Will property prices come down?” This is not a new question especially in a time when the property market is soft.

Before one answers that question, panellists at TheEdgeProperty.com’s Roundtable on Budget 2017 held on Oct 24 pointed out that industry stakeholders should first ask and find out whether there is any possibility that property prices could go any lower.

The panellists that took time off to take part in a lively discussion following the tabling of Budget 2017 by Prime Minister Datuk Seri Najib Razak on Oct 21 were: Real Estate and Housing Developers’ Association Malaysia (Rehda) deputy president Datuk Soam Heng Choon, Rehda deputy secretary general Tan Ching Meng, Rehda Selangor chairman Zulkifly Garib, Rehda Johor chairman Datuk Steve Chong, Rehda Kedah/Perlis chairman Datuk Rick Cheng and Master Builders Association of Malaysia (MBAM) president Foo Chek Lee. The roundtable was moderated by TheEdgeProperty.com managing director and editor-in-chief Au Foong Yee.

Overall, the panellists agreed that it is possible to bring down property prices but developers would not be able to do it on their own. All stakeholders — including the federal government and state governments — have a role to play.

The industry players also stressed that property prices hinge on numerous costs, the major ones being land, construction, compliance and labour.

“If you look at the historical data that we have compiled in Kedah, the compliance cost has been increasing every year since 2008, on existing items as well as fees imposed on new items. So it is impossible to see property prices dropping in the near future,” said Cheng.

He said the compliance cost took up only 5% of construction cost in 2008 for a single storey terraced house in Kedah. But this has increased to 13% this year. For each of these terraced houses, the compliance cost comes up to about RM20,000. On top of a hike on construction cost, this is 546% higher than in 2008, he cited.

“In urban areas like the Klang Valley, the percentage of compliance cost in a property development can reach 20% to 25%,” said Tan.

Meanwhile, Soam said the government has been made aware about the rising compliance cost. “We are trying to ask the federal government to address this issue and for the National Land Council and National Housing Council to standardise the cost in each state.”

On the cost of labour, MBAM’s Foo said it is “impossible” to keep the cost low because Malaysia’s construction industry needs foreign labour. We cannot deny that the construction industry needs foreign workers because our youths do not want to do the job, he added.

He also said that the Goods and Services Tax on building materials is another burden to developers and contractors, and they have no choice but to transfer the cost to the end-buyers.

There are other factors that add up to the total construction cost as well such as the lengthy process for development approvals which could take years while requirements imposed on developers, including the requirement to build low-cost housing, also affects the prices of other property types.

“There are already a lot of conditions being imposed [on developers]. For developers, the average net sellable area of their projects is now about 15% to 20% lower than 15 years ago. At that time, we could build 12 to 13 units of terraced houses per acre, but now the number is smaller, so our net sellable area has been reduced,” Soam said.

He also stressed that developers are not making “obscene profits” as they are often perceived.

“If you look at some of the listed property development companies, you can check their profit margins and compare that with companies in other industries. Are we really making obscene profits? I don’t think so,” Soam commented.

Agreeing with Soam, Zulkifly said the focus has long been on the developers and the government when it comes to property prices. “It is possible to bring prices down if everybody plays his or her part,” he said.

Overall, it does not seem likely that property prices will come down anytime soon but considering the current state of the market, some developers may be feeling the pinch and decide to reduce the prices of their properties.

Indeed, there could be good buying opportunities for homebuyers shopping around during this time, said Rehda Johor’s Chong, who believes some developers may lower their property prices to ease their cash flow problems.

“It’s important to remain positive and send positive vibes to the market. Housing property prices will not come down [for the time being] but there are many choices in the market. It is now a buyer’s market and if you see any cheap property, just grab it,” Chong added.

The roundtable also discussed the measures announced by the government in Budget 2017 and the use of Industrialised Building System to bring down the cost of property.

Source: TheEdgeProperty.com.my

Picture for illustration only

Mirage @ Tanjung Bungah, another high-rise mixed development by Kobay Development at Tanjung Bungah, Penang. It is located on a 1.5 acre seafront land along Jalan Tanjung Bungah, diagonally opposite Grand Ocean Condominium.

This development will see the construction of a 45-storey building with 2 residential towers. It offers a total of 90 condominium units and 45 units of serviced suites.

This project is still pending for approval, more details to be available upon official launch.

Project Name: Mirage @ Tanjung Bungah (to be confirmed)
Location : Tanjung Bungah, Penang
Property Type : Mixed development
Built-up Area: (to be confirmed)
Total Units: 90 (condo), 45 (serviced suites)
Developer : Super Tropica Development Sdn. Bhd. (Kobay Development)

Location Map:

InterContinental Hotels Group (IHG®), one of the world’s leading hotel companies, has signed a management agreement with Exopuri Development Sdn Bhd to develop a new 288-room Holiday Inn & Suites on mainland Penang.

