Prices continue upward trend

PROPERTY investors still have strong confidence in Penang’s real estate market and its offerings. Traditionally, the end of the year is often a bumper period in terms of property sales in the state, says Raine & Horne International Zaki + Partners director Michael Geh in presenting The Edge / Raine & Horne International Zaki + Partners Penang Housing Property Monitor for 4Q2012.

The secondary market saw some significant price movements in 4Q2012, with active transactions, especially for reasonably priced properties.

Prices, especially of landed homes, are expected to continue their upward trend. Based on the monitor’s sampling, property prices in Penang’s secondary market for 4Q2012 saw active upward movements in almost all locations sampled compared with the previous quarter.

The highest price growth recorded was for 2-storey semi-detached houses in Sungai Dua, which rose 57% from RM700,000 in 3Q to RM1.1 million in 4Q.

This was followed by 1-storey terraced houses in Tanjung Bungah, which increased by a whopping 50% to RM600,000 from the previous quarter’s RM400,000.

Bungalows in Tanjung Tokong are now selling at RM2.2 million, or RM600,000 more than the previous quarter. At Tanjung Bungah, bungalows were sold for 29% or RM500,000 more, at RM2.2 million in 4Q.

For high-rise residential properties, the highest quarterly price growth recorded in 4Q2012 was for 3-bedroom flats in Green Lane, which increased 25% from RM200,000 in 3Q to RM250,000 in 4Q. The price of 3-bedroom apartments rose by 16% to RM370,000 in Tanjung Tokong, and by 14% to RM400,000 in Tanjung Bungah. Similar apartments in Batu Ferringhi saw a 6% price increase, from RM350,000 in 3Q to RM370,000 in 4Q.

Housing rents, however, remain unchanged. While more genuine home-buyers are coming out to buy properties compared with investors, escalating housing prices may be a deterrent.

"If they are not able to buy a property because of the unaffordable prices, they will opt to rent first. Therefore, 2013 will see a significant rise in tenants and the housing units for rent," says Geh.

New launches

Residential property launches in Penang continue to see strong take-up in 4Q2012.

Last November, S P Setia Bhd soft-launched its condominium project in Sungai Ara, called Setia Pinnacle. The 30-storey project offers 434 units and is tagged from RM514,000 for early birds. It has since been 80% sold, with only bumiputera units remaining.

The developer is also set to launch the 35-acre Setia Eco Forest, comprising both landed and high-rise units, at the end of this year or early next year. The project has a gross development value of RM1.2 billion.

It was also reported last December that IJM Land Bhd would commence work on The Light’s commercial precinct situated next to the Penang Bridge in 2H2013. The 102-acre site will comprise four hotels, a convention centre, a shopping centre and an international business district. The RM5 billion project will take about eight years to complete. The developer recently signed an agreement with Singapore’s Suntec International to jointly develop the RM346 million convention centre, to be known as Penang Waterfront Convention Centre (PWCC).

Geh says the location for the IJM project is "fantastic". "The location is prime and has the edge as it is near the Penang Bridge and off the Jelutong Expressway. It is just 15 minutes away from George Town and the airport. Its four hotels, shopping centre and convention centre may draw the crowd away from the Gurney area, which is congested during peak periods. If it is well designed and developed, it may even rival Gurney Drive in the future."

On whether that will be Penang’s next big development, Geh says it’ll be a tussle between the IJM project, E&O Bhd’s Quayside project in Tanjung Tokong and Hunza Properties Bhd’s Gurney Paragon.

On why developers seem to be taking up land and developing in Iskandar Malaysia and not Penang, Geh says: "The Iskandar Region in South Johor has attracted developers within Malaysia and beyond as it is clearly the hottest spot in the country in terms of land acreage bought and committed to be developed over the next few years.

"Why not Penang? Well, we lack available large tracts of development land that are, among others, not sited on hilly slopes, not within the inner-city George Town density controlled core and buffer zone area, and not reclamation land.

"I have personally been requested to scout for large tracts of development land for international developers within the state, but many constraints surfaced during the due diligence period. There are a few sites with potential to be developed into eco-themed residential developments, such as Gita Bayu in Serdang, for example. However, because of strong objection within the state government and by some residents, developers are not able to get the necessary approvals."

This story first appeared in The Edge weekly edition of Feb 25-Mar03, 2013.

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