Property prices in Penang have risen by leaps and bounds since about seven years ago. The announcement of the second bridge in Penang in late 2006 is a key reason for the increase in property prices.
Raine & Horne Malaysia director Michael Geh said that the price of vacant land on the island has increased from around RM250 per sq ft to RM300 per sq ft in Batu Maung. This southern part of the island where the second bridge is located could fetch about RM50 per sq ft to RM60 per sq ft prior to the announcement of the second bridge in late 2007. Geh pointed out that the pricing depended on whether the land had been zoned for agriculture, commercial or residential use.
For landed properties, new two- to three-storey terrace houses now cost from RM1.2mil south of the island, compared with about RM450,000 prior to the announcement.
“The new condominiums in similar locations are now priced at RM700,000 to RM800,000, compared to RM250,000 to RM300,000 prior to the announcement.
“In the prime locations of the north-east district such as Tanjung Bungah, Tanjung Tokong, and Pulau Tikus, the pricing of new lifestyle high-rise unit starts from RM800,000 onwards, about RM400,000 prior to the announcement,” Geh said.
The sub-sales market in 2013 saw the highest transaction for a landed property at RM4mil for a 5,000sq ft semi-detached house with a land area of 3,800sq ft in Tanjung Tokong. Terraced properties sold in the sub-sales market in 2013 saw the highest transaction at RM1.8mil for a 2,700sq ft linked home with a 1,900sq ft land area in Tanjung Tokong. Property prices in the sub-sales market are about 10% to 15% more than two years ago, Geh said.
“The highest transaction for a condominium in the sub-sales market in 2013 was RM1,200 per sq ft. This was for a 1,200sq ft lifestyle condominium in Tanjung Tokong.”
In Seberang Prai, Henry Butcher Seberang Prai associate director Fook Tone Huat said vacant land prices in Seberang Prai, especially those in South Seberang Prai where the second bridge is located, is now hovering at RM40 per sq ft to 50 per sq ft, compared to RM8 per sq ft to RM9 per sq ft prior to the announcement of the second link project in 2006.
In Central and North Seberang Prai, the land prices then were between RM20 per sq ft and RM40 per sq ft. Now, the land prices in the prime locations of Central and North Seberang Prai are priced between RM50 per sq ft and RM100 per sq ft.
“New landed properties such as double-storey terrace units in South Seberang Prai are now priced between RM350,000 and RM400,000 compared to between RM150,000 and RM200,000 prior to the announcement of the second bridge,” Fook said.
In Central and North Seberang Prai’s prime locations, the prices for double-storey terraced are between RM400,000 and RM600,000, compared to between RM200,000 and RM270,000.
“We are also seeing a lot of lifestyle condominium projects being planned for development in Bukit Mertajam this year. The pricing of new condominiums in Seberang Jaya and Bukit Mertajam in Central Seberang Prai hover around RM300 per sq ft,” he said. As for the secondary or sub-sales property market, the prices for double-storey terraced houses hover around RM250,000 to RM500,000, depending on the location. “The landed properties in the sub-sales segment command the best pricing in Bukit Mertajam and in Butterworth town. The pricing of condominiums in the secondary market hover between RM250 per sq ft and RM300 per sq ft,” he added.
Property market outlook
Fook said the volume of property transactions in Seberang Prai is expected to soften this year, largely due to the difficulty in obtaining housing loans. “There will definitely be fewer transactions this year compared to approximately 12,000 registered in 2013. Since January, we have seen fewer enquiries for primary and secondary market properties, as the rejection rate of housing loans is currently hovering at about 60%.
“Property prices are expected to remain more or less the same as last year,” Fook added.
According to Geh, prices of properties in the secondary segment would remain stable, while those in the primary market might soften slightly. “Property prices will soften this year, unless Bank Negara changes its housing loan policies. There will definitely be a dip in the volume of transactions, due to the stringent loan conditions,” he maintained.
Besides the opening of the Second Penang Bridge on March 1, 2014, Seberang Prai is also drawing the attention of developers, as there are now plans to develop a RM200mil premium retail outlet known as Penang Designer Village and an integrated shopping mall, which will be anchored by an Ikea store.
PE Land Sdn Bhd will undertake the Penang Designer Village, while the integrated shopping mall with residential components will be developed by Aspen-Ikano.
Kuala Lumpur and Penang-based developers will undertake the development of RM4.559bil worth of residential and commercial projects in Penang amid a very challenging year for the local property market, which is expected to soften. Approximately RM1.862bil worth of residential and commercial projects are being planned in Seberang Prai, while the remaining RM2.697bil will be launched on the island.
