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Penang property sector improving

GEORGE TOWN: The property sector in Penang has seen an improvement in the second quarter of 2009 compared to the sluggish 2008 in the aftermath of the global economic meltdown.

Real Estate and Housing Developers Association (Rehda  Penang chapter) chairman Datuk Jerry Chan said this year, new project launches by several top-notch developers had boosted the local property market, especially on the island.

Speaking to The Edge Financial Daily, Chan said new projects by developers including IJM, E&O Properties and S P Setia had set new benchmarks in the industry. Landed property and condominiums had been well-received by buyers and investors, he added.

Chan said for most developers, 2009 had been good in terms of overall property outlook and market sentiment.

“Many of us thought that the global economic downturn would adversely affect the property sector here and it would be long drawn and result in deep recession, but it has not been the case. The property outlook for 2010 seems positive overall especially with various sectors, namely manufacturing, tourism and services sectors improving,” he said.

However, Chan voiced concern that property prices may run ahead of buyers’ expectations and affordability.

“There is a concern that property prices, especially on the island, may exceed what people earn. If one is buying a property as an investment and rent it out, will the rental and yields from the property pick up in tandem with the prices?” said Chan, adding that the present scenario was ideal with low interest rates and good financial packages being offered.

He said residential properties on the island had reached new heights with most priced above RM500,000 and rising.

“There is a gap in the number of launches priced below RM400,000 and this is worrying. Hence, the state government’s move to relook the plot ratio for high rise developments is most welcome as it is timely and long overdue,” he added.

The state government announced recently that it would relook the plot ratio and may limit development in certain parts of the island.

The density guideline limits the developers’ options in building low-medium cost units, super condominiums or very high-end landed houses. Rehda has proposed flexibility for developers to configure the mix, the number of rooms per unit, and different unit built-up areas of each type.

This, Chan said, would allow developers to be creative and build a variety of units with differing sizes in a housing scheme to cater for a wider group of buyers.

“We need this mix just like what is being done in Singapore and KL, which have much higher plot ratio than what we have on the island. Developers are facing high land costs which have increased tenfold over the last 20 years while construction costs have gone up by more than five times,” he said.

He also called on the government to relook the policy of “one size fits all” for the low-medium cost housing.

“Not everyone needs three bedrooms, especially smaller families who are just starting off. They should be able to take up lower priced and smaller units, which will more catered for their budget,” he added.

He noted that the Penang state government had been responsive to issues raised by the housing industry and related professional bodies.
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