The other Penang poised to soar

Land scarcity and sky-rocketing property prices on Penang island have driven developers and investors towards the mainland in recent years. Although the mainland property scene continues to play second fiddle to the island’s, growth in the Seberang Perai area is now accelerating and poised to soar higher.

Seberang Perai, formerly known as Province Wellesley, is a narrow hinterland located opposite Penang Island separated by the Penang Straits. With its proximity to the island and ample land resource, the mainland is becoming an attractive investment destination.

The island has seen rapid growth as a port city and tourism destination while only a few towns on the mainland, such as Butterworth, Simpang Ampat and Seberang Jaya, are hubs of business activity. Butterworth is the principal town of Seberang Perai, and the transit point for public transport connecting the mainland to the island, and to other cities on the peninsula.

Seberang Perai has changed a lot over the years as robust industrial activity has stimulated the development of housing, PA International Property Consultants (Penang) Sdn Bhd executive director Michael Loo tells TheEdgeProperty.com.

“For instance, Butterworth, where I was born and brought up, has seen residential development move from landed homes to high-rises. There are also increasingly more gated developments in Butterworth, something we hardly saw a few years ago,” he says.

He claims that 20 years ago, the population ratio of Penang island to the mainland was about 55%, but as connectivity between the two parts of Penang improved, the population of the mainland now outnumbers that of the island by around 53%.

According to data available as at 2012 from the Department of Statistics, the island had a population of around 738,500 people and the mainland, 872,600.

Associate director of Henry Butcher Malaysia for Seberang Perai, Fook Tone Huat, says major town centres here, such as Batu Kawan, Simpang Ampat, Bukit Mertajam and Seberang Jaya, have seen significant urbanisation. Their new townships are drawing more property buyers and people to live there.

Developers from other states have expanded their footprint to the mainland, including PJ Development Holdings Bhd, Eco World Development Group Bhd, Hua Yang Bhd and Titijaya Land Bhd.

“We do see some developers from the Klang Valley, Penang island and Ipoh moving to the mainland, looking for development land of good potential in Jalan Baru, Bukit Mertajam, Batu Kawan and Simpang Ampat, including lands suitable for affordable housing development,” Fook says.

Loo of PA International concurs. He says most developers in Seberang Perai were local companies such as Tambun Indah Land Bhd, DNP Land Sdn Bhd, IJM Land Bhd and Asas Dunia Bhd, until around the year 2000. More recently, more developers from other states have moved in.

“Over the past five years, property prices in places such as Butterworth, Batu Kawan and Simpang Ampat have seen at least 50% capital appreciation. Even though the implementation of the Goods and Service Tax (GST) has impacted market sentiment, property prices continue to grow, but at a slower pace,” he remarks.

With numerous public transport and infrastructure projects planned such as a light rail transit (LRT) line linking George Town and Butterworth, a monorail line from Raja Uda to Alma, a Bus Rapid Transit (BRT) line from Permatang Tinggi to Batu Kawan, and the Penang Undersea Tunnel, the mainland property market will become an increasingly viable alternative to more expensive properties on the island.

Mark SawIn the past five years, Loo says the selling price for high-rise residential developments on the mainland have ranged between RM300 psf and RM400 psf, with some projects selling above RM400 psf.

For instance, Woodsbury Suites by PJD Property is selling at RM550 psf. It offers 420 serviced suites of between 550 sq ft and 1,250 sq ft in built-up area.

A 1,089 sq ft unit in Signature Condominium by Excel Focus Properties Sdn Bhd was listed on TheEdgeProperty.com last November for RM498,000, or around RM457 psf.

An analysis of transactions by TheEdgeProperty.com shows the average transacted price of non-landed residential property in Seberang Perai hit a new high of RM192 psf in 1Q2015, an outstanding 23.4% y-o-y increase from RM155 psf previously. This followed an already robust 9.7% y-o-y growth in the preceding year.

