Looking back at 2015

2015 was certainly a challenging year for property developers. Various cautionary signals continued to influence the market sentiments. This is evidenced by the consecutive quarter-on-quarter decline in the residential property transactions since 2013.

Figure 1: Average transacted price vs volume (residential property)

The decline in transactions was particularly obvious for residential property in the island. The total transactions in the Island for Q3 2015 by far the lowest in the past decade, a further sign that Penang Island’s property market has significantly cooled.

For home buyers and investors, the continued enforcement of cooling measures, tighter credit environment, the sluggish rental market and a various pessimistic economic factors were some of the main factors affecting their appetite.

Nevertheless, 2015 was definitely a good start for first time home buyers. There were plenty of affordable housing available in the Island; ranges from RM200k onwards. Moreover, some of these projects are strategically located within well-established township namely Georgetown, Tanjung Tokong, Sungai Ara and Tanjung Bungah. The first batch of affordable housing is slated to be completed by 2018.

While the overall sales data indicated some price correction and continuous softening in residential property market, a positive price trends is observed when we take a deeper dive into the 3 most common residential property types (condo, 2-3 storey terrace & semi-D) in Penang. [Figure 2]

Figure 2: Property sales data for condo, terrace and semi-detached.

Notably, the average transacted price for a condominium in north-east district of Penang Island registered a 19% quarter-on-quarter increase in Q3 2015. The average transacted price for a semi-detached house in south-west district also recorded a 14% increase in the same quarter.

On top of that, PenangPropertyTalk.com has also recorded a total of 1.61 million visits in 2015, a 37% increase over 2014. This is an indication that there are still strong interest for the property market in Penang but the affordability and sluggish economic factors has hold them back from buying one.

Property market outlook in 2016

Going forward in 2016, the market sentiments will be quite similar to 2015. As the cooling measures and economic situation do not look like they will be eased in the short term, coupled with an anticipation of more affordable housing supply, the residential property market, especially in the island, will remain over supply situation.

However, despite the fact that 2016 is slated to mirror the trends set in 2015, there is a high chance that buying activity may pick up towards the end of the year. This is due to the belief that prices would be corrected sufficiently by Q3/Q4, encouraging buyers to grab the opportunity and re-enter the market. This assumption is further supported by the growing engagement observed in PenangPropertyTalk.com.

Statistically speaking, upcoming mid-size condominiums located in the north-east District of Penang Island have invited the most attention from our readers, mainly coming from Penang, Kuala Lumpur and Selangor.

Affordable housing – The key growth driver

With the significant demand, affordable housing would be a key growth driver for residential property sector. But accessibility has become the main obstacle, mainly because commercial banks typically have a more stringent credit assessment for lower income groups, whose income is below the ‘viable’ threshold to ensure repayment. Many developers now need to resolve its housing inventory problem and driving expectations for more measures to address the affordable housing supply glut.

In 2016, more affordable housings are expected to be introduced by private sector, addressing the demand of such housing in other popular area of Penang Island. These area includes but not limited to Gelugor, Bayan Mutiara and Balik Pulau.

The combination of low-cost and easy credit is going to be the key to the success of affordable housing in Penang. The state government should also continue to introduce more measures to stimulate affordable housing development, striking a balance between demand and supply. This is to encourage a decent take up rate for viable execution, while avoiding speculation.

The potential of Mainland

Property prices in mainland has escalated significantly over the past few years. For those who has been focusing on the island would be surprised to find out that the prices of a landed property in mainland is getting unreachable now.

It has been my firm believed that the landed properties at prime location in mainland will continues to flourish as upgraders are looking for exclusiveness and a better lifestyle with lower price tag. EcoWorld has achieved 80% take-up rate for their 2-storey terrace houses in Eco Meadows is another indication that now more buyers are willing to pay higher premium for an exclusive living experience despite a less branded location.

Figure below shows the ratio of residential property transactions in Penang Island vs mainland since Q1 2012. The consistent decline in property translation ratio for Penang Island is an indication of a possible shift in Penang’s housing market, suggesting a growing potential in mainland.

Figure 3: Residential property transactions ratio (Island vs Mainland)

Upcoming areas to consider in 2016

For first time home buyers, there are plenty of affordable housing projects to choose from. If the existing options does not meet your requirement of a realistic lifestyle, keep a lookout on a few more upcoming affordable scheme located in Georgetown, Gelugor and Bayan Mutiara.

For those who has more budget, stay tuned for the upcoming condominium by SP Setia at Jelutong, and Queens Waterfront Residences by Ideal Property Group at Bayan Bay. These units are likely to be priced below RM1 million.

Over at the mainland, Penang Design Village will be ready towards the end of 2016 to fulfil your shopping needs. For upgraders with seven figures budget, wait till you see the upcoming zero-lot bungalow at Eco Marina by EcoWorld. You can also expect the launching of Vertu Resort Condominium by Aspen Group at Batu Kawan.

