Surge of development in land-scarce Penang has come at a cost.
A drive from the city centre along the northern coastal road in Penang takes you through Tanjung Bungah and Batu Ferringhi. Twenty years ago, the view was breathtaking – the clean sandy beaches on one side and the lush greenery and hills on the other.
The beaches, despite being popular with swimmers, are not what they used to be. The crystal clear waters of yesteryears are no more. Years of soil being washed down by development have somewhat sullied the waters, On the other side, high-rise condominiums have replaced the greenery. Hills have been cut and there are vertical towers of concrete in place.
When night falls, only handful of units in recently-built condominiums are lit up. It’s a mini-version of a ghost town where there’s activity in only a small percentage of dwellings. Most are empty – unoccupied. But they have been purchased. “To Let” signs are sparse. Who is the dude who has more than RM1 million to spare by leaving his pad unoccupied?
The fact that property prices in Penang have sky-rocketed is acceptable because as an island, there’s little land, especially on the eastern side. But this increase has now led to unaffordable housing for the general masses.
So, who is buying up the luxury condo units? Foreign purchasers make up only 8%. There’s on school of thought that Penangites who migrated are returning and putting their savings on property.
Then, there’s this reasoning that this group is returning because they see the difference in governance after the March 2008 elections. They see the state run efficiently without any corruption and they feel confident in putting their money in Penang.
But almost everyone points the fingers at speculators who are pushing up the price. Town planner and theSun columnist Dr Goh Ban Lee is among them and he is hoping the bubble will burst. The feelings of the Penangites are easy to understand.
Having lived all their lives on their own haven, they feel the influx of speculators is destroying what they view as “easy, laid-back style of life.”
The condos, they argue, have destroyed the peace and quite of Penang where houses had large compounds instead of closeted boxes high up in the air.
Speculators, one doctor volunteered are drawn by greed and quick returns, And the small property gains tax introduced in 2007 is one of the causes.
With only 5% to be paid as tax, it makes it viable for speculators to make a killing. Says the doctor: “If you put RM50,000 in down payment for a unit costing RM1 million (and that’s what developers are asking), you can make a quick profit after two years.
“If you invest RM500,000 in 10 units and the price goes up to RM1.2million per unit, you make RM2 million and pay a small percentage in taxes. This is the biggest attraction.”
But who is willing to pay 20% above the developer’s price? There are many who still see no end to the price hike and continue to “invest”.
But the outcome depends on market conditions – demand and supply. It appears that demand exceeds supply, hence the large interest. But when units stay empty and buyers are unable to service the loan, are we looking at something we have never seen before?
Most Penangites are hoping for something like that. Most are thinking on the same lines as Dr Goh – hoping that the bubble will burst and everyone will come down to earth with a thud to reality.
Too Many Plans, too little options
Development on Penang Island is governed by the Pelan Dasar Perancangan – Kawalan Pemajuan (Planning Policy Plan – Control of Development) which was adopted by the State Planning Committee chaired by the chief minister in 1996.
Prior to that, the authorities had relied on the Pelan Dasar which was adopted in 1985. In 2007, the state government launched the Penang Structure Plan which outlined development for the entire state including the mainland.
In 2007, the Penang Island Municipal Council (MPPP) drew up the Local Plan for sustainable development on the island. This was submitted to the state government for review and subsequent public display to get feedback and comments from the public.
However, the state delayed the review pending issues related to heritage matters.
The delay in approving the Local Plan, says Chief Minister Lim Gua Eng, is to incorporate a Local Area Plan for Georgetown is that there will be no conflict after approval or variation by Unesco which declared the city as a World Heritage Site. He expects this to be finalised by the end of the year.
In 1996, there were no requirements for Environmental Impact Studies and other necessities, but in 2002, the federal government introduced a ruling barring development above 500 feet (152.4m).
Not withstanding this, the 2007 Structure Plan limited development to 250 feet (76.2m) and hillside gradient of 25 but with an important caveat – planning permission will be given in special cases.
Immediately after publication of the 1996 Plan, there was a lot of trading of land including plots on hills slopes. Many had bought plots based on the zoning in the plan and were issued titles zoned as “residential”. Ever before this, bungalows had already been built on hills and purchasers felt that there would be no problems in building their own homes.
Then came the building boom at the turn of the millennium. Developers bought land where they could put up high-rise buildings to get maximum returns. It was not just land on hill slopes but also in the Tanjong Bungah and Batu Ferringhi areas.
MPPP president Patahiyah Ismail says although approvals were given, there was enough enforcement to ensure developers comply with the conditions imposed by the council.
In 2008, she says, five “stop work” orders were issued to developers in the Baty Ferringhi are. And, of course, the developers will fight tooth and nail to get the orders lifted.
Even when the council turns down planning applications, they can turn to the state appeals board which adjudicates.
There has been at least one case where the decision of the council was overturned on appeal. Two other appeals are pending.
Development per se may not be the bane of residents and environmentalists, but the scales, some say, is beyond what is acceptable. Bungalows may be suitable but the main complaint is the number of high-rise buildings in the pipeline.
It all boils down to density which is divided into low (six units per acre); medium (seven to ten units per acre) and high (more than 30 units per acre).
Patahiyah says several factors are taken into account including the existing infrastructure and where it does not meet the requirements, developers are compelled to build access roads, drains, etc.
“We also impose stringent conditions to prevent flow of water, erosion and ensure that there is no damage to the environment,” she said.
The photographs that have been published in various newspapers showing a portion of the hill slope stripped bare, she explained, was an abandoned project. Since work had stopped abruptly, the council was unable to do anything except carry out periodic inspections to ensure there is no erosion which could cause a landslide. – The Sun