I&T Penang Properties Blogs

1. More new property launches - More housing projects are being slated for launching in the second half of this year by established developers in Penang as there is growing optimism amongst housing developers and market players on the recovery of domestic economic and improving market outlook on the property sector. Read more at Penang gears up for more property launches.

2. Property transactions on the rise -According to NAPIC’s press release, there is an increase of 16% in terms of number of property transaction in 1^st Quarter 2010 compared to the corresponding quarter in year 2009 whilst the total transaction values surged significantly, almost 49% from RM16.92bil to RM25.5bil. It is projected that the rise on the property transactions and total values are likely to continue for the forthcoming quarters. The overall property market performance this year is expected to be much better than year 2009 which have been marred by the world financial crisis.

3. Rebound in market demand -The rebound in market demand experienced by the Penang Property sector in the first half of this year is mainly attributable to the pent-up demand after a period of subdue market activities brought about by the impact of the world financial crisis.

Recent reports of higher take up and improving sales performances experienced by Penang’s established housing developers indicates that the market demand has indeed picked up and the demand trend is likely to remain firm in the short term as property investors are flocking back into the property market in anticipation of buoyant economic outlook as well as further price increase following the recent government’s move to implement gradual removal of subsidy on energy and raw materials.

Another factor that could fuel the buoyancy of the property market is the recent strong performance of the Bursa Malaysia KL Composite Index which have recovered over 1,400 points. The stock market has made substantial gains this year and this could boost the property sector.

A local research fund house predicted that Malaysia’s property sector is set to see its biggest residential boom in a decade. The property sector was already entering the early stage of a property “super cycle”. More at OSK bets on Malaysian Property boom.

The Economic Clock - Malaysia’s property sector is currently at the stage of 9 - 12

4. Rising home prices - There is a growing concern that home prices are getting costlier due to the cost push factor as most of the newly launched projects appeared to be in the category of upmarket segment offering luxury housing units.

Penang Island is facing very limited land bank for housing development particularly medium cost housing units and landed homes. With limited supply in land bank, land costs on the Penang Island keep rising and inevitably push up home prices to unprecedented range that go beyond the affordable levels of the majority of the island’s population. A Penang politician MP has recently voiced his concern on rising home prices and has urged the housing ministry to relook into the present housing policy. In the meantime, more parties are urging the state government to review and address the housing issues in Penang which may have an impact on brain drain of Penang employment. The rising prices of homes, if left unchecked, may result in gentrification. Urban gentrification is a phenomenon on socio-cultural changes in an area resulting from wealthier people buying up the housing units in a less prosperous community area.

Many consider property, be it a landed home or stratified condominium unit, is a big ticket item which involves high capital and long term commitment, so the question of whether is it better to buy or rent is very much depends on one’s financial affordability and needs. www.intproperties.com looks into the advantages of owning a home versus renting.

Advantages of home ownership

i) Provide stability and certainty of stay for your family;
ii) Benefit of security and pride of home ownership;
iii) Freedom on choices of usage ie. for self-occupation or weekend second home or rent out;
iv) Built equity of your own home. Instead of paying rental monthly, you make repayments to the banks and gradually building up your home equity and ultimately owning the property after you redeem the property.
v) Hedge against inflation. Owing to the scarcity of landbank earmarked for new developments and growing population, demand for quality and affordable housing in established areas in Penang remains high which leads to higher home prices. In addition, the cost to build new housing stock continues to rise due to inflationary factor.
vi) Tax relief. Malaysians are eligible for tax relief of up to RM10,000.00 a year on loan interest payment to finance the purchase of property for three consecutive years subject to conditions that it is limited to one residential home for own occupation( not for rental) and the sale and purchase agreement is signed between March 10 2009 and December 31 2010. Besides, the government has further relaxed the EPF housing withdrawal guidelines beginning of January this year to encourage more Malaysians home seekers to own houses.

Advantages of renting

i)a cheaper and affordable way (less upfront costs) as you only need to come out with deposit payments equivalent to 3 months rental of which the security and utility deposits are refundable;
ii) Faster move in time unlike property purchase which takes 3-4 months to complete the deal and hand over the property.
iii) option of choosing length of stay according to tenant’s need ie. monthly or yearly tenancy ;
iv) No need to bear documentation costs such as legal fees for preparation of sale and purchase agreement and loan documents and stamping charges in connection with home ownership transfer and yearly taxes like assessment rates and quit rent.
v) No need to bear maintenance charges and structural repair costs either as these costs are also to be borne by the landlord.
vi) flexible of being relocated without having to worry about the empty home!

Recommended blogs on the advantages and disadvantages of Buying versus Renting, go to Renting vs Buying a home or Buying vs. Renting.

