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Buying Penang properties? Affordability means RM600 – RM700psf.

September 21st, 2014 Leave a comment

by Charles Tan

A close friend asked me recently what’s the price that I would be willing to sell my condo in Tanjung Tokong. I said, RM700k. She laughed and said, my husband said that’s impossible. I laughed and said, it is ok. In fact at the price I wanted to sell, I was only looking to sell it at RM610 – RM630 psf.

Surely that is not something too high in Penang island. Furthermore, every condo in the neighbourhood are already above RM630 per sf despite giving just one car park. My unit comes with 2 car parks even if front and back. Nearby, E&O’s project was already selling at RM1,300 psf or higher. Just wanted to remind her that it is impossible for the whole Tanjung Tokong to rise in price but not my condo. The most recent offer came in at RM620K just two weeks ago which I told the buyer not to worry. Surely for RM620K he/she can get a decent unit, as long as he is ok with one car park and below 1,000sf. Then, today, I read the news from SP Setia in The Star.

Reported in The Star on 30 July 2014, SP Setia’s General Manager, Khoo Teck Chong said that over the next five years, SP Setia would be building more varieties of affordable housing that are able to cater to Penangite’ income level. This is because for the past few years, majority of all properties in Penang island has grown out of proportion in comparison to salary. Besides that, due to the stringent loan policies, it is getting tougher to sell high-end properties. He said that in the south-west district of the island, SP Setia would be developing properties prices from RM600 – RM700 psf range. The upcoming one would be Sky Vista at about RM600 psf. In SP Setia’s own survey, it was shown that properties priced between RM600 per sf and RM700 per sf are deemend to be affordable and thus are in demand by Penangites.

Personally, I rate South-West which is Balik Pulau as below Tanjung Tokong today. That’s why in terms of pricing, it should not be priced too high. RM600 per sf is a price which only more established developers like SP Setia would dare to price. However, if you ask me if I have just two choices today, where would I buy, it would be Balik Pulau and not Tanjung Tokong. Reason being, majority of all the working professionals would be on this side of the island instead of Tanjung Tokong. Of course, if you are a Penangite, then the choice is obvious. Penangites have their special preference for areas and always consider areas like Sungai Ara or even Relau as secondary instead of main areas. I guess it is ok. This is the reason why properties everywhere within the island has seen more than doubling of price within past few years.

>> This opinion article comes courtesy of Charles, the founder of kopiandproperty.com. He is popular for sharing his thought on property investment mostly based on his own 11 years experience as well as from all the readings and conversations with property gurus in the industry. (Source)

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  1. f
    September 22nd, 2014 at 16:48 | #1

    Personal opinion allowed,

    I am attracted to this almost the end of paragraph ….. Penangites have their special preference for areas and always consider areas like Sungai Ara or even Relau as secondary instead of main areas….

    But somehow I don’t see the interest of intellectual discussion start yet. Instead many people busy speculating, talk down others, foreigners etc. (which is of course quite fun)

    Let me start the ball rolling.

    Sg Ara is just a secondary area? I think this subject worth to debate.
    What is meaning of secondary area? Something not a main choice but force to buy because cheap?
    So, where is primary area?

  2. Chris
    September 23rd, 2014 at 08:48 | #2

    It would be a safe bet to say that anyone who chooses to stay in Penang have their own preferences depends on what they do in the state.

    Personally I do not like the word “primary” or “secondary” in this case. It sounds like you’re looking down on other’s choices even if you do not mean it. I like the words “preferable”, “less preferable” and “not preferable”.

    As an outsider myself (shoot me all you want), attracted by both employment and nature (mountains and beaches, and all outdoor activities), and not by the culture or the luxurious lifestyle, I find Bayan Lepas area to be more preferable than the north side of the island. Not saying Georgetown or Tanjung Tokong isn’t any good, but for what I’m looking for, why pay more for less?

    Personally I have high hopes for Batu Kawan.

  3. f
    September 23rd, 2014 at 10:36 | #3

    Finally some intellectual discussion.

    I would agree with Chris for most of the points.

    I think it depends on where is your regular or majority business/work and family activities (schooling, tuition etc).
    Balik Pulau also can your personal Primary choice if you have businesses/work there.
    if both husband & wife work in FTZ but stay in Gurney drive, isn’t that less convenient?

    I think in general (at least FTZ people) would agree Queensbay as the magnate of “primary” location. But houses in that areas (Bayan Bay, D Residences, Sg 2, Batu, Uban, Sg Nibong,) and nearby Taman are high side for regular income earners.

  4. brt
    September 23rd, 2014 at 11:39 | #4

    Haha…this is no intellectual discussion lah. The reason you’re concerned about whether south island is being labelled as secondary or north island is being labelled as primary is because you’re kiasu about the value of the properties that you own. And with so many properties being built and bought over the last few years in the south, the feeling of glut makes you feel even worse.

    At the end of the day, if you’re only buying for own stay and you enjoy it, why bother about the “grading”?

