Penang’s property lure
Developers offer new products for investors and owner occupiers
SOME call it a correction, others a consolidation.
What is certain is this, despite the weak Penang market, Kuala Lumpur-based developers continue to allocate resources for Penang island and Seberang Prai on the mainland.
Considered as one of Malaysia’s key markets – the others being the Klang Valley and Johor – KL-based developers flocked to Penang several years ago when the going was good.
Today, with their accumulated land bank, they are launching fresh products to lure both local and overseas investors and owner-occupiers. Seberang Prai, where property prices on an average have appreciated about 5% from 2016, continues to attract investments from Kuala Lumpur-based developers.
Properties located in the prime locations of central Seberang Prai and southern Seberang Prai have remained stable since the property market started to slow in late 2014. This stability is attractive for investors within the country and from overseas.
Moving ahead, Raine & Horne Malaysia senior partner Michael Geh says the outlook for 2018 is expected to be soft.
“There are plenty of choices. Developers are still launching new products, although the pace has slowed.
“The good news is that Bank Negara has maintained its overnight policy rate at 3%, which will continue to make properties in the country attractive to overseas investors and maintain the stability of demand and prices in the local market.
“The recent state policy of allowing overseas investors to buy properties priced from RM500,000 in Seberang Prai will also encourage new property investments in the state,” he adds.
The popular addresses in central Seberang Prai are Taman Pauh in Permatang Pauh, Taman Sejahtera in Alma, and Taman Bayu Mutiara in Bukit Tengah. The second bridge project linking Batu Kawan in south Seberang Prai and Batu Maung in the southern part of the island has driven up property prices located at both ends of the bridge.
Henry Butcher Seberang Prai’s associate director Fook Tone Huat says a number of condominium projects are being planned in Prai this year with prices between RM350 and RM500 per sq ft (psf). Vacant land in Simpang Ampat and Batu Kawan in southern Seberang Prai where the second bridge is located, are between RM40 psf and RM60 psf, a huge jump from RM8 to RM9 psf some 11 years ago, before the 2008 global financial crisis.
So despite the slow market, the interest is still there which is good for Kuala Lumpur-based developers who moved north several years ago.
Eco World in Penang
Eco World Development Group Bhd expects its Penang projects to add 10% to its revenue for the fiscal year 2017 ending Oct 30, compared to about 5% in 2016.
“In 2018, the contribution should also be about 10%,” its general manager Chan Soo How says.
Eco World also plans to launch the Eco Horizon and Eco Sun projects on a 374-acre site, which has a collective gross development value (GDV) of RM7.76bil.
“The Eco Horizon project will be launched in the fourth quarter of 2017, while Eco Horizon in 2018.
“The projects feature landed residential properties within a gated and guarded community, priced from RM800,000 onwards. There will also be a commercial component for Eco Horizon,” says Chan.
Chan adds that Penang’s contribution to the group revenue may seem relatively small currently but this is expected to increase once the Eco Horizon and Eco Sun projects are launched.
Eco World currently has a condominium project Eco Terraces in Paya Terubong on the island and terraced projects Eco Meadows in Simpang Ampat on the mainland.
He says the group is happy with the sales achieved in Penang and believes that the right products and concepts will attract buyers.
“Eco Meadows was our first development in Penang, launched in 2015. The landed homes were sold out within three months. Eco Bloom, an integrated apartment project within Eco Meadows, also received good response at its launch last year,” he adds.
SP Setia’s expectation
SP Setia Bhd expects Penang to contribute between 8% and 12% to the group’s revenue for the 2017 financial year ending Dec 30 compared with 8% a year ago with the RM550mil Setia Sky Ville in Jelutong being its main sales booster.
Despite the weak sentiment, SP Setia has sold about half of it, its general manager (property north)
Ng Han Seong says.
“Generally there is still demand for reasonably priced property in good locations. Setia Sky Ville in Jelutong is easily accessible to various part of the island. It is also surrounded by many amenities such as schools, colleges, market, shops and medical centres,” he adds.
Ng says they have met their sales target, which have improved over 2016. He says there “isn’t any depressed market.”
“The market is going through some correction, which is quite normal when prices have peaked,” he says.
SP Setia currently has about 140 acres of undeveloped land on Penang island.
“We have several options and are studying the type of projects to launch in 2018. On the mainland, we have acquired 1,670 acres in Bertam, which is nearer to Penang island than Batu Kawan. We plan to launch the first phase of a residential project in Bertam next year. This will be announced when the time is right,” he says.
On future projects in Penang, Ng says SP Setia would design the homes to give the owners a lifestyle that enables them to relax and interact with the neighbours.
“In all of our developments, we offer well landscaped gardens and facilities for young and old in order to create a healthy life style and a community. At the same time, we always price our products competitively.
