City & Country: Residential prices stabilising

Residential property prices on the secondary market in Penang are showing signs of stabilising. Rents in sought-after areas such as Gurney Drive, Tanjung Bungah and Pulau Tikus were unchanged in 2Q2010 from the previous quarter due to the already high transaction prices, especially for condominiums, says Raine & Horne International Zaki + Partners director Michael Geh.

In presenting The Edge/Raine & Horne International Zaki + Partners Penang Housing Property Monitor for 2Q2010, Geh cites recent secondary transactions for Gurney Park condominiums along Gurney Drive at an average price of RM585 psf. Gurney Park was completed in 1998 and launched at an average price of RM260 to RM300 psf.

Geh expects the upward trend in the prices of completed high-end condominiums seen in 2009 to stabilise further in the coming quarter.

Based on the sampling in the monitor, most home prices were unchanged from the previous quarter, with a handful seeing some price increases. For 1-storey terraced houses, those with built-ups of between 1,200 and 1,600 sq ft in Bandar Bayan Baru saw a 4% or RM10,000 price rise, to RM280,000 from RM270,000 in the previous quarter. Similar houses in Sungai Ara also saw a 2.5% increase to RM410,000 in 2Q2010.

Prices of 2-storey detached homes (built-ups from 3,000 to 4,000 sq ft) were also unchanged with the exception of homes in Minden Heights that saw a 1% drop to RM850,000 in 2Q2010, compared with RM860,000 in the previous quarter. Based on the monitor, rents for properties sampled in Penang for 1Q2010 and 2Q2010 remained flat.

Meanwhile, the most expensive new housing area in Penang currently is E&O Properties’ Seri Tanjung Pinang in Tanjung Tokong, which is 5km from Georgetown, according to Geh. “The benchmark price is moving from RM750 psf to RM1,000 psf for newly launched condominiums there.

Units at Quayside Condominium at Seri Tanjung Pinang , comprising five blocks of high-rise and two blocks of low-rise condominiums with built-ups ranging from 1,137 to 2,481 sq ft, are tagged from RM750 psf.
Meanwhile, the Queensbay Mall area is becoming the new hotspot in Penang. Commercial activity is increasing there, he says. Previous hot spots in Penang identified by Geh include Tanjung Tokong, Tanjung Bungah, Batu Ferringhi, Pulau Tikus and Teluk Kumbar.

New projects
The Penang property market is still very much a speculator’s market, says Geh. “We’re still in a property boom as far as new homes are concerned, as reflected in the escalating newly launched property prices,” he notes.

At Gurney Drive, a favourite spot for tourists and locals alike, there are two ongoing high-end residential and mixed developments —  8 Gurney by Pulau Ceria Sdn Bhd, a subsidiary of City Associates Group, and Gurney Paragon by Hunza Properties Bhd. 8 Gurney, launched at the end of last year, has a total of 90 units and more than 80% have been taken up, at an average selling price of RM330 to RM360 psf.

Both developments are expected to be completed within the next two years.

Geh says Gurney Drive remains a hot spot despite traffic and parking problems: “Traffic and parking problems are a norm in the island. Gurney Drive is strategically located between Batu Ferringhi, Tanjung Bungah and Georgetown.” 

Geh also notes that a five-acre parcel of development land in Batu Maung was transacted at more than RM65 psf. “It’s a good price for the land owner. Prices for development land are pretty high at the moment. The site is just 3km to 4km from Mah Sing’s SouthBay site. Most landowners in Batu Maung are hoping for a 40% to 50% higher offer, and we have noticed such listings [of five-acre sized tracts] in the market in the past 12 months,” he adds.

Meanwhile, the Penang Development Corp (PDC) has called for proposals for its high-end integrated Bayan Mutiara development. The project, involving 97 acres of land, comprises 62 acres carved into three parcels as well an extra 35 acres via land reclamation at the island’s southeastern foreshore.

Bayan Mutiara, which is on the waterfront, is located close to the airport, industrial, commercial and heritage zones. The development includes Grade-A offices and specialist medical facilities. It will also have commercial blocks, residential enclaves, retail and public spaces, and promote environmental sustainability.

PDC has been appointed project manager by Chief Minister Inc to coordinate, manage, monitor and oversee the project until its completion. It will be interesting to see how the Penang housing market fares for the rest of 2010.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 821, Aug 30- Sept 5, 2010.