Despite being the second-smallest state in Malaysia after Perlis, Penang boasts the highest population density in the country. It is home to about 2,500 people per sq km on the island and about 1,000 people per sq km on the mainland.
When presenting The Edge/Raine & Horne International Zaki+Parners Penang Housing Property Monitor for 4Q2009 (the article appeared in City & Country, Issue 793, Feb 15 to 21, 2010), Mike Geh, director of Raine & Horne International Zaki+Partners (Penang), noted that the number of transactions for residential properties in Penang increased 5.4% y-o-y last year. More transactions took place in 4Q2009 than in the previous quarters combined, he said.
Geh believes that the confidence of property buyers in Penang remains shaky despite the improving economic recovery. As such, he predicts that there will not be an unexpected jump in transactions this year, although more first-time homeowners and those looking to upgrade their homes are expected to purchase properties this year.
Khor Boon Soo, executive director of KGV-Lambert Smith Hampton (Penang), believes that, as property investment is usually a long-term endeavour, this is a good time to buy and hold on to properties in Penang. Khor acknowledges that property prices on Penang Island have always been high, owing to the limited availability of land for development. “As such, property prices will continue to rise in tandem with economic growth. Experience has shown that investors who wait for prices to fall before entering the market often end up buying at much higher prices. Where the Penang property market is concerned, the sooner you enter it, the better.”
Which are the hot growth spots? Teluk Kumbar, Batu Maung, Bayan Lepas, Sungai Ara and Relau, say property consultants The Edge spoke to. In general, these areas stand to benefit from factors such as new infrastructure (for instance, the second Penang Bridge), the offering of modern and planned townships, as well as scarcity of quality development land on the island.
“The shortage of suitable development land on the island has pushed development southwards to previously undesirable areas such as Relau, Sungai Ara and Batu Maung,” Khor explains.
Khor says this former fishing village on the island is seeing rapid development. It has largely been cleared of squatters for a large modern and high-end residential development. VPC Alliance (Penang) Sdn Bhd director Kelvin Tan says one of the two growth areas in Penang is southeast of the island, from the Penang bridge interchange down to Batu Maung.
Given its proximity to the proposed Second Link, Mah Sing’s 86.7-acre Southbay project in Batu Maung is another major development that will change the landscape of Penang Island, says Tan. The first phase, comprising three-storey link houses priced from RM967,000, has been taken up, he notes. However, some bumiputera units remain unsold, he adds.
Similarly, Chan Wai Seen, director of JS Valuers Research & Consultancy Sdn Bhd, adds that the Teluk Kumbar/Batu Maung areas can be high growth locations, owing to their proximity to the second Penang Bridge. At present, notes Chan, there are limited large and properly planned townships in the area.
While Batu Maung is separated from the main Bayan Baru township by the airport, Khor believes that it now benefits from the Sungai Nibong-Jelutong Coastal Expressway, which provides fast and convenient access to George Town and the inner city. Like Chan of JS Valuers Research & Consultancy, Khor points out that the second Penang Bridge, which will link Batu Maung to the mainland, will be a major contributor to its potential.
Sungai Ara/Relau and Teluk Kumbar/Bayan Lepas
Shawn Ong K B, vice-president of asset valuation at Henry Butcher Malaysia (Penang), favours areas such as Sungai Ara/Relau and Bayan Lepas/Teluk Kumbar. He observes that there is still plenty of land for future development. “Owing to the scarcity of land suitable for development within and on the fringes of George Town city over the past few years, many developers, such as Mah Sing have shifted their developments to the southern part of the island,” notes Ong.
The Sungai Ara/Relau area and the Bayan Lepas/Teluk Kumbar areas are also blessed with good infrastructure, notes Ong. “For example, they are near Bayan Lepas Airport, easily accessible via the Bayan Lepas Expressway, and close to all amenities, such as the existing Penang Bridge and future second Penang Bridge.”
The interchange will be connected to the Bayan Lepas Expressway and will be near Batu Maung/Bayan Lepas Industrial area, says Ong.
Ong points out that in these areas, a freehold double-storey terraced house would cost RM550,000 to RM650,000, while a leasehold one would cost RM300,000 to RM350,000. Meanwhile, a freehold double-storey semi-detached house is priced at RM700,000 to RM850,000, while a leasehold equivalent would cost RM400,000 to RM500,000. Freehold condominiums of 1,000 to 1,300 sq ft are priced from RM220,000 to RM350,000.
Simpang Ampat, Bukit Tambun
On the mainland, Khor of KGV-Lambert Smith Hampton (Penang) believes that the area around Simpang Ampat/Bukit Tambun/Valdor in the South District of Province Wellesley (Seberang Prai) shows great potential for high growth. Tan favours the Simpang Ampat-Tambun-Batu Kawan area. However, he notes that the developments are mainly carried out by local (mainland) developers, as opposed to developments on the island, which are carried out by KL developers.
Khor says the Simpang Ampat/Bukit Tambun/Valdor locality, which lies at the end of the second Penang Bridge, will benefit directly from the new accessibility afforded by the link. “As land and property prices on the island are much more expensive, developments will eventually spill over to the mainland,” he predicts.
This is an excerpt of an article that first appeared in the May 2010 issue of Personal Money
This article was written By Lim Siew May of The Edge Malaysia