The island, however, is seeing fewer residential property launches due to the growing shortage of land, higher land cost on the island, and a challenging property market environment, although the gross development value (GDV) of the projects launched on the island this year is still higher.
Developers with plans to undertake fresh projects include IJM Land Bhd (GDV of RM538.5mil); Mah Sing Group Bhd (RM280mil); DNP Land Sdn Bhd (RM800mil); Ideal United Bintang (RM935mil), a subsidiary of Wing Tai Malaysia Bhd; Tambun Indah Land Bhd (RM616mil), Sunway Bhd (RM290mil), S P Setia Bhd (RM300mil) and Eastern & Oriental(E&O) Bhd (RM800mil), MTT Properties & Development Sdn Bhd (RM250mil) and Ivory Properties Group Bhd (RM2.76bil).
Ivory Properties Group Bhd and Tropicana Corporation Bhd have also formed a joint venture company called Tropicana Ivory Sdn Bhd to develop Penang World City, an integrated waterfront development with a GDV of RM10bil.
Renowned developer, BSG property, with huge land banks in Penang is still embarking on projects despite the cautious market sentiment as its projects are mainly located in prime locations. In Seberang Prai, the biggest projects planned so far are DNP Land’s RM250mil BM Mahkota and the RM550mil Jesselton Hills landed property scheme in Bukit Mertajam and Tambun Indah Land Bhd’s RM616mil new landed property launches in Bukit Mertajam and Pearl City in Simpang Ampat, South Seberang Prai.
IJM Land will be launching RM236.5mil worth of properties comprising double-storey houses in Jawi, South Seberang Prai and double-storey linked bungalows in Bukit Mertajam, Central Seberang Prai as well as what is said to be the most expensive villa in Penang.
Sunway Bhd also plans to launch some RM150mil worth of residential and commercial projects for the second phase of Sunway Wellesley in Seberang Prai, a mixed-development project in Bukit Mertajam at the end of this month while the RM60mil third phase, comprising resort condominiums, will kick off in Oct 2014.
Sunway Bhd general manager Tan Hun Beng said it will be launching properties in Seberang Prai as the lower land prices allow the group to price its properties affordably.
DNP Land (North) general manager K.C. Tan said that the exclusive landed property scheme will feature the first high-end condominium project for Bukit Mertajam with over 200 units of semi-detached and terraced houses in Jesselton Hills, Alma.
Tan said the condominium scheme, known as BM Mahkota, has a GDV of RM250mil, while the GDV of the Jesselton Hills landed properties is about RM550mil.
“The projects are strategically located in between the first and second bridges, and is close to Jalan Song Ban Kheng, a prime residential district. They are also surrounded by the Prai and Bukit Minyak Industrial Parks and Penang Science Park.
“We expect buyers to come over from Kedah, especially from Kulim High Tech Park, as Bukit Mertajam is the main connecting point beween Penang and Kedah,” he said.
Tan added that when the Aeon BM Department Store opens in mid-2014, the appeal of the projects will be enhanced.
“The Aeon BM Department Store, sitting on a 19-acre (eight hectares) site, has a 1mil sq ft of gross retail area,” he said.
On the island, Ideal United Bintang has planned the most number of projects to be launched this year. This includes approximately RM935mil of residential projects in the south-west district, which include mixed-development projects such as the RM265mil Solaria and the second phase of the RM220mil Ideal Vision park project. The second phase of the RM450mil Imperial residences residential project will also be launched.
The other sizable project is E&O Bhd’s RM800mil Andaman Edition 18 East condominium project, which will be launched in the first half of 2014.
IJM Land will introduce the RM125mil Trehaus@Bukit Jambul, comprising condominium villas and semi-detached villas in this first quarter, and a yet-to-be-named medium-and low-medium cost project, which have a GDV of RM177mil in the fourth quarter of 2014.
In the second half of this year, S P Setia will launch its RM300mil Setia Sky Vista, a condominium project in Relau. Meanwhile, Mah Sing will undertake the development of the RM280mil The Loft condominium scheme in Southbay City in Batu Maung, which has been launched this January. Sunway Bhd will kick off the third phase of the RM80mil Sunway Cassia comprising two-storey semi-detached and three-storey terraced houses in Batu Maung in June 2014.
S P Setia Property (North) general manager Khoo Teck Chong said the group is launching fewer projects this year because of the softening property market, due in part to banks tightening the loan conditions.
E&O marketing and sales head Christina Lau said the greater access afforded by the second bridge and a host of new investments pledged by multinational corporations were positive indicators for the state of Penang going forward. “E&O is fortunate to possess development land on Penang Island including Seri Tanjung Pinang 1 in Tanjong Tokong and over 300 acres at Gertak Sanggul and realising the development potential of these land parcels will keep us busy for several years to come.”