However, total transaction volume for the 12 months to 1Q2015 declined 16.8% y-o-y to 1,203 units from 1,446 units.

Cheaper pricing drawing buyers’ attention

C H Williams Talhar & Wong director Tony Lee Eng Kow concurs there is rising interest from property buyers as property prices in Seberang Perai are relatively more affordable than on the island, where landed homes, for instance, are mostly beyond the mass market.

Although buyer interest from the island is increasing, Lee notes that the strata high-rise residential market in Seberang Perai is still in the early growth stage. Besides, most buyers from the island prefer landed homes and shop offices for investment. The areas popular with property investors are Butterworth and Bukit Mertajam.

PPC International Penang Sdn Bhd executive director Mark Saw says more investors from around the country would be interested in buying Penang mainland property if the transport infrastructure here was improved.

“There are people who move to the mainland from the island for its affordability but the majority property buyers will only do so if there is an improvement in the transportation Infrastructure,” he adds.

He notes that the opening of the Penang Second Bridge has stimulated economic activity in Juru and Tambun as they are easily reached by Penangites staying on the southern part of the island.

In terms of capital appreciation, Saw sees potential in Batu Kawan because of a number of developments there.

“Batu Kawan is a greenfield site so we should see strong capital appreciation of properties there over the next five years once the planned developments are completed,” he says.

In Batu Kawan, Eco World will develop the RM10 billion Eco Marina township on 300 acres of land. Mainland residents are also looking forward to the RM8.4 billion Aspen Vision City that will include an IKEA mall. There is also a RM1 billion mixed-use development that boasts a mall with premium boutiques. Meanwhile, Paramount Property plans to build a university metropolis, comprising commercial, residential and retail elements anchored by the new KDU campus.

Outside Batu Kawan, major developments include Pearl City by Tambun Indah Land Bhd, a 1,140-acre township in Simpang Ampat comprising landed properties, serviced residences, commercial hub, international school and mall.

Pressure on rental yields

As new developments are completed, high-rise residential supply is expected to increase in the near future. PPC’s Saw anticipates rental yield growth to face pressure given the increased choice for tenants.

Research by TheEdgeProperty.com shows that indicative annual rental yields based on asking rentals observed as at June 2015 range between 4.0% and 7.5%. The highest indicative asking rental yields can be found at Pantai Apartment (7.5%) on the coast of Butterworth.

Saw says the popular high-rise residences for renters are located near established areas, such as the Chain Ferry area.

Fook of Henry Butcher says those renting houses in Seberang Perai are mainly middle and higher-income professionals, managers, factory engineers and businessmen with companies in the northern parts of the country.

“The main considerations of tenants are location, public amenities, building facilities and services,” he adds.

Fook expects mainland property prices and rental yields to remain flat in 2016 due to the weak overall economic conditions, the impact of GST and strict lending criteria, but expects the situation to improve after 2017.

“This year will be a buyer’s market. I would advise investors to look for good buys now, especially auction properties below market price,” says Fook.

Improved accessibility bringing more opportunities

Despite the property market slowdown of the last two years, Saw believes there are positive signs. For one, developers are looking for opportunities to increase their land bank on the mainland.

“I believe more developers will consider areas with good opportunities, especially if they see good infrastructure projects such as rail links, bus routes and roads being planned.

“If there is improvement in holistic public transport in all areas, including in the north of Butterworth, we will see more opportunities [for development] in areas like Tasek Gelugor,” Saw adds.

Fook notes some other catalysts that could help boost other areas on the mainland, including the proposed Penang-Butterworth Undersea Tunnel that will link Gurney Drive on the island to Bagan Ajam in Butterworth.

“This project could help boost property demand in Butterworth and its surrounding areas of Sungai Puyu, Teluk Air Tawar and Bagan Lalang,” he explains.

Fook says Simpang Ampat, located in Seberang Perai, will benefit from the Penang Second Bridge.

