Special Report Penang Property: Zooming in on Seberang Perai - Developers betting on growth prospects

ABUNDANT and more affordable land as well as a large population have attracted more developers to invest in Seberang Perai. There are also more job opportunities in the mainland now as industrial businesses shift their operations there. More young adults have also moved from the island to the mainland as property prices are more affordable there.

As several major projects are set to take off in Bandar Cassia in Batu Kawan, those involved in Seberang Perai’s real estate market are expected to reap the rewards of their investments.

Developers from outside Penang have made inroads into the mainland. They include Sunway Bhd, Mah Sing Group Bhd, IJM Land Bhd, Eco World Development Group Bhd, Malton Bhd, DNP Land Sdn Bhd and Global Oriental Bhd. Meanwhile, the local players include Ivory Properties Group Bhd, Tambun Indah Land Bhd, Tah Wah Group Sdn Bhd and Asas Dunia Sdn Bhd.

According to Ivory Properties chief operating officer Goh Chin Heng, the second Penang bridge turned the mainland into a “different ball game”. He says the mainland has the longest industrial belt in the country and industrial investors are keen to invest there, shoring up demand for housing.

“With a two-car lane and a motorcycle lane on the second bridge, it will definitely bring Penang island closer to Batu Kawan, just like the case of Hong Kong Island and Tsim Sha Tsui,” he says.

Top: DNP Land’s BM Impiana township will also feature an AEON shopping mall that  is scheduled to open in June
DNP Land’s Jesselton Hills in Bukit Mertajam

Going forward, he expects Batu Kawan to be the new satellite city on the mainland, while Simpang Ampat and Juru will be the new hot spots thanks to the second Penang bridge and new catalyst projects.

“Batu Kawan has the potential to become another growth area, with retail outlets, themed shopping and leisure activities on a mega scale in one area. In the Bukit Mertajam area, Alma Town will be the popular hot spot while Butterworth, Bagan Ajam, Sungai Puyu, Teluk Air Tawar and Sungai Dua will benefit from the undersea tunnel, which is expected to be completed in 2025. In terms of value creation, homebuyers may see a 30% to 40% appreciation but this would be in a longer period compared with the island’s appreciation rate.”

Goh says the island will feature more stratified properties while landed properties will still be preferred on the mainland. Luxury condominiums on the island are priced at RM1,200 to RM1,500 psf, while affordable units are from RM600 to RM800 psf. Meanwhile, affordable condos on the mainland are priced from RM300 to RM350 psf.

“If we make a general comparison of the island and the mainland, the price of similar products of the former is 2.5 to 3 times higher than the latter. Generally, we expect the gap between the two to narrow, especially in the Batu Kawan area as it transforms into a well-planned township.”

According to Goh, the group’s key projects on the island are City Residence, City Mall, Mount Erskine, Penang Times Square and Island Resort. “We have also started the first phase of Penang World City and the remaining phases are in the planning stage.”

On the mainland, it will soon be completing the third and last phase of Aston Villa at Bukit Mertajam. Over at Bandar Cassia, the group and IKEA will be developing an IKEA store and mall on a 245-acre parcel at a cost of RM484 million.

“The main focus of the state government should be to plan and develop the infrastructure, such as the roads and drainage, well. We are glad to see that the state government is welcoming more investors to set up their businesses on the mainland, and we believe that the state will work more closely with the local planning authority to support development approvals.

“Apart from that, the state and relevant authorities should work together on solid waste solution planning as we are expecting a significant growth in the population on the mainland in the near future. The state should also continue playing its role in the development of affordable housing.”

Another company that has made inroads into the state is Mah Sing, with its acquisition of a 76.38-acre tract in Jawi, near the toll of the second Penang bridge. The land will be developed into Southbay East, a township with affordable homes to cater for the middle class. Named after the more upscale Southbay City mixed-use development in Batu Maung on the island, the township has an estimated gross development value (GDV) of RM400 million. It will comprise linked homes, linked semi-detached homes, townhouses and shops. Its first phase will likely feature terraced houses priced at about RM500,000 each, a price point that analysts feel is acceptable for the area. Southbay East will be a gated-and-guarded community with clubhouse facilities.

Notably, this is Mah Sing’s first project on the mainland and its sixth in Penang. The group had acquired the land for RM12.80 psf, which is deemed reasonable compared with similar acquisitions nearby, namely IJM Land’s acquisition of a 70-acre tract at Pekan Sungai Jawi for RM18.50 psf.

IJM Land is planning to develop a small township there, with a preliminary GDV of RM300 million to RM350 million. It already has a township on the mainland, namely Pematang Sanctuary. This upscale freehold 100-acre township mainly comprises 2-storey semi-dees and 2-storey bungalows. Prices range from RM520,000 to more than RM772,000, which translates into a GDV of about RM200 million.

Meanwhile, Eco World has a new freehold project in Bukit Tambun on the mainland. Called EcoTrees, the 58.18-acre development is located near the second link and next to the North-South Expressway. According to a spokesperson, it will have landed and strata properties, with a small mall comprising shops and offices. The first phase is targeted to be launched in 2015.

Meanwhile, DNP Land, a subsidiary of Wing Tai Malaysia Bhd, has projects coming up in Alma, Bukit Mertajam. They are the Mahkota mixed-use development, Sentinelle Ville gated-and-guarded landed luxury homes and Jesselton Hills gated-and-guarded high-end landed homes.

Mahkota will comprise 360 units of serviced apartments with built-ups of 1,156 sq ft onwards and a row of 3-storey shopoffices. The project will come up directly opposite AEON Jusco, which is scheduled to open in June. Meanwhile, Sentinelle Ville will comprise 66 units of 3-storey semi-dees with private lifts. The land areas will be from 34ft by 85ft onwards, while built-ups will be around 3,609 sq ft. Construction has just begun.

Left to right:
Goh: If we make a general comparison of the island and the mainland, the price of similar products of the former is 2.5 to 3 times higher than the latter
Tan: If there is a multi-national company that is coming to Penang, I can assure you that they would not set up their factory on the island

Jesselton Hills will be a 120-acre development with 800 units of 2-storey and 2½-storey semi-dees, bungalows and 2-storey superlink homes. There will be 136 units of semi-dees with built-ups of 2,478 to 2,960 sq ft and land areas of 36ft by 72ft and 39ft by 79ft onwards. Meanwhile, the 198 superlinks will have built-ups of 2,408 sq ft and land areas of 23ft by 75ft.

“You can see a paradigm shift where the population  is moving to this side and the job market [is growing]. If there is a multi-national company that is coming to Penang, I can assure you that they would not set up their factory on the island. [On the contrary], you can see the foreign directi investment really come into the area [Bukit Mertajam, which is on the mainland],” says DNP Land’s senior general manager of property division northern region K C Tan.

“Why did we choose Bukit Mertajam? Mainly because it’s an industrial park and they have done very well here. Many multi-national companies are also coming here.

“The emergence of Batu Kawan definitely inspires a lot of confidence,” he says.

Malton, on the other hand, has entered into a joint venture with landowner Batu Kawan Bhd to develop a 300-acre parcel in Batu Kawan. According to a research note by RHB Research Institute Sdn Bhd, the parcel had a potential GDV of RM3.88 billion as at June last year. The launch of phase one is scheduled for mid-2014 and will comprise shopoffices and superlink homes with a GDV of RM440 million.

Meanwhile, Sunway is developing Sunway Wellesley, an 82-acre freehold development in Bukit Mertajam. Unveiled in April last year, the first phase comprises 31 units of 3-storey shopoffices and has been fully sold. Meanwhile, phase two comprises 154 units of 3-storey townhouses, 60 units of 3-storey semi-dees, and 11 units of 3-storey shopoffices.

According to RHB Research Institute in a note dated Aug 19, 2013, Global Oriental owns 350 acres of undeveloped land in the Bandar Cassia township. The tract has an estimated GDV of RM2.3 billion. One of the more recent launches in the township is Callisia 2, which comprises terraced houses with built-ups of 22ft by 67ft. The houses are priced at RM359,000 and have been fully sold. The research report also notes that the next phase will comprise terraced houses, superlinks and semi-dees in a gated-and-guarded precinct. Indicative pricing is at RM500,000, RM555,000 and RM750,000 respectively. The note also says that Global Oriental plans to build a retail mall once Bandar Cassia’s population grows further.

Top: Bukit Tambun Bottom: Tambun Indah Land’s flagship Pearl City in Simpang Ampat

Tah Wah Group has a 130.5-acre parcel on the mainland, primarily in Bukit Mertajam, Kubang Ulu, Bagan Ajam and Kepala Batas. Meanwhile, it has launched 854 units of 3-storey terraced houses, 3-storey semi-dees, 3-storey bungalows, condos, and 2-storey and 3-storey shopoffices over the past two years. These are located in its Orange Villa, Orange Villa 2, Orange Selayang, Orange Garden and Orange Regency developments.

Tambun Indah Land, meanwhile, has ongoing projects in 101.26 acres of land in Butterworth, its flagship Pearl City in Simpang Ampat, Bukit Mertajam, and Jelutong on the island. They are Carissa Villas, Pearl Indah 3, Pearl Residence, Pearl Impian, phase one of Pearl Avenue, Capri Park, BM Residence, Straits Garden, Camellia Park and Permai Residence. Its cumulative GDV is RM971.6 million.

Its remaining projects worth RM3.8 billion are mostly in Pearl City, with the rest in Bukit Mertajam. They are Taman Bukit Residence, phase 2 of Pearl Avenue, Pearl Harmoni, Pearl Tropika, other phases of Pearl City, and Rain Tree Park 1 and 2.

According to a RHB Research Institute note on March 6, terraced houses in Pearl City have seen their values increase by 10% annually over the past six years, while semi-dees and bungalows have appreciated by 5% to 10% on average.

“This is a good indication of demand for affordable housing. We believe the house price in South Seberang Perai will continue to hold up, given the higher entry cost [namely, land cost borne] by other developers,” it said.

According to RHB Research Institute, Tambun Indah Land is eyeing 40% of buyers from Penang Island this year, up from 28% in 2009. Notably, there are also more buyers from Kedah, northern Perak and Kuala Lumpur, who have most likely been drawn by the growing job market in Penang.

This article first appeared in The Edge Malaysia Weekly, on April 21 - 27, 2014.


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