Whether renting is better than buying depends on many factors, including how fast prices rise and how long you will stay in your home. And now there is a new method rent-buy interactive calculator to compare the costs of buying and renting equivalent homes.

The methodology of the calculator keeps a running tally of the most common expenses of owning and renting. It also takes into account something known as lost opportunity costs — for example, the return you could have earned by investing your money instead of spending it on a down payment. The calculator assumes that the profit you would have made in your investments would be taxed as long-term capital gains and adjusts the bottom line accordingly. The calculator tabulates lost opportunity costs for all parts of the buying and renting scenarios.

This rent-buy interactive calculator allows home seekers to do their own comparisons on renting versus buying whereby you can i)  adjust the annual home price change and annual rental rates according to local market conditions  and ii) change inputs or variables such as your rate of return on investments, condo/common fees and your tax bracket to find out whether the buying is better than renting or otherwise!

Whilst no one can accurately predict the future pricing/rental trend of the houses in a particular area, however, analysis to find out average house price index or its trends based on the past historical housing data of say past 10 years or 15 years or 20 years of a similar class of property in a specific housing area can be quantified.

In Malaysia, information on property pricing trends and rental movements, current and future supply and take up rates of various sub-sector of Malaysia property market can be obtained from the annual publication of Malaysia Property Market Report published by Department of Valuation and Property Services (JPPH) and NAPIC quarterly reports. Find out more at 6 websites that property investors need to know in Malaysia. It would be good that a similar calculator can be generated in Malaysia using our very own housing data.

Views of new completed housing schemes in mainland Penang

Villa Cendana 2 ( Cendana Permai) at Juru

Dedaun - another housing scheme by PDC at Batu Kawan

In my many years of practice, I have come across land owners who are unsure about the exact land areas and even boundaries of the lands they own whilst some are confused with the land area conversion units from acre to hectare or relong to hectare and vice versa as different states have different adoption of land area measurement system.

www.intproperties.com blogs into this subject of land area conversion units with an aim to give you a better understanding and guides on the current land area conversion units commonly used in the northern states of Peninsular Malaysia ie Penang, Kedah and Perlis as well as the neighbouring country of Thailand.

Hectare, Acre, Relong or Rai

Although Malaysia has officially adopted a metric system since 1982, the British’s imperial units and local units are also very much in use. The computerisation of land titles registration in land offices in Malaysia over the last two decades and the implementation of E Tanah system have replaced much of the old titles and have used International System (SI) unit of hectare in land registrations.

The old unit of acre, which is non-SI, is still widely use in Penang State whilst relong is the local unit commonly used by the people in the Kedah and Perlis States. A browse on the land for sale listing posted on Malaysia’s popular portal of mudah.com shows that relong is still widely use in Kedah. 

In Kedah and Perlis, the early system of land tenure was influenced more by the ancient Thai Law of Property than by the Malay Customary Law. From an early date, ‘surat putus’ (or document of title) was issued by Sultans. Originally, these ‘surat putus’ was a written decision of ‘hakim’ or judge of the state following an ownership dispute, countersigned by the Sultan. The documents recorded the evidence submitted and the decision made together with the dimensions and area of the land concerned and a rough description of its locality and abuttals. The earliest survey of property lots started by 1912 in Kedah.

Whilst in Penang, the land registration inherited the British land tenure system. The English Law of Real Property and Conveyancing continued to be used until they were repealed and substituted with a system of Registration of Titles under the present National Land Code (Penang and Malacca Titles) Act, 1963. More at related article of history of land system.

Across the border to southern Thailand, the common land measurement is Rai. A Rai (Thai ไร่) is a unit of area, equal to 1,600 square metres (40 m × 40 m), used for measuring land area. Its current size is precisely derived from the metre, but is neither part of nor recognized by the modern metric system, the International System (SI). 1 Acre = 2.5 Rai, 1 hectare = 6.25 Rai. Guide on land measurement conversion in Thailand.

In UK, although the non-SI unit of acre is still in use, it will no longer be allowed when land is being registered come January 2010 in compliance with EU Metric Directive-European Union abolishes the British acre.

For advisory on land investments in Malaysia and Penang Properties, email to us at Izrin & Tan Properties Sdn. Bhd. or call us at +604 6588333 (Penang Office) or +603 92839782 (Kuala Lumpur Office) and we would be pleased to assist.

