More growth expected as island sees new projects

The Penang housing market is expected to grow further in 2Q2011 as more new developments come up with expectations of high take-up rates.

Raine & Horne International Zaki + Partners director Micheal Geh says that in 1Q2011, the property market in Penang was positive, with strong take-up rates despite the recent hike in interest rates, which makes home financing packages less attractive than when the global financial crisis was at its height. This was when developers introduced innovative financing packages such as the 5/95 scheme (where property buyers only paid a deposit of 5% of the purchase price and paid the remaining sum upon completion of the property).

“There seem to be fewer marketing campaigns and promotional strategies by developers this year but even so, take-up for new homes seems pretty strong,” he says when presenting The Edge/Raine & Horne International Zaki + Partners Penang Housing Property Monitor for 1Q2011.
“This indicates strong market fundamentals or maybe there are few investment options besides property available in Penang or maybe even in the country,” he adds.

A number of new projects were launched in Penang in 1Q2011, including S P Setia Bhd's Reflections in Sungai Ara, which offers 317 condos with prices starting at RM416 psf. Some 80% of the units have been sold so far.

Also launched during the quarter was Meridien Residence by Reka Indah Development in Sungai Ara, offering 160 condos in a 30-storey block, with prices starting at RM380 psf. The built-ups ranged from 1,260 to 1,916 sq ft. These units too have seen an 80% take-up rate so far.

“We expect more vertical developments/luxury homes [condominiums] to come up around the island in the following quarters. Among the interesting developments to look out for in 2Q would be the luxury condominium Setia V Residence by S P Setia in Jalan Kelawei. The project is named after the V-shaped layout of the building, which offers full views of the famous Gurney Drive area,” Geh explains.

Meanwhile in Bayan Indah, GSD Land is offering Summerton, comprising two 17-storey blocks of condominiums with 300 units in total. Priced from RM400 psf, the leasehold project with 1,733 to 2,403 sq ft units is open for registration.

As tracts for development become scarce, property prices are expected to remain high.

Based on the 1Q2011 data presented in the monitor, properties in a number of housing developments sampled continued to see a rise in value. The highest price jumps from the previous quarter were for standard 3-bedroom apartments in Tanjung Tokong and Tanjung Bungah. Prices rose 7% or by RM20,000 from RM300,000 in 4Q2010.

Geh says the increases in these areas are due to the pull of commercial activity where Tesco and Straits Quay are located.

He also expects the planned relocation of Tenby International School from Gurney to Tanjung Bungah by S P Setia to attract investors to condominiums in these areas for rental yields and capital appreciation.

There were also slight increases in the property prices of 3-bedroom flats in Relau, Greenlane and Sungai Dua and Lip Sin Garden in 1Q2011. Geh says most of the affordable flats below the RM200,000 price range sampled offer better yields.

The 2-storey semi-detached houses in Sungai Nibong saw a 3.5% increase in value to RM880,000 in 1Q2011 while 2-storey bungalows in Minden Heights saw a 3% rise to RM1.75 million. Standard 2-storey terraced houses in Sungai Nibong also saw a 3% increase in value.

The rental market in Penang in 1Q2011 was generally stagnant except for 3-bedroom apartments in Batu Uban where there was an almost 4% increase from RM1,400 in 4Q2010, to RM1,450 in 1Q2011. Geh believes the lacklustre rental market in Penang is due to oversupply.

“The increase in the number of transactions does not represent demand for rental properties as many of the buyers are bulk investors or speculators,” he says, adding that he does not expect the rental market to move much in the coming quarter. According to him, one major concern on Penang island is traffic congestion.

With regard to George Town's Unesco World Heritage Site status, there was a display of a Draft Special Area Plan (SAP) of the city for public viewing recently. It was open for public comments and submissions as well as other inputs that will be included in a review of the Draft SAP before it is adopted and gazetted.

Geh says the proposed guidelines are for the management of the George Town Heritage site. The time given for feedback has ended and deliberations are going on to finalise the plans. The adoption of an SAP will ensure George Town retains its Unesco World Heritage Site status.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 860, May 30-June 5, 2011

SOURCE: The Edge Property