An auction for a six-acre parcel of land near Gurney Drive, Penang, failed to attract any bidders on Wednesday, dealing a setback to efforts to raise funds for the long-delayed Ayer Itam road bypass project.

Representatives of the appointed auction agent, One Asia Property Consultants (PG) Sdn Bhd, waited an hour for potential bidders before closing the auction, according to a report by The Edge. The state government has yet to decide whether to hold another auction.

Known as Plot 7A in Tanjung Pinang Town, the land is located along Jalan Peter Paul Dason, which connects Gurney Drive with Andaman Island. The parcel carried a reserve price of RM313.632 million, equivalent to RM1,200 per square foot. Vacant land in the surrounding area is reportedly fetching more than RM1,000 per square foot in the open market.

The proceeds from the proposed sale were intended to help finance the completion of the Ayer Itam bypass, which links Ayer Itam to the Tun Dr Lim Chong Eu Expressway. Construction progress exceeded 90% as at the end of August, but the project has faced delays due to financing and site logistics issues.

The project operates under a land-swap arrangement, whereby land is transferred to the contractor, Consortium Zenith Construction Sdn Bhd, based on completed work claims instead of cash payments. The contractor had sought the state government’s assistance to monetise the land and improve cash flow, with completion targeted for April 2027.

Apart from the prevailing soft property market, uncertainty over the permissible plot ratio for a proposed mixed-development project on the site may have contributed to the lack of interest.

Plot ratios determine the maximum floor area that can be developed relative to the size of a land parcel. Development density on Penang Island is subject to state planning controls, given its limited flat land, environmentally sensitive hills and heritage considerations.

The absence of bidders leaves the state government to consider its next steps in unlocking the land’s value to support the completion of the bypass project.

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