Penang property price increase expected to be gentler

KUALA LUMPUR: Penang property prices are expected to see a softer rise over the next few months due to the rising interest rates environment, unless there are extraordinary events in the property scene to boost home-purchases, Raine & Horne International Zaki + Partner director Michael Geh told City&Country of The Edge Malaysia.

Geh said the property market sentiment in Penang continues to be buoyant, with both primary and secondary markets posting stronger sales in 1Q2010 compared with 4Q2009. However, he believes that major policies to retail banking as well as other international and national economic trends will determine how the property scene pans out.

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

More than seven launches took place in Penang in 1Q2010, with development tracts being very much sought-after, resulting in, depending on their usability and location, land prices spiking, he said.

Among the launches were IJM Land’s The Light Point condominium project in its The Light project near Gelugor, which was launched in January at an average price of RM600 psf. Lip Sin Company launched Taman Sri Aman in Batu Maung in 1Q2010, with 2-storey terraced homes tagged at RM778,000, or RM393 psf. Tambun Indah Sdn Bhd’s Pearl Garden offering of 2-storey terraced and semi-detached homes in Simpang Ampat was launched in the same quarter, priced from RM230,000 or RM156 psf.

Prices of almost half of the properties on the secondary market sampled in The Edge/ Raine & Horne, International Zaki + Partners Penang Housing Property Monitor for 1Q2010, are already showing a slight decline. 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 1-storey terraced homes sampled in Seberang Perai Utara saw a drop of 20% -- from RM150,000 in 4Q2009 to RM120,000 in 1Q2010.

Meanwhile, rents have been rising for standard 3-bedroom flats with built-ups of between 700 and 750 sq ft. Such flats sampled in Paya Terubong recorded the highest increase in rental of 25% -- from RM400 per month in 4Q2009 to RM500 per month in 1Q2010 -- while in Bandar Baru Air Itam, rents rose 22% from RM450 in 4Q2009 to RM550 in 1Q2010.

However, rents for 3-bedroom apartments/condominiums in Cantonment Road, with built-ups of more than 900 sq ft, recorded a 12% decrease, from RM1,700 per month in 4Q2009 to RM1,500 per month for 1Q2010. Similar units in Tanjung Bungah saw a 15% decrease from RM1,300 in 4Q2009 to RM1,100 in 1Q2010.

For more on the Penang housing property monitor, read the City & Country pullout of the May 31, 2010, issue of the The Edge Malaysia.

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