HOW TO CALCULATE LAND MEASUREMENT

SI units (Metric )
1 hectare = 10,000 sq meters

Non SI units
1 acre = 43,560 square foot
1 hectare = 2.471 acres

1 relong = 30,976 square feet
1 relong = 484 jempa
1 jempa = 64 sq ft
1 hectare = 3.4748 relong
1 acre = 4 rood
1 rood = 40 pole
1 rood = 10,890 sq. feet
1 pole = 272.25 sq. feet
1 sq meter = 10.76381 sq feet

Example 1
Land Area 5a 2r 20p = 5 + 0.5 + 0.125 = 5.625 acres x 43,560 square feet
= 245,025 square feet
= 22,763.80 square metes
= 2.2763 hectares

Example 2
Agricultural land in Kedah
Land Area 15 relong 50 jempa = 15 x 30,976 square feet + 50 x 64 square feet
= 467,840 square feet
= 43464.16 square metres
= 4.3464 hectares

Example of site plans attached in the old titles in Kedah and Perlis- with unit measurements in both relong and acre

Example of old land titles in Kedah issued in 1950’s

Penang property owners beware! According to the recently released Auditor-General’s Report 2007 on activities and special studies of Penang State’s government agencies and reports prepared by Penang State Department of Land and Mines, the auditor findings disclosed that there are several land forgery cases recorded in Penang State. Apart from the one landmark case Boonsom Bunyanit vs Adorna Properties Sdn.Bhd, there are also a number of fraudulent cases involving lands in the State.

According to the report, there are 7 cases of signature forgery on transfer form (Borang 14A) and fraudulent land transfers detected and the properties identified are located in both Penang Island and mainland Seberang Perai whilst another 4 cases involving forgery of documents relating to court order, more at Auditor-General’s Report 2007 (page 129 -132, Table 50 & 51). And the shocking revelation is the opinion of the auditor :-

“Pada pendapat Audit, Pejabat Tanah Dan Galian tidak dapat mengesan kesahihan dan ketulenan dokumen yang dikemukakan bagi urusan tanah kerana kakitangan Pejabat tidak ada kemahiran dalam bidang tersebut. Hak pemilik tanah tidak terjamin apabila berlaku pemalsuan dalam urusan tanah.”

(In the opinion of the auditor, The Department of Land and Mines could not detect the validity and authenticity of the documents presented for land dealings because the department staff does not have the expertise in this field. The rights of the land owners can not be guaranteed when forgery in land dealing occurs).

In light of the above, Penang land and property owners are advised not to take things for granted and to exercise caution on the safekeeping of their property title deeds and conduct regular title searches and seek reputable solicitor advice.

Amendment to Section 340 National Land Code

According to Ministry of Internal Security’s reply in Parliament house on 9 July 2007, the number of case of fraudulent signature for land title transfer recorded during the period 2001 till May 2007 are 16 cases in 2001, 19 cases in 2002, 22 cases in 2003, 32 cases in 2004, 35 cases in 2005 and 40 cases in 2006 and 16 cases up to May 2007. The statistics disclosed that forgery of land titles and land scams are on the rise. In a move to safeguard and protecting the landowners, Malaysia’s Bar Council has taken a lead and submitted a memorandum to the then Natural Resources and Environment Minister Datuk Seri Azmi Khalid on July 24 last year. It is understood that in the memorandum, the Bar Council proposed several amendments to be made to the relevant sections of the National Land Code (NLC), especially Sections 340(3) and (4) and 187B. Bar Council welcomes move by government to amend s 340 NLC and is expected to be amended by year end.

For advisory on individual property purchases and rentals of Penang properties, email to us at Izrin & Tan Properties Sdn. Bhd. or call us at +604 6588333 (Penang Office) or +603 92839782 (Kuala Lumpur Office) and we would be pleased to assist.

The new Penang state government land policy seeks to encourage Penangites to become permanent landowners and boosting commercial and industrial growth. Under the new policy, industrial landowners in Penang can apply to extend their lease period from the present maximum 60 years to 99 years, while owners of leasehold residential lands can apply to convert their land to freehold status. More at We will be fair in land conversion.

The conditions and procedure for conversion are here and here.[Update : The official guidelines (Bahasa Malaysia version) on the new land conversion policy and the application form (Borang 12A) is now available and can be downloaded from the website of Penang State's Department of Land and Mines].

Land owners can begin submitting individual applications after June 15 to change the status of their land titles.

And here are the views and comments on the state’s new land conversion policy from man on the street, local community leaders, property consultants and housing developers to legal practitioners.

The move is expected to benefit industrial land owners or companies to secure financing to expand their factories as presently commercial banks are less keen to provide banking facilities to industrial lands and factories with short leasehold tenure of less than 30 years as collaterals.

Industrial/Housing schemes to benefit from this new land conversion policy

Industrial lands and factories in Penang’s Industrial Parks developed by Penang Development Corporation (PDC) are alienated on 60 years lease. These industrial parks are Bayan Lepas Industrial Park, Mak Mandin Industrial Park, Seberang Jaya Industrial Park, Prai Industrial Park, Bukit Tengah Industrial Park and newly developed Bukit Minyak Industrial Park.

Whilst PDC’s housing schemes are mostly leasehold properties of 99 years namