There are concerns that Penang island cannot absorb the high number of projects

The planned development of RM29.6bil worth of properties on Penang island in the next 10 to 15 years has raised concerns over the capacity of the market to absorb them.

The properties are planned for 1,121.56 acres which include reclaimed land and strategic locations on the island.

Eastern & Oriental Bhd is reclaiming 740 acres for the second phase of the Seri Tanjung Pinang project in Tanjung Tokong to develop two islands for mixed development projects, which will have an estimated gross development value (GDV) of RM12bil.

E&O is expected to reclaim the land in 2012 and the group has until 2019 to complete reclamation before the concession expired.

“It should take two years from the start of the land reclamation before the first project launch can be embarked upon.

“Phase two will be a mixed integrated development comprising two islands of approximately 740 acres.

“At three times the size of phase one, phase two is expected to generate RM12bil in gross development value,” E&O deputy managing director Eric Chan said in a report.

Chan said upon completion of the reclamation for Seri Tanjung Pinang Phase Two, it would take at least 10 to 15 more years to fully develop the land.

“Within that time, with Penang continuing on its present growth path, the demand for better residential properties and lifestyle amenities is expected to be generated.

“E&O will be poised to fulfil this demand with the realisation of Seri Tanjung Pinang Phase Two,” Chan said.

Ivory Properties Bhd is reclaiming 35 acres to add to its recent acquisition of the 67.56 acres of Bayan Mutiara land in Bayan Baru for a mixed development scheme, which will have an approximate GDV of RM10bil, according to a recent AmBank report.

IJM Land Bhd is reclaiming 103 acres for the development of an RM5bil mixed development project, which will be completed in 2021.

IJM Land is expected to complete the reclamation of the 103 acre site next year-end.

Mah Sing Group Bhd is developing properties on various prime locations on about 95 acres on the island, with an estimated GDV of RM1.6bil.

From 2012 to 2017, Sunway City Bhd will be launching the Sunway Hill Residence on an 81-acre site in Sungai Ara around 600 units of landed properties and condominiums with RM1bil in GDV.

There are also other smaller projects with combined multi-billion ringgit GDV such as the reclamation of a 100-acre site in front of Queensbay Mall by Boustead Holdings Bhd; new residential projects on the island planned by the other developers from Kuala Lumpur and Penang, and the proposed project by Penang Turf Club (PTC) on 50 acres on the PTC site.

It is estimated that about 70% of the RM29.6bil in new developments will comprise residential properties.

Last year, the purchase of new residential properties on the island was estimated to value around RM1.8bil to RM2bil, which was among the highest in recent years.

If the purchases of new properties on the island were to be maintained at the 2010 level of around RM1.8bil to RM2bil, industry observers said it would take 10 to 11 years to complete the take-up of the properties.

Real Estate & Housing Developers’ Association (Rehda) Penang chairman Datuk Jerry Chan Fook Sing said even if the uptake was consistently estimated at RM2bil per annum, the 10 to 11 years period would still be a long time.

“This is assuming that the Penang property market can consistently absorb around RM2bil worth of properties per annum.

“A RM21bil GDV is a lot for the market to absorb even if the period of uptake were to be extended to 15 years.

“The planning and the launch of the projects must be timed to suit demand, although the demand of properties would be higher in certain areas of the island.

“But of course if the economy continues to be good and there is consistent or increasing demand, there should be no problem for the new launches to be absorbed in a shorter period of time.

“If Penang can continue to re-invent itself in the economic sphere, then it can draw people from other states to Penang to work.

“This migration could serve as the source of demand for the future property launches and create a higher population as opposed to normal birth rates,” Fook Sing said.

Registered and chartered valuer C.A. Lim & Co proprietor Lim Chien Aun said there could be downward pressure on property prices on the island due to the oversupply of new launches.

“As it is, the bulk of properties purchased over the past five years were for speculation purposes.

“When the holding power is gone, the speculators will have to release the properties into the market. Add that to the supply of new launches, there will be an oversupply situation.

“Developers must identify where their markets are coming from carefully and release the new launches according to demand,” Lim said.

Lim said for the past five years, the return on investment (ROI) for properties on the island had dropped by 50%, while the value had increased by about 100%.

“This is something that had gone unnoticed.

“The ROI is worsened by the fact that Penang properties generate very low rentals.

“If the ROI keeps decreasing, as property values increases correspondingly, then no one would buy property in Penang for investment purposes.

“The property market in Penang would then become purely speculative in nature,” Lim said.

Lim added that there was also the affordability factor.

“To purchase a high-rise property priced above RM300,000 on the island, the buyer’s monthly household income would need to be between RM8,000 and RM10,000.

“The bulk of wage earners in Penang do not fall into this income bracket.

“Where would the demand for future property launches come from?” he said.

Sunway City general manager Tan Hun Beng said the volume of properties planned for launch raised the question whether developers had done enough research and analysis on market demand.

“I think developers should make the necessary studies before making their launch projections: is the present positive response to the property market a good sign or is it an early signal of an approaching storm?” Tan said.

