The scarcity of land on Penang island have caused residential property prices to soar over the past five years. Let us take a closer look at the trend and examine the areas where property developers are cashing in.
Property prices on Penang island are among the highest in Malaysia, according to real estate valuers. A recent press report revealed that prices for condominium units in Batu Ferringhi, Tanjung Bungah and Gurney Drive are starting from RM2 million for units measuring 1,000 sqft.
According to Michael Geh, director of Raine & Horne Malaysia, the increase was among the steepest in the Pulau Tikus, Gurney Drive, Tanjung Tokong and Tanjung Bungah residential neighbourhoods, which experienced a rise of over 25% in prices. In areas such as Bayan Baru, Sungai Ara, Minden Heights and Batu Maung, prices of condominium units and terrace and semi-detached houses have also increased by at least 25%.
Geh pointed out that the medium-range housing schemes in George Town neighbourhoods of Perak Road, MacCallum Street, Burmah Road, Jelutong Road and Sungai Pinang have also experienced a similar price increase over the past five years. Although this has driven many people to buy homes in Seberang Prai, where prices are a third of those on the island, Geh observed that prices of property on the mainland are rising as well. As such, he believed that property prices in Penang will continue to rise given the rise of raw materials prices and the scarcity of land.
More to Come
Despite the tightening of housing credit by banks, some RM6.463 billion worth of residential and commercial properties are about to be executed by Kuala Lumpur and Penang-based developers on the island and mainland in the second half of the year and 2013.
Among the developers with plans for new housing projects in Penang are SP Setia Bhd, IJM Land Bhd, Mah Sing Group Bhd, Sunway Bhd, Ideal Property Development Sdn Bhd and Ivory Properties Group Bhd. About RM6.105 billion worth of projects are located on the island, comprising mostly high-rise projects, with the remaining RM358 million being planned for Seberang Prai, to be undertaken by Sunway and IJM Land in the second half year and 2013.
As land is still available in the South-West district, areas such as Sungai Ara, Batu Maung, Bukit Jambul, Sungai Nibong and Teluk Kumbar continue to be popular with developers such as SP Setia, Sunway, IJM Land and Ideal Property.
Due to rising land cost, Datuk Jerry Chan, chairman of the Real Estate and Housing Developers’ Association (Rehda) Penang, believed that the trend of development on the island will be towards high-rise developments. He stated that the state’s economic status was still sound, which is the reason developers continue to launch new projects.
The stability of raw material prices is another contributing factor, according to Datuk Finn Choong, executive advisor of the Penang Master Builders’ and Building Materials Dealers Association. “By launching their projects now, developers can lock on to the present prices of construction materials for their projects. This means developers can price their properties within the affordable range of RM400,000 and RM500,000,” he said, adding that a number of the projects planned for launch in the South-West district this year and next year are priced within this range.
Since 2010, the price for both residential and commercial properties in Central Seberang Prai has appreciated by about 20%. In Seberang Prai itself, the value of properties continue to rise as the second bridge is scheduled to be completed soon.
In the second half of 2012 and in 2013, SP Setia plans to undertake RM1.288 billion worth of properties in the South-West district, in addition to RM1.275 billion worth of projects, consisting of a RM1.1 billion mixed-development project in Tanjung Bungah and a RM175 million condominium project in Sungai Nibong.
These projects include the RM250 million Setia Triangle, a commercial cum residential scheme in Sungai Ara, the RM335 million Setia Greens 2 in Sungai Ara and a RM53 million condominium project in Teluk Kumbar. Next year, SP Setia plans to launch the Wave and Breeze condominium projects for Setia Pearl Island in Sungai Ara, with a GDV of RM350 million and RM300 million respectively.
Similarly, Penang-based Ideal Property Sdn Bhd plans to launch residential and commercial projects with a collective GDV of RM1.1 billion for the South-West district, starting with the RM400 million Imperial One project in Sungai Ara comprising 768 units of condominiums.
The company also plans to launch the first phase of the Ideal Vision Park, a RM1.5 billion mixed-development scheme, early next year. The first phase comprises RM300 million worth of high-rise residential and commercial properties, followed by four more phases that will be launched in stages in 2014 and 2015.
By year end, IJM Land plans to launch the RM85-million Trehaus scheme, comprising 26 semi-detached properties and 46 villa condominiums, in Bukit Jambul. It also plans to launch the RM350-million Light Collection III, comprising 190 condominiums and duplex townhouses, in the North-East district.
Ivory Properties Group Bhd plans to follow suit by launching about RM1.6 billion worth properties on the island in the next few months. These projects comprise the first phase of Bayan Mutiara, the third and fourth phases of the residential towers for Penang Times Square, a RM130-million condominium block in Batu Ferringhi, and the RM400-million City Mall and City Residence project in Tanjung Tokong.
In line with its target to focus on residential properties priced below RM1 million in Penang, Kuala Lumpur and Johor, Mah Sing is planning to launch RM180 million worth of low-rise condominiums in the Batu Ferringhi tourist belt later this year.
Over in Seberang Prai, some of the upcoming projects include the RM185-million Sunway Wellesley by Sunway, comprising residential and commercial properties, and the RM173 million Permatang Sanctuary scheme, comprising 300 semidetached and bungalow properties. – iProperty