Land prices in Penang likely to rise next year
A LAND valuation of RM1,200 per sq ft for 44.5ha of reclaimed land in Penang by the state government is being used as a point of reference for land transactions, claims the Real Estate and Housing Developers Association (Rehda).
The association’s Penang chairman Datuk Jerry Chan said yesterday land prices in the state are expected to rise next year.
This is partly due to the government’s move of pegging land value so high in relation to the swap deal with Consortium Zenith BUCG, the developer of the proposed RM6.3 billion undersea tunnel and three highways.
The deal involves land starting from Tanjung Tokong to the sea-fronting Persiaran Gurney, which has been tagged at RM1,200 per sq ft, since the state does not intend to pay the developer for the multi-billion ringgit projects.
Stating that the said deal will now be the yardstick for land owners and developers when fixing prices on their properties, Chan said: “If the state takes that kind of valuation, what do you think other land owners and developers will do?
“And remember that the project construction cost (RM6.3 billion) was from six months ago, which has not taken into account additional costs due to the higher electricity tariff and the goods and services tax (GST). If costs goes up, so will property prices,” he said at IJM Land Bhd’s office.
Present was IJM Land northern region general manager Toh Chin Leong.
Chan said while Penang can expect to see fewer property projects launched in 2014, prices will not come down.
This, he said, is because banks and investors are already cautious about the property market.
Penang is unlikely to see any property bubble as the property market remains healthy, he said.
“We, however, need time to determine how some of the measures imposed by the Federal Government via 2014 Budget and the state government will affect the market.”
Toh said property prices in Penang are on the rise due to various factors, including increased higher compliances cost, which has been increasing in the past four years.
“Cost contributions have increased three-fold as they now have to pay the government a default compensation of RM120,00 for each low-cost housing unit they did not incorporate into their project.
Developers also have to obtain a housing development licence by paying a deposit of three per cent of their project’s estimated cost to show they have sufficient financial ability to begin building properties.
Source: Business Times
“……This is partly due to the government’s move of pegging land value so high in relation to the swap deal with Consortium Zenith BUCG, the developer of the proposed RM6.3 billion undersea tunnel and three highways……” – Sounds like someone is pissed, firing his first shot at the state gov.
“….Present was IJM Land northern region general manager……Penang can expect to see fewer property projects launched in 2014…….” – another culprit of penang property frenzy. IJM was the pioneer of “block purchase” and “insider trading” in Penang. Their friendly media was always prompt in featuring their “overnight queue before launch” for their dump-site projects…..:)
Rehda Chairman said, “Penang is not likely to see property bubble”. I worried lo when someone from Rehda said things like that…:)
Rehda statement and reasoning can believe ones meh ? Full of twists, excuses, ploys and just want to make house potential buyers worry and fear ma ……
Chan said: “If the state takes that kind of valuation, what do you think other
land owners and developers will do? The said deal will now be the yardstick
for land owners and developers when fixing prices on their properties”.
If the said deal will now be the yardstick for developers when fixing prices on
their properties, they will also have to build highways and overhead bridges
to smoothen the flow of traffic at their projects sites in place of traffic light at
junctions.
yardstick? Pls state ‘tunnel included’ in your new project.
i personally own 3 properties at Tg Tokong and i think what he just said is crap.
How can one measure the price of land based on the state’s payment’s term for the tunnel.
Yes the state got a good deal in exchange for the tunnel but that doesn’t mean developers can use that as a measurement to sell their future projects.
He is either ignorant or just trying to squeeze more juice from the consumers and i believe it is the latter.
thanks GOD !
Land price up! Electric up! GST coming up! Bubble popping up?? Wait long long to those who thinks bubble gonna burst! You will be left behind!!! Seat and wait for 10 more years!!
