The immediate outlook of Penang’s property market will be challenging amid difficulties in the global and national economic environment, said property services firm Knight Frank Malaysia in its latest report.

In its Real Estate Highlights report, the firm noted that the total volume of transactions for all sectors in Penang for 2015 registered a drop of 15.6% against 2014 while total value, likewise, fell by 15%.

Of this, residential transactions — which comprised 70.9% of transactions — saw volume fall by 16.9% and value fall by 18.5%.

The residential sector is expected to soften and consolidate further on increasing supply and poorer take-up rates, said the report.

Zooming in on the luxury high-rise segment, Knight Frank Malaysia noted that there were not many transactions for units with built-ups from 3,500 sq ft to 6,000 sq ft in the subsale market in 1H2016.

Of the units that were sold, units at The Cove in Tanjong Bungah fetched RM446 psf and RM626 psf, while other units in the area were sold for up to RM793 psf, said the firm.

Meanwhile, smaller subsale units at Gurney Paragon fetched RM808 psf to RM1,150 psf while at the Quayside in Seri Tanjong Pinang, subsale units were sold for RM768 psf to RM1,138 psf.

Meanwhile, asking rents dipped from 2015, with larger units in Tanjong Bungah typically asking for RM1.10 psf to RM2.30 psf, although some landlords are still seeking RM2.80 psf to RM2.95 psf.

At Gurney Drive, asking rents for units with larger built-ups range from RM1.80 psf to RM2.60 psf, while most smaller units have asking rents of RM2.20 psf to RM2.90 psf, although some landlords are asking for RM3.50 psf to RM4.40 psf.

On the other hand, the Penang office market has plateaued with occupancies generally stable, despite the fact that there is no new incoming supply.

According to the report, the existing supply of office space (buldings with 10 storeys and above) on Penang Island remains at 2H2015’s level of 5.59 million sq ft.

The occupancy rates for the four prime office buildings monitored in George Town remain at 2H2015’s level, ranging from 80% to 100%.

Meanwhile, current asking rents for older buildings also remain at 2H2015’s rates, from RM2.80 psf to RM3 psf. However, rent at Hunza Tower, which is fully occupied, is RM3.50 psf.

Going forward, Knight Frank notes that landlords of secondary buildings are expecting pressure from tenants to suppress rental rates.

In Penang’s retail subsector, prime shopping malls are seeing ground floor retail lots command RM13 psf to over RM35 psf, depending on the mall, location and unit size.

Occupancy rates for the prime shopping malls on the island range from 80% to 98.5% while secondary shopping malls generally range from 70% to 90%.

Knight Frank Malaysia reckoned that prime malls are still performing well, but they will not be completely immune from the effects of the weak economy.

Hence, occupancies and rental rates will also come under downward pressure, while secondary malls will face even greater challenges.

Source: TheEdgeProeprty.com.my