are anxious to sell their properties to reap capital gains while the economic climate looks bright,” he tells City & Country.

Residential hot spots in Penang are still primarily Tanjung Tokong, Tanjung Bungah, Batu Ferringhi, Pulau Tikus and Teluk Kumbar, he adds.

Both the secondary property and rental markets experienced significant activity in 1Q due to the attractive financing packages (such as the 5/95 scheme) offered by developers.

The quarter saw more than seven new property launches while development tracts on the island were much sought-after, leading to land prices soaring to record highs depending on their usability and location, Geh says. He cites Teluk Kumbar, Batu Maung, Gurney Drive, Pulau Tikus, Batu Ferringhi, Teluk Bahang, Balik Pulau and Relau as areas that developers chose for land acquisitions.

For instance, S P Setia Bhd recently announced its intention to build a high-end condominium with 70 units on a 0.92-acre tract on Gurney Drive. Geh says this is a good move because Gurney Drive is an excellent location for property development.
It was reported that the developer is eyeing more land on the island this year to develop a gated enclave consisting of detached and semi-detached homes.

According to the 1Q2010 housing property monitor, rents for standard 3-bedroom flats with built-ups of 700 to 750 sq ft on the island are trending upwards. Such flats in Paya Terubong recorded the highest rent increase of 25% — from RM400 in 4Q2009 to RM500 in 1Q2010 — while in Bandar Baru Air Itam, rents rose 22% — from RM450 in 4Q2009 to RM550 in 1Q2010.

In contrast, rents for high-rises such as the standard 3-bedroom apartments/condominiums in Cantonment Road, with built-ups of more than 900 sq ft, fell slightly. They dipped 12% from RM1,700 in 4Q2009 to RM1,500 in 1Q2010. The rents for similar units in Tanjung Bungah saw a 15% decrease from RM1,300 to RM1,100 in 1Q2010.

“The flats are standard affordable housing while there is an obvious supply of apartments and condominiums in Penang. This was the cause for rental stabilisation and correction in the high-rise market in 1Q,” Geh explains.

As for landed homes, rents for 1-storey terraced houses with built-ups of 1,200 to 1,600 sq ft in Green Lane and Jelutong dipped 7%. In Green Lane, the decline was from RM700 in 4Q2009 to RM650 in 1Q2010 while in Jelutong, it was from RM750 in 4Q2009 to RM700 in 1Q2010.

In terms of value, the prices of almost half of the properties sampled increased while there was a minimal decline in the prices of the other properties. The prices of 1-storey terraced houses, with built-ups of 1,200 to 1,600 sq ft, in Jelutong rose 2% to RM430,000 while in Tanjung Bungah, the prices of sampled houses increased by RM10,000 to RM360,000.

The 2-storey bungalows sampled in Tanjung Tokong saw an almost 11% drop in value — from RM1.68 million in 4Q2009 to RM1.5 million in 1Q2010 — while the 1-storey terraced homes sampled in Seberang Perai Utara saw a drop of 20% — from RM150,000 in 4Q2009 to RM120,000 in 1Q2010.

The values of standard 3-bedroom flats, with built-ups of 700 to 750 sq ft, generally rose in 1Q2010. For example, in Relau, there was an increase of 3.5% from RM140,000 in 4Q 2009 to RM145,000 in 1Q2010. Similar flats in Greenlane saw an almost 3% increase to RM185,000 in 1Q2010

New launches
IJM Land’s The Light Point condominium project in its The Light project near Gelugor was among new property launches in 1Q2010. It was unveiled in January at an average price of RM600 psf. The whole waterfront project covers 152 acres and will be developed over the next 12 to 15 years by Jelutong Development Sdn Bhd, a subsidiary of IJM Properties Sdn Bhd.

Lip Sin Company launched Taman Sri Aman in Batu Maung in 1Q2010, with 2-storey terraced homes featuring built-ups of 2,200 sq ft and priced at RM778,000 or RM393 psf. Tambun Indah Sdn Bhd’s Pearl Garden, offering 2-storey terraced and semidees in Simpang Ampat, was launched in the same quarter and was priced from RM230,000 or RM156 psf. Pearl Garden’s 2-storey terraced homes are 1,760 sq ft in size while the semidees are 2,320 sq ft.

City Associates Group’s subsidiaries launched high-end condominium 8 Gurney in George Town, the units of which are 10,470 sq ft onwards in size and priced from RM3.5 milion or RM326 psf. Another property launched in 1Q by Metro Jelata Group of Companies is Taman Seri Arowana in Seberang Jaya. It comprises 2-storey terraced houses with built-ups of 1,600 sq ft and prices starting at RM305,000 or RM254 psf.

Developer Asia Hill Group, which offered new strata-titled bungalows in Bukit Jambul, recorded strong sales and has only a few units available for sale now.



This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 808, May 31-Jun 6, 2010.