Loo from PA International says the Penang Transport Master Plan will strongly catalyse mainland development. With better accessibility, people who work in Bayan Lepas will have the option of moving to the mainland and commute to work daily.

Source: TheEdgeProperty.com.my

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Incentives to housing for first-time buyers and free rice were among several measures Putrajaya announced as part of its Budget 2016 revision to help the lower-income groups tackle rising living costs.

Prime Minister Datuk Seri Najib Razak stated 11 measures, including the liberalisation of approved permits for agricultural products like coffee beans and meat, so as to reduce the cost of daily necessities, while hardcore poor families will receive 20kg of rice every month in the MyBeras programme.

“We are not alone in facing the global economic challenges,” Najib said in a tweet.

“Other countries are also facing uncertain economic conditions #Bajet2016,” he added in Malay.

The prime minister announced that the sale of houses costing below RM300,000 will be limited to first-time house buyers.

For the public housing project involving houses that cost RM35,000, the government will offer, through Bank Simpanan Negara and Bank Rakyat, a financing package at a rate of 4 per cent for more than 10,000 homeowners.

The prime minister also said the government will increase the number of shops with affordable prices from 640 to 1,000.

The Federal Agricultural Marketing Authority will also open a market called MyFarm Outlet that will sell food 5 to 20 per cent cheaper than market price.

Source: TheMalayMailOnline.com

Renowned developer SP Setia Bhd is launching two new projects in Penang this year.

They are Solok Slim, the developer’s maiden project in Jelutong, and Isle of Palm in Setia Pearl Island, Sungai Ara.

Solok Slim consists of two 33-storey condominium blocks with a total of 550 units on a 2.15ha plot of freehold land.

The project to be launched in May offers units with a built-up area of between 1,036sq ft to 1,424sq ft with a price tag of RM750psf.

SP Setia general manager (north) Ng Han Seong said the project was strategically located within the established town-ship of Jelutong with access to schools and colleges.

Speaking during a project briefing on Tuesday at the Setia Welcome Centre, SPICE in Bayan Baru, he said Solok Slim had a residence club and podium facilities including a guest lounge, multi- purpose hall, games room, kids’ playroom, gymnasium, reading room, sauna, pools and Jacuzzi.

Residents can also enjoy the use of a landscaped garden terrace, children’s playground, pre-function area, spice community garden, barbecue/party deck, basketball court, multipurpose court, yoga/ taichi deck, jogging track, water courtyard and outdoor dining pavilion.

Ng said the project had a gross development value of RM450mil.

The landscape, designed by an award-winning architect from Singapore, will have 112 different species of plants.

As for Isle of Palm, it is within a guarded community in Setia Pearl Island. It is a low-density development with only 30 three-storey semi-detached units.

Each of the homes comes with a land area from 2,880sq ft to 8,148sq ft and a built-up area from 2,155sq ft to 3,795sq ft.

The project, which has a GDV of RM70mil, has 17 designs for selection and the sales launch is set for March.

Source: TheStar.com.my

Movement in values in Penang’s secondary residential market remained stagnant this year due to a lack of transactions, says Raine Horne International Zaki + Partners Sdn Bhd senior partner Michael Geh.

Presenting The Edge/Raine Horne International Zaki + Partners Penang Residential Property Monitor 3Q2015, Geh says 1-storey terraced houses with built-ups of 1,200 to 1,600 sq ft in Sungai Ara and Tanjung Bungah appreciated in value from 3Q2014 by 2% to RM750,000 from RM735,000, and by 2.5% to RM800,000 from RM780,000.

For standard 2-storey terraced houses with built-ups of 1,300 to 1,800 sq ft, only those in Sungai Nibong saw average values rise by 4.5% to RM1.15 million from RM1.1 million. Two-storey semi-detached terraced houses there also appreciated by 2.8% to RM1.8 million from RM1.75 million.