Chartered valuer and property consultant Azmi & Co (Penang) Sdn Bhd managing director Chandra Mohan Krishnan said the RM21bil GDV of residential properties was a lot to absorb over a 10 to 15 years period.

“If there is no demand, there may be downward pressure on property prices. However, the value of landed properties on the island should be able to hold on, as they are becoming scarce,” he said.

IJM Land (north) general manager Toh Chin Leong said it was important for developers to build a balance mix of residential and commercial properties.

“Commercial projects are important to attract the movement of labour to Penang, which will provide demand for housing.

“This is why a large portion of our second phase on 103 acres comprises commercial projects such as hotels, corporate offices, and retail outlets.”

Penang Master Builders and Building Material Dealers Association immediate past president Datuk Finn Choong said the reclamation works would generate demand for workers and jobs for local contractors.

“We can see positive benefits for Penang even before the launch of the new properties.

“The reclamation activities would bring in foreign labour to Penang which would generate economic spill-over effects for the state, as the workers would have to spend money on rentals and food. On paper the number of new projects seems a lot.

“However, if the Penang government can continue inspiring confidence in investors and manages well the expectation of Penangites, the state can draw migration from different income groups into the state that can support the new properties planned,” Choong said.

Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat said Malaysia’s population stood at 28.3 million with an average annual growth rate of 2%.

“Being a young population, 67% are between 15 and 64. Nearly everyone will be making decisions about where to live, work, shop and play, with real estate as the major key component for the next 20 years.

“It is important to know a great deal about where they reside, educational backgrounds, family composition, incomes, and whether or not they work.

“Consequently future real estate needs can be anticipated,” Teoh said.

On the infrastructure supporting future development, Penang Chief Minister Lim Guan Eng said international contractors from several countries have indicated that they are interested to build four major road projects in Penang.

Lim said the contractors were from China, Singapore, Hong Kong, Japan and South Korea.

He said the state government would invite those interested to bid for the projects via request for proposals (RFP) by the end of the year.

“The RFP will be out at the end of the year. It will take another six months before the contracts can be awarded to the successful bidders,” Lim said in an interview recently.

The proposed projects are the 4.2km Gurney Drive-Lebuhraya Tun Dr Lim Chong Eu bypass, the 4.6km Lebuhraya Tun Dr Lim Chong Eu-Bandar Baru Air Itam bypass, the 6.5km Penang-Butterworth Tunnel, and a 12km proposed road connecting Tanjung Bungah and Teluk Bahang.

 

SOURCE: The Star

Penang Hill and its surrounding localities will be upgraded at a cost of RM8.6mil as part of efforts to ease the traffic congestion there during the peak season and to provide a sheltered walkway for visitors.

Penang Hill Corporation (PHC) general manager Datuk Lee Kah Choon said it would be done in three phases.

The first phase comprises three projects while the other two phases are still in planning stages.

“The three projects are the building of shelters for the bottom and hilltop funicular railway stations and a walkway linking the bottom station to a neighbouring Chinese temple car park, which is under-utilised at the moment,” said Lee at a press conference on Tuesday.

The bottom station’s centre court will have shelters installed and it will also be done for the hilltop area.

A sheltered walkway will be built on the hilltop, leading to the promenade near the Bellevue Hotel.

“This will allow the visitors to take in the scenic view in a comfortable atmosphere. Currently, there are no proper shelters and it inconveniences the visitors, when it rains or when it is hot. The shelters will provide cover while at the same time provide an unobstructed view of the hill with proper ventilation,” said Lee.

“We will also build a sheltered walkway (less than 100m) linking the bottom station to a nearby temple car park. This means we will have more car park sites and two entrance points to the bottom station.”

This would ease the current traffic and crowd congestion, especially during the peak period, Lee said.

Penang Development Corporation’s consultancy head Khairil Faizi Abdul Majid said that the projects were expected to be completed within six months.

Prai Tropika is the latest residential development by Prima Prai Group located at the heart of Prai township in Penang. This development comprises 54 units of 2 1/2-storey terrace houses. Strategically positioned next to Giant Prima Prai and easily accessible via Butterworth Outer Ring Road (BORR) and North-South Highway. It is only 5 minutes away from Penang Bridge and mere minutes drive to Ferry Terminal.

Property Project : Prai Tropika @ Perai Utama
Location : Prai, Penang
Property Type : 2 1/2-Storey Terrace
Tenure : Freehold
Built-up Area: 2,127 sq.ft. onwards
Land Area: 22′ x 56′ onwards
Total Units : 54
Indicative Price: RM 374,000 onwards
Developer : Prima Prai Group
Contact No.: 04-389 2882 / 04-398 0033

PETALING JAYA: The outlook of the property market is mixed, with developers reporting firm sales while property agents report tell-tale signs of a slowdown in certain market segments.

Rahim & Co executive chairman Datuk Abdul Rahim Rahman said: “The market is giving a mixed indication, but what is happening in the United States and Europe is very serious and will have an effect on this part of the world. For example, the take-up rates of newly-launched condominiums have been very encouraging with more than 60% sold just a few months after launching. However, on the rental market, leasing has been less active and rental rate has not increased that much.”