Certainly, these are just the tips of the iceberg. Most important, continue to follow us for more exciting updates in 2016!

Happy buying and investing… plan realistically, know your affordability and buy within your means.

– Ken Lim
(Founder, PenangPropertyTalk.com)

Glisten Hill, an upcoming high-rise development in Juru, Penang. This development is located along Jalan Juru, comprises 134 units of service suites. It is only a short drive from Juru Autocity, about 10 minutes drive to AEON Big hypermarket at Bukit Minyak.

Property Project : Glisten Hill
Location : Juru, Penang
Property Type : Service Suites
Tenure : Freehold
Total Units: 134
Built-up Area: (To be confirmed)
Indicative Price: RM 3xx psf. onward
Developer : SG Miracle Sdn. Bhd.

Location Map:

Penang Transport Master Plan (PTMP).

No choice but to reclaim land to fund transport plans in Penang

Over the past seven years, the DAP-led Penang government has had to endure criticism from various quarters over many of the changes introduced in the state.

Among them are the proposed undersea tunnel and highway projects and more recently, the proposal to reclaim more than 1,200ha for two man-made islands off the southern coast of Penang island to finance the ambitious Penang Transport Master Plan (PTMP).

Such projects are not without controversy. When the undersea tunnel linking George Town and Butterworth was proposed, it was criticised by non-governmental organisations (NGOs) and environmentalists worried about the project’s impact on the sea.

The same concern has now been raised by NGOs and fishermen in the south, who fear the massive land reclamation will destroy fishing and breeding grounds for marine life, and cause pollution in the sea.

Chief minister Lim Guan Eng (pictured, below) said the Penang government had thought of other options but it has no power to borrow money or raise bonds to fund the master plan.

“When we have something of this scale, RM27 billion, we have no choice,” he told The Malaysian Insider recently.

The PTMP is a comprehensive plan to create an integrated transport system for Penang.

It includes a rail network with light rail transit (LRT) and monorail lines, cable cars, buses, water taxis, and ferries, apart from highways.

Meant to drive growth in Penang up to 2050, the master plan will cover the entire state, introducing monorail lines connecting the George Town city centre to Air Itam and Tanjung Tokong, trams in the city, an LRT from Komtar to the Penang International Airport in Bayan Lepas, and another LRT line across the sea to Butterworth on the mainland.

There will also be a rail line and bus services connecting the districts in Seberang Prai.

In addition, there is a proposed cable car project to link the island and the mainland, to be implemented and completed by 2018 by transport hub Penang Sentral builder Malaysian Resources Corp Bhd.

Lim said the cable cars, when ready, would ensure faster travel of 15 minutes across the sea, and offers a “romantic” spectacle, especially after dark when lit by LED lights.

Enthusiastic about the big plans in the pipeline, he said locals on the mainland and a majority of the state population would be supportive of the master plan.

“Are we going to get cold feet just because some people oppose it? It will be a question of how we trade-off, but we are willing to trade our popularity for the future. We are going for broke,” he said.

It is not the first time the DAP-led state government has pushed forward a mega-project on its own without any financial backing from the federal government.

In the run-up to the 2013 general election, the state proposed the ambitious undersea tunnel project and three highway projects which drew objections from NGOs.

Faced with criticism, Lim told voters before the elections not to vote for his administration if they rejected the tunnel.

The opposition coalition was returned for a second term with the highest popular vote recorded in the state at 68%, 10% more than in 2008.

“We expect the federal government to continue to discriminate and to slowly constrict us like a python.”

Penang, he said, was now choked with traffic because it was a popular tourism destination, which has caused overcrowding at the Penang International Airport.

“We were expected to reach 6.5 million in passenger arrival by 2020 but we reached that number this year. The airport is like a pasar malam (night market), but there are no plans by the federal government to expand it at the moment.

“So we have this problem, and we are choked with congestion and choked of funds. Are we going to twiddle our thumbs, sit down and wait to die?”

Of the two islands proposed to be reclaimed for the PTMP, one is planned for the future expansion of the Bayan Lepas free industrial zone and airport.

The other is proposed for housing and the state administration centre.

Lim said any reclamation must pass the detailed environment impact assessment (DEIA).

He also said the state was open to suggestions of alternatives.

Asked if such land reclamation and land swap deals were more favourable to developers than the people, hence the remark that the Penang Pakatan Harapan government was a “pro-developer” administration, Lim said things were done differently now.

He said the state government’s formula of swapping reclaimed land was different from its predecessor’s because the state would still be calling the shots.

“When the land is reclaimed, it will belong to the state, not the developer. We will auction off the land. Under the previous government, developers reclaimed and the land belonged to them.”