Average prices of 2-storey detached homes in Green Lane also rose 2.8% to RM3.6 million from RM3.5 million in 3Q2014.

Only standard three-bedroom flats with sizes of 700 to 750 sq ft in Green Lane appreciated by 11.7% to RM380,000 from RM340,000, while average prices of standard three-bedroom apartments/condominiums (excluding luxury types) of over 900 sq ft in Island Park/Glades inched up 2.1% to RM480,000, from RM470,000 in 3Q2014.

Meanwhile, in the rental market, only two types of properties in three locations showed slight increments. The average monthly rent for standard 2-storey terraced houses with built-ups of 1,300 to 1,800 sq ft in Green Lane inched up to RM1,500 from RM1,400 per month. Meanwhile, average rents of 2-storey semi-detached houses with built-ups of 3,000 to 4,000 sq ft in Island Park and Sungai Dua rose slightly to RM1,800 from RM1,700, and to RM1,400 from RM1,300 per month.

Penang Transport Master Plan

According to Geh, there were few significant launches in the third quarter of 2015. The reason was attributed to many developers deferring the release of new projects due to an unnaturally long delay in receiving their advertising permit and developer licences.

This delay — seen over the past 12 months — has affected the number of transactions as fewer sale and purchase agreements were signed, which in turn caused the property market’s statistics to be “abnormal” for 2015, says Geh.

However, he notes that real estate agents appointed as marketers for these delayed projects have been out and about gathering expressions of interest.

“From what I observe, the demand is still strong. The projects are oversubscribed by more than two times. This means the optimism and demand is still there. It’s just that [prospective buyers] cannot sign the agreement,” he says.

However, the proposed RM27 billion Penang Transport Master Plan (TMP) has partially helped to make up for the lack of excitement in the primary market. Geh describes the plan, which integrates travel by land and sea, as well thought out, purposeful and very much a “people’s plan” that will benefit Penangites as a whole.

He adds that it is a “people moving system” as the light rail transit (LRT) component in particular will bring the island and the mainland closer in terms of physical distance and property prices.

“This additional link will be a catalyst to turn not-so-popular areas into viable development areas because with the LRT, people can then move from one place to another with ease without worries of traffic jams and transport issues,” Geh says.

The LRT on the island is expected to start from Komtar in Georgetown all the way to the Penang International Airport at Bayan Lepas, with 26 stops proposed.

The LRT will link with a sea-crossing track to the mainland. Interchanges are proposed at Gelugor on the island and Taman Supreme on the mainland.

On the mainland, commuters can switch to the proposed Raja Uda-Bukit Mertajam Monorail, which will have 22 stations from Sungai Dua in the north of Seberang Perai to Permatang Tinggi in the south. Notable stations include Alma, Bandar Perda, Sunway Carnival Mall and Penang Sentral.

TMP delivery partner SRS Consortium Sdn Bhd recently proposed two more rail lines recently. These include two monorails from Paya Terubong to Komtar and Tanjung Tokong UDA Flats to Komtar.

Geh believes that the TMP will effectively cool the island’s overheated property market as people will be able to live on the mainland and travel easily to and around the island.

“This connectivity and easy accessibility will result in equitably priced properties both on the island and the mainland while relieving the heavy pressure on prime property sites on the island,” he says. “Housing prices will be more equitable throughout the state, instead of being imbalanced like it is now. There is currently more demand for housing on the island compared with the mainland.”

He suggests that the Penang International Airport be expanded to accommodate wide-bodied jets. This will enable long-haul flights and direct flights to land there.

“We should allow for direct flights from Sydney, Melbourne, London, Beijing, Taipei, Manila and Dubai,” Geh proposes.

He notes that as a major airport that already sees six million passengers annually, it should be upgraded to allow more direct flights to further boost passenger numbers and the state’s tourism sector and investments.

“An expansion of the airport will also complement the TMP, along with the proposed land reclamation near the airport,” he says.

Source: TheEdgeProperty.com.my