    It is an undeniable fact that wealthy foreigners prefer the north. Whether the mountain is 50 feet higher in the north, or the beach is 50 feet wider, who cares and it’s totally irrelevant! The moment an ang moh arrives in penang, he looks around and he sees all mat sallehs around, surely he will say to himself that’s where he’s going to live. Simple…:)

  5. lol
    September 23rd, 2014 at 19:38 | #5

    Well said. I totally agree with you brt.

    @brt

  6. kopiandproperty
    September 23rd, 2014 at 22:12 | #6

    @f
    Thanks for all the comments. Somehow I find the readers of penangpropertytalk.com are more intellectual. Seriously. For example, Sungai Ara as secondary. To me, Sungai Ara is my primary area. However, once you look at the price per sf, you would understand that preference is still for the Tanjung Bungah / Tanjung Tokong area. Even Gelugor, even Jelutong. Perhaps that’s because of wrong perception, maybe these people just have never lived in Sungai Ara or seen its growth? I like Bayan Baru area too but there were no projects that I like when I decided to buy many years ago. Yes, it’s also true that the ‘ang moh’ may prefer sea view. However, the number of these foreigners coming to Penang remain to be very low and in terms of transactions, I think they prefer places where other ‘any mohs’ are. So, if Balik Pulau is able to attract a huge community of ang moh, I think it may well be Balik Pulau in future. Do note that none of these ang mohs who would like to jam from Gurney to Tanjung Bungah for 45 minutes or more in future. In terms of ‘grading’, I have never looked down on newer areas. Thus far, my purchases have always been in newer areas where there are less people fighting for it. It works well for me thus far and I have enjoyed every place I have stayed too. Take care. charles.

  7. Chris
    September 24th, 2014 at 15:04 | #7

    @brt
    I think an intellectual discussion is when you question your own opinion, trying to convince others while allowing yourself to be convinced, picking on details and exploring new ideas. It’s kind of opposite of “don’t worry be happy”.

    If you accuse others to be “kiasu”, then it’s just like what @f said, talking down others. Fun? Maybe. But so is having a discussion without playing down other’s opinion.

    But I agree with you though, in the end of the day, if you’re buying for own stay and you like the place, why bother what others say? Mainland a lot of lalat? So? More free food for my Kaloi fish!

  8. brt
    September 24th, 2014 at 15:40 | #8

    @Chris

    I have no intention to talk down others, it’s just the usual me, straight to the point. I just don’t like the kiasu type, short term speculators, property agents and developers who exploit human greed and entice innocent people into short term speculation and in the process earn commission for themselves, and harming our society, I am just disgusted with how people are obsessed with money nowadays, totally ignoring integrity….:)

    @kopiandprop

    Balik Pulau becoming an attraction for ang mohs? Well, nothing is impossible. But if I were the state planner, it would be idiotic to plan it that way. It’s not just the seaview that attracts the angmohs to Tanjung Bunga, the whole eco system is there. So it’s like the tech culture of silicon valley, it’s not just about the engineers. It’s the whole eco system of venture cap, trained engineers, risk taking culture, market size, wall street, immigration policy, education system etc.

    For penang to move forward and becoming even more liveable, foreign participation is crucial, and that’s where the ang mohs, the koreans, the japs, the sings etc are needed, and they need a place to stay. The state’s aim should be to enable that, and yet not depriving the locals of these good things. We cannot have a totally free market for properties, but that doesn’t mean we cannot make everyone happy. Rocket, you need more brains on this.

  9. Chris
    September 25th, 2014 at 09:05 | #9

    @brt
    :) Glad you think that way, we need more people like you.

    I too despise greedy people in general. I do not hate property investment, I think of it as “wealth retention” instead of “get rich quick”. It feels very unfair for people who’s not into speculating but was dragged into the speculator’s game.

    I know the comment guidelines says “avoid political discussion”, so I just want to say the supposedly “socialist” state government has become too capitalistic in the last few years, and many people are feeling the middle class squeeze. Happy to see there’s an affordable housing program, even though I do not qualify since I’m not a voter here.

  10. c
    September 25th, 2014 at 11:24 | #10

    @Chris

    In general, I also echo your view and BRT.

    I like this topic as there are lots of constructive discussion here and pretty lively.

    I think the next point we may want to discuss further is specifically valuation and its potential for growth. Definitely I agree the Northen / downtown area shall command higher prices. I think there is not necessary to compare it with Bayan Lepas/ Sg Ara.

    To me I chose to move to Bayan Lepas because of its magnate as the industrial powerhouse and Penang’s no.1 GDP. it producing products and not just speculative or purely residential piece of land. The housing is supporting the real economy. Otherwise we would be just like another Phuket solely rely on tourism.

    Specifically for Bayan Lepas or South West District (cover from Batu Uban till One Residence/SPI) what are the fair pricing for condos and landed house.
    Is it overprice and is there growth? Sometimes I see same area but different projects the price gap is huge.
    Eg. Taman Iping vs Southbay, Setia Green Vs. Siara 81,

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