The hotel will be strategically located in the bustling commercial district of Prai, between the major bridges connecting mainland Penang and Penang Island. Business guests can enjoy a short 15-minute commute to most major commercial areas in Prai which are home to the headquarters of a number of multinational companies, whilst visitors travelling for leisure can access Penang’s renowned downtown area, Georgetown, by car through a half hour drive from the hotel.

When it opens in four years, Holiday Inn & Suites Penang Prai will be the tallest building in the area at approximately 35 levels, enjoying high visibility from the North-South Highway which connects Malaysian capital Kuala Lumpur with Penang and other northern cities. The hotel, which will be a short drive to upcoming major development Batu Kawan, will sit within Juru Sentral, a mixed use complex, alongside retail shops, residential premises, offices and serviced apartments. Guests will also appreciate the close proximity of the hotel to two of Prai’s main lifestyle hubs, Auto City and Icon City which boast a wide range of restaurants and bars and banking facilities.

Leanne Harwood, Vice President, Operations, South East Asia and Korea, IHG said: “We are delighted to have this opportunity to work with Exopuri Development Sdn Bhd to expand our presence in Penang as the state, also known to most as the ‘Silicon Valley of the East’, continues to experience growth in visitor arrivals and gain traction as a regional business hub for international companies. Penang welcomes international and intra-regional visitors from countries where the Holiday Inn brand is well known and loved, and we are confident Holiday Inn & Suites Penang Prai will be a great addition to the Malaysian state when it opens within the next few years.”

Holiday Inn & Suites Penang Prai will feature four restaurants and bars: an all day dining, a lobby lounge, a pool bar and a rooftop sky bar. The hotel will also have 12 meeting rooms including a ballroom with a generous seating capacity to cater for a range of meetings and events. Guests can enjoy the outdoor pool, work out at the fitness centre or relax at the spa during their downtime. In addition, the hotel will include suites with amenities catering to guests staying in Penang for an extended period of time.

Mr. Ng Kock Leong, Managing Director, Exopuri Development Sdn Bhd said: “We are pleased to be developing the hotel with IHG who we know has a great reputation in operating world-class hotels. The Holiday Inn brand is well loved and recognised by travellers all around the world, and coupled with the great location we are opening the hotel in, we are confident Holiday Inn & Suites Penang Prai will be the hotel of choice by both first time and frequent travellers to Penang. We look forward to welcoming guests through our doors when the hotel opens.”

Source: HospitalityNet

Blossom @ Tanjung Bungah, an upcoming mixed development by Kobay Development Sdn. Bhd. at Tanjung Bungah. It is strategically located along Jalan Tanjung Bungah, in front of The Waterfront Condominium. Just a short drive to the famous tourist belt of Batu Ferringhi.

This development will see the construction of a 42-storey buiding with two serviced residence towers, offering a total of 412 residential units and 10-level multi-storey car park.

More details to be available upon official launch

(UPDATED: 29 October 2018)

Project Name: Blossom @ Tanjung Bungah (to be confirmed)
Location : Tanjung Bungah, Penang
Property Type : Residential
Built-up Area: (to be confirmed)
Total Units: 412
Developer : Kobay Development

Location Map:

If you feel that Penang, especially the island, is getting crowded you are absolutely right.

According to the Department of Statistics, the level of urbanisation in Penang at 90.8 per cent is among the highest after Kuala Lumpur, Putrajaya and Selangor.

The population density of the northern state is also high at 1,490 persons per square kilometre in 2010 as compared to the most populous state, Selangor, that only has a population density of 674 persons per square kilometre. Nationally, the average population density stands at 86 persons per square kilometre.

If we look at the population distribution between the island and the mainland, almost half of the population is concentrated on the island, which is 45.8 per cent of the approximate 1.6 million people in the state as at 2012.

“There is no question that Penang is one of the more urbanised states in the country and one of the focus of urbanised states is the needs of housing,” said Town and Country Planning and Housing committee chairman Jagdeep Singh Deo in an interview with Malay Mail Online.

He said the need to address housing issues is quite acute and with urbanisation, there is also another issue to resolve ― traffic congestion.

Spreading out from the island

Highly aware of the rapid development and resulting urbanisation of the island, the Penang state government launched several projects to spread out the population and to resolve the traffic congestion that has become a major problem in recent years.

According to Jagdeep, the state government launched its affordable housing projects in all five districts of the state ― northeast district and southwest district on the island, North Seberang Perai, South Seberang Perai and Central Seberang Perai.

“To date, we have 14 projects in all five districts but if we look at the numbers, Seberang Perai has the largest share of projects in all five districts,” he said.