Yardstick for fixing property price? OMG… see whether Rehda still got stick or not when nobody buy their already overpriced property…:)
Why these Rehda people statements always contradict one? Yesterday said property sales slow down d… now said price sure increase pulak… aduh…
The Worst Defences For Property Market
a) Its QE’s Fault – Well, yes … but all you have to really care are low/high interest rates, affordability, real occupancy vs real yield
b) Material prices keeps going up – That is a most naive defence … WHAT THINGS in life do not have an upward price expectation??? If that is your defence then the world WOULD NEVER EVER FOREVER have any property correction …. but they still do!!! Why? Because cost of land and materials are never the guiding light for speculative behaviour and their correction. Its (a), jobs and confidence.
c) Malaysia still cheap compared to the regional neighbours – Another ass-whacked job defence. You take that line, you would stayed very invested in MYR assets compared to say SGD assets for the last 10, 20, 30 years … and you would have lost a lot of money (opportunity cost) taking that line of defence. Regional prices do not balance each other out. Asset prices are a reflection of the ability of its people to make money, the kind of businesses (low vs high value add), margins that their goods and services can command, affordability ratios, attraction to international investors (rule of law, corruption perception, industriousness, upside, local currency strength, government stability, ease in capital flows/controls), whether an economy is moving up the value chain …
“We, however, need time to determine how some of the measures imposed by the Federal Government via 2014 Budget and the state government will affect the market.”
… I wonder too
So sad, I haven’t achieve target to buy a landed dream home in penang yet.. dream seems further and further
@gurt
What is your budget?….:)
@Jem
I agree with your a,b,c.
But what Mr Chairman said may not be that far from the truth. The state has screwed up once on Bayan Mutiara land, and now this tunnel thing. They’d better have a proper plan on housing issues in Penang…..:)
Very Matured Comments here… So I will join your Party..
@Merbok
I think Mr.Chairman is measuring apples with oranges.
As far as i remember the land at Seri Tg Pinang was sold for RM1/sft. Even if you were to add in the reclamation cost it wouldn’t be valued at RM1200/sft.
What the state did was to get the most value per sft in exchange for the tunnel without involving public funds to fund the tunnel project. That is a good move. So the state managed to sell the RM1/sft before reclamation land to China tunnel construction company for RM1200/sft. That is a very good deal but that doesn’t mean developers should use that as a reason for increasing land cost.
The same goes for Bayan Mutiara. The state had to sell Bayan Mutiara at a market price as well through open bidding. Just imagine people were already making so much noise when the state sold the Bayan Mutiara land at RM240/sft. They were claiming it was sold for too cheap. Now people are turning around saying that because the state sold at an expensive price so now land becomes expensive. Even developers are singing that song now.
Btw, IJM Land got their land at RM50/sft.
Hence, the only way developers can justify selling at prices more than RM1200/sft is to include mega infrastructures as part of their projects as well.
Otherwise it is best to stick with the last market transacted price. Let the consumers decide.
what’s wrong with Bayan Mutiara? what’s the screw up?
No way Penang property will go down. Those who have not bought will surely be left out at the rate things are going… the newly launched scheme in Teluk Kumbar all sold out in 3 days!
@Jem
Developers are typically greedy by nature. When you say “that doesn’t mean developers should use that as a reason for increasing land cost”, I’m sure you have already realized by now developers would use any excuse at all to justify for higher price in order to maximize profits….:) So essentially we are pretty sure the tunnel builder is not going to subsidize your tunnel.
So they paid RM1200/sqft for the land, guess what they are going to do next?….:) And once they start to do what they are going to do next, the OTHER DEVELOPERS would have plenty of justification for what they are going to do after that!…:) With THIS and with THAT, therefore Mr Chariman predicted “…. If the state takes that kind of valuation, what do you think other land owners and developers will do?”
Now, someone might then say, at the end of it, it boils down to the MARKET. Can penangites afford properties based on land price of RM1200/sqft? If they can’t, how to sell? Hello???? *knock* *knock*…. China buyers!!! Spore buyers!!! And whoever said foreign buying only accounts for 3%?4%?5%? of the total transactions, so foreigners have no impact on high property price??? ….:)
Friends, we are living in a different world today. For the good of our people, we need to stop foreign property buying. The income disparity is getting very wide between us and those foreigners who are interested in our properties….:)
It is indeed that the penang state government selling it at 1200/psft but after the completion of the tunnel and the collection of the tunnel toll charges. All these ridiculous price will go away. What i am trying to say here, it is only a perception that it is sold at 1200/psft, it is just a matter of time that the amount will be collected back by toll charges.