“The quick and healthy take-up rates reported by developers mean that people are still confidently investing despite the seriousness of the US and European debt issues,” he said.

He expects the number of launches to continue to be fairly healthy with good take-up rates, especially for those outside the Kuala Lumpur city centre

“The market is not saturated. Although prices of landed units may have gone up quite a bit, it is possible to buy detached houses at RM1mil in Shah Alam,” he said.

Senior vice-president Gerard Kho of real estate consultancy Reapfield, reckoned that the market might be rather flat when compared with the first half of this year and the whole of last year. The market during the last 18 months have been exceptionally buoyant and the full impact of the US-Europe problems were not factored in by the market then.

“We are not sure what will happen in the second half of this year, but we are taking a cautious stand,” said Kho.

He said the prices of landed units would continue to go but they are seeing a disparity between asking price and transacted price widening. This disparity was seen a couple of months ago, he said. Prices have gone up compared with the first half of this year but the increase was less.

“We expect this situation to continue – growing disparity between asking and transacted price,” Kho said.

As for the condominium market, excluding the KLCC and Mont’ Kiara, prices have not gone down and rental remains strong. Kho said prices were flat in the Mont’Kiara and KLCC market.

The company was also seeing more listings coming into the market which means there were more units available now and buyers were waiting on the sidelines looking for a good buy, he said.

“But they are not going for fire-sale prices,” he said.

“People today will be buying at more realistic prices, unlike the first half of this year when they were prepared to pay more than the current market prices. As more stocks entering the market, the market may soften but despite that, high-rise units costing less than RM500,000 are expected to do well.

“If one is looking at the Klang Valley specifically, whether the market is up or down, there will be demand,” he said.

Kho said in terms of market activities, the first half of this year was the most buoyant compared with the Jan-June 2009 and Jan-June 2010 periods.

As for the healthy take-up rates, this may largely be attributed to the attractive lending terms offered by the banks together with the various rebates offered by developers.

In a 23-acre development known as Empire City next to the Lebuhraya Damansara-Puchong (LDP) by the Empire Group, a marketing agent reported that sales have been brisk with five to six units sold on a daily basis about two weeks ago.

Known as serviced office suites, the units are located on top of what will be a five-star hotel.

“This enables the buyer to apply for a 90% loan because this project is on a commercial title. If it were a residential title, he can only get 70% loan, if this is his third mortgage,” the agent said.

He explained that buyers need only pay a deposit of RM5,000. There is a 5% rebate. If a unit costs half a million, a buyer gets RM25,000 discount. He needs to pay the remaining 5% (RM25,000) upon signing the Sale and Purchase Agreement, less the RM5,000 booking fee. His initial capital outlay amounts to only RM20,000. The entire 23-acre development is expected to be completed by 2015.

Rebates have become a feature in today’s launches and may be a sign of the competitive property market, particularly for condominium sales.

In a three-acre development in Jalan Kiara 3, near Mont’Kiara heading towards Segambut, Mitrajaya Homes group relaunched Kiara 9 Residency over the weekend. The completed project comprises about 200 units of condominiums and 16 units of 3.5 storey villas. The condominium block is 70% sold, the villas, 50% sold.

There is a 20% rebate for condominium units facing west, those facing east, a 12% discount and those facing another upcoming condominium block, a 15% discount.

Some of the discounts could go as high as RM200,000. Landed villas come with a 5% rebate.

As an indication, a 2,200 sq ft unit complete with cabinet fixtures and electrical appliances on the 10th floor facing another ongoing block of high-rise apartment is priced at RM1.7mil, and a discount of up RM256,000 has been given.

RESIDENTS of two condominium blocks in Gurney Drive, Penang, are having sleepless nights due to the loud music coming from vehicles parked opposite their blocks.

One of the residents, who wished to be known only as Kori, 68, said he and his wife, Hashiko, 59, had not been sleeping well for the past five months because of the loud music.

“Every night, there will be cars parked opposite our block and loud music will be played from the speakers in the car boot. There will also be people dancing to the music ” it’s like a mini open-air discotheque for them.

“We’ve been living in this place since March and we thought it was a temporary thing at first but it has been getting worse especially on weekends,” said the Malaysia My Second Home Programme participant.

Kori, who hails from Osaka, Japan, said the music was so loud that he could hardly hear his wife speaking and they live on the third floor.

“We’ve made numerous police reports and even got our landlord to report the matter to the area’s assemblyman and it would stop for only a few days.”

Another resident, who wished to be known only as Teoh, said she too had difficulties falling asleep due to the loud noise.

Kori and Teoh said they had reported the matter to the building manage- ment and was told that they were in the midst of finding a solution to the problem.

The condominium?s property ma-nager Regan Maurice said the police had been alerted of the situation.

“There is a police beat base nearby but each time they see the police approa-ching, they’d quickly disperse but would come back again after the police had left.”

State police chief Deputy Comm Datuk Wira Ayub Yaakob when contacted said he would instruct his personnel to look into the matter.

SOURCE: The Star