He said there is a need to spread out housing projects to districts other than the northeast district which is George Town where the main city and the Unesco Heritage Zone lies.

“Although the island has attracted many private sector developers, it is not necessarily the case that none are interested in Seberang Perai as I have seen many developers applying to build projects on the mainland now,” Jagdeep said.

This shift to the mainland could be due to two main factors ― lower land costs on the mainland and the scarcity of land on the island.

Jagdeep believes that there will be a natural spread of projects and the population to the mainland in the long run as projects increase there.

According to Think City’s chief operating officer Dr Neil Khor, the population at Central Seberang Perai is currently high but the land use is inefficient so there is a need for a detailed development plan to maximise efficient land use.

Think City is currently undertaking an urban regeneration project in old town Butterworth, a portion of Central Seberang Perai. The district has the second highest number of population, of about 380,300 as compared to 733,600 for the whole island.

“The whole idea of releasing the pressure of urbanisation in George Town is to spread it out and gentrification is moving to Butterworth,” he said.

Khor said Think City is working together with the Seberang Perai Municipal Council to come up with a plan-led approach in reviving the old town and encouraging a more organised development of the area.

“We are looking at projects that go in tandem with the local plan and structural plan and while we can’t go in to improve the existing public housing projects here, we could improve the public spaces such as parks and a clean seafront for people,” he said.

Batu Kawan and South Reclamation Scheme

Batu Kawan is one of the sites that the state is focusing on to develop and become a natural site for the population to spread out to.

“The first phase of Bandar Cassia will be ready in December this year, there are already existing industries there and commercial outlets like Ikea is also coming up, soon we will see Batu Kawan coming up much like what happened to Taman Tun Dr Ismail in Kuala Lumpur,” Jagdeep said.

He believes that it will be a natural phenomenon as once these commercial and residential aspects slowly take shape, many will start to set up and live there.

“This is an answer to the saturated urbanisation that George Town is seeing right now,” he said.

Another area to look at is the proposed South Reclamation Scheme (SRS) project on the southern side of the island where three man-made islands will be reclaimed to provide 4,500 acres of land space.

“These three islands will have three components ― industrial to cater to the free industrial zone, commercial and residential,” Jagdeep said.

He said the state government has agreed to allocate more than 25 per cent of the residential components on the three islands to affordable housing.

“I am still trying to negotiate for more affordable housing units there but I am happy that at least 25 per cent has been allocated for this category,” he said.

The SRS is part of the state’s planned Penang Transport Master Plan (TMP) as it is meant to fund the ambitious RM27 billion project.

Addressing housing woes

While projects are underway in all five districts, there are also other measures that the Penang state government put in place to meet with current housing needs.

One of it is the increase in density for housing projects from 30 units per acre to 87 per acre only for certain areas on the island. There are also certain areas that allow a density of up to 180 units per acre.

However, there is a catch to this increased density as only affordable housing projects for housing priced below RM300,000 can apply for such high density, said Jagdeep.

“We only allow higher density developments for affordable residential projects, we don’t want developers to reap profits from higher density projects,” he said.

Also in the works, in tandem with the state’s planned TMP, is a form of development called the transit oriented development (TOD) where density could even be higher than 180 per acre.

An example of TOD is KL Sentral where commercial, residential and industrial developments are located in one area and are connected by a transit point.

“If we look at the main line of the LRT under the TMP, we can have TOD along the alignment especially at main stations along the line,” he said.

The rationale is that with an LRT line, it takes away the need for private vehicles so even with higher density at TOD projects, it will not affect the traffic in the area.

Resolving traffic congestion

Traffic congestion is probably one of the major issues that comes with urbanisation, particularly on the island side of the state.

“That is why we have the TMP which is spearheaded by Chow Kon Yeow and it is now in the planning stage,” Jagdeep said.

In the long run, the comprehensive transport plan that includes a connected network of LRT lines, bus routes and also monorails, will make Penang more connected while at the same time, alleviate the growing traffic congestion problem.

Jagdeep said the state can’t allow higher density for housing if the traffic can’t cater to it so most housing projects are heavily dependent on the traffic impact assessment.

That being said, Jagdeep believes that more of the population will slowly spread out from the northeast district in the island as the southwest district is now facing rapid urbanisation with more projects coming up.

“I can foresee that there will be further sprawling and overflow to outside the currently popularly dense area once it reaches saturation point,” he said.

As it is, due to the increasing costs of housing and rental within the Heritage Zone of George Town, many are moving out of the core zone to surrounding areas.

According to Khor, if calculated based on population, Butterworth has double the number of people as compared to the Heritage Zone due to the recent evictions and relocation of inner city residents.

“Butterworth has a higher density and as gentrification moves this way, we can see that urbanisation will have spread here too,” he said.