“With our land bank, we will have various type of products which we are confident that will meet market demands,” he adds.
E&O waterpark
Eastern & Oriental Bhd’s (E&O) senior general manager (marketing and sales) Wayne Wong says the group’s Penang projects have consistently contributed about 80% of its revenue in recent years.
“Penang is expected to remain our key revenue driver for fiscal year 2017 and beyond, especially with the realisation of the Seri Tanjung Pinang (STP) 2 project. Sales in Penang have been promising despite the soft market conditions.
“In March, 25 out of the last 35 units of Ariza Seafront Terraces in Seri Tanjung Pinang were launched. Of the 25 units, we sold 23. Ariza racked up sales of RM66.8mil out of a GDV of RM97mil.
“We are also releasing the final phase of 18 East at Andaman project, where limited premium units with sea views are currently available.
This signature E&O development boasts an outstanding 4.5acre waterpark and over five acres of lushly landscaped recreational space, on par with the best five-star hotel resorts worldwide.
“Next year will also see us continuing to channel our resources to realise our catalyst STP2 project. We are targeting to complete reclamation works for phase 2A by mid-2018, barring any unforeseen circumstances,” he adds.
IJM goes compact
IJM Land Bhd senior general manager (North) Datuk Toh Chin Leong says the group’s sales target in Penang is RM240mil for the current financial year ending March 31, 2018 or about 20% of the group’s revenue, which is the same as the previous financial year.
Toh says the Penang market is slow currently with investors staying on the sidelines while the market on the mainland is more active and consistent by comparison. Housing prices are generally higher on the island, he says.
Toh says IJM Land is planning to put RM474mil worth of projects on the island and the mainland in January 2018. It was relatively quiet where launches were concerned this year.
The projects it plans to launch next year are 3 Residence at Karpal Singh Drive on the island, the RM318mil 3 Residence condominium project, priced from RM565,000 and the RM156mil Sanctuary Ridge double storey semi-detached project in Bukit Mertajam, priced from RM730,000 onwards.
“The property market is cyclical. At this current moment, prices ranging from RM500,000 to RM800,000 are still moving.
“We are making our products more compact and flexible. This helps to lower the absolute price which will help buyers to overcome loan approval issues,” he says.
Toh says residential units within an integrated development will have better demand if the broadband infrastructure is well planned. People can work, live and play in one location, which will mean less travelling,” Toh says.
Mah Sing’s strategy
Mah Sing Group Bhd chief operating officer Seth Lim says Klang Valley projects will make up about 70% of the group’s revenue for 2017 financial year with the rest coming from Penang, Johor Baru and Kota Kinabalu.
Mah Sing will launch the RM140mil M Vista in October 2017, which is the phase 3 of its Southbay township in Batu Maung. It has six projects in Penang.
He reckons 2017’s Penang market has been soft compared to 2016. Nonetheless, on the whole, the group has managed to secure satisfactory sales volume despite the challenges.
Lim says the market is currently undergoing consolidation, with healthy mid to long term prospects due to strong fundamentals such as young population, stable employment and the continued development of public transport infrastructure.
In Penang, Mah Sing currently has a land bank of 75 acres with a combined remaining GDV and unbilled sales of RM3bil. This will be able to sustain the group’s growth in Penang for the next few years.
“Land in Penang, especially on the island are scarce. Therefore, we believe properties developed in strategic locations at affordable price points will have demand. We believe demand will continue to be strong for property buyers who are buying to own or buying for longterm investment,” Lim says.
He adds that the group recently acquired 10.89 acres of freehold land in Bukit Mertajam to develop a business park with an estimated GDV of RM150mil.
Aspen’s hopeful
Over in Seberang Prai, the development of Aspen Vision City in Batu Kawan by Penang-based Aspen (Group) Holdings Ltd is much anticipated.
Its first phase of the RM10bil Aspen Vision City comprises an IKEA store, Columbia Asia Medical Centre and commercial project Vervea.
Aspen (Group) Holdings Ltd president and chief executive officer Datuk M. Murly says the Vervea would be ready at the end of 2018 and IKEA is expected to open in the first quarter of 2019.
Murly says the group is also planning the RM350mil Viluxe Villa residential scheme, the RM238mil Vittoria Financial Centre, and the RM613mil HH Galleria in Aspen.
“The Viluxe Villa comprises 13 bungalow units, Vittoria Financial Centre will have several commercial blocks and HH Galleria is a mixed-development project with two condominium blocks, shop offices and retail spaces,” he adds.
The group is also planning for a shopping mall with a net lettable area of one million sq ft in Aspen Vision City. This will involve an investment of RM1bil. The mall is scheduled to open in 2020/21.