Lim said the “pro-developer” accusation was “all slander” and “typical cheap politicking”.

When Aspen Vision Land was mentioned as example of a developer seen to be close to the state, Lim said it finally brought in Swedish furniture giant IKEA to the state which Penang folk wanted for a long time.

“Aspen bosses are also involved in the FAP (Football Association of Penang), and the state wants to develop Penang football. So we work closely with them. Football is also very important.

“But we have our own KPI (key performance indicator). We do everything by open tenders.”

Lim said the state government could make special arrangements if a developer could bring in something of quality like a university or big business like IKEA.

Source: TheEdgeProperty.com.my

If you are buying your first home in the South-West district of Penang, you may be interested to find out how are these two affordable housing projects compared to each other.

	Ramah Pavilion	One Foresta
Developer	M Summit Group	Ideal Property Group
Location	Teluk Kumbar	Sungai Ara
Standard unit size	800 sq.ft. – 1,355 sq.ft.	900 sq.ft.
Price psf.	RM247 – RM294	RM333
No. of carpark	1	1
Selling Price	RM198,000 – RM398,000	RM300,000
Upgrade packages	RM18,000 – RM25,000 600mm X 600mm Porcelain Tiles 4 Nos Inverter air-con points with copper piping Plaster glass ceiling 2 Nos Water Heater MS Grille Door 2 Nos Shower Screen & etc Additional carpark for RM30,000	(No feedback from developer)
Development land size	8.78 acres	11 acres
Land tenure	Freehold	Freehold
Total units	759	2334
Expected completion	2018	2019 (Estimated)
Highest floor	38	40
5 nearest schools	SJKC Yang Cheng (0.5km) SMJK Heng Ee (7.0km) SJKC Chong Cheng (9km) SJKC Wen Khai (11km) SMK Teluk Kumbar (3km)	Upcoming SJKC Shih Chung (0km) Straits International School (3km) SK Bayan Lepas (1km) SMK Bayan Lepas (2km) SK Mutiara Perdana (2km)
5 nearest eateries	Khunthai Restaurant (3.5km) Hai Boey Seafood (3.5km) Hao You Seafood (2km) Ayu Mee Udang (2km) Bukit Genting Leisure Park & Restaurant (3.5km)	Bayan Cafe (1km) Nasi Kandar Rahim (1km) Teluk Kumbar Seafood (4km) Khunthai (6km) Sungai Ara Food Court (3km)
5 nearest malls	Queensbay Mall (15km) Giant Hypermarket (10.5km) Sunshine Square (11km) BJ Complex (11.5km) Tesco Extra (14.5km)	Queensbay Mall (10km) Sunshine Square (6km) BJ Complex (8km) Giant (5.5km) Tesco (13km)
Web popularity (Past 90 days)	10,000 pageviews	19,000 pageviews
Travelling to (off peak) Penang Bridge 2nd Bridge Airport Komtar FTZ	16km (26 minutes) 12km (20 minutes) 8km (16 minutes) 23km (35 minutes) 13km (22 minutes)	11km (16 minutes) 8km (14 minutes) 3km (6 minutes) 18km (22 minutes) 7km (14 minutes)
Key highlights (by developer)	Low Density with 100% Affordable Homes only Affordable price with condo unit size and condo facilities Greenery landscape garden Refreshing environment Excellent scenery	(No feedback from developer)
	More about Ramah Pavilion	More about One Foresta

Current project by Ewein – City of Dream

Ewein Bhd’s (Ewein) unit, Ewein Zenith II Sdn Bhd, has inked a sale and purchase agreement (SPA) with Consortium Zenith BUCG Sdn Bhd (CZBUCG) to acquire a 1.79-hectare freehold land in Section 1, Bandar Tanjong Pinang, Penang for RM162 million.

In a statement, Ewein said RM16.2 million would be deposited as refundable deposit upon the execution of the SPA.

“The whole proposed acquisition shall be financed through a combination of internally-generated funds and bank borrowings.

“The final composition of the funding will be determined by the management of Ewein Zenith II at a later stage, and this will depend on the cost of funding and cash requirements of the company’s business operations,” it said.

Ewein Zenith II is a 60 per cent-owned subsidiary of Ewein Land Sdn Bhd, which in turn is a wholly-owned subsidiary of Ewein.

The remaining 40 per cent is held by CZBUCG, a construction company that was awarded the works for major roads project and the third link (tunnel) project in Penang by the state government for RM6.3 billion.

Ewein Deputy Chairman and Group Managing Director Datuk Ewe Swee Kheng said the land was strategic for the company’s future development, and located in a matured and established prime area for residential and commercial projects.

“The proposed acquisition is expected to be completed in the first half of calendar year 2016,” he said.

The company plans to embark on a residential and commercial property development on the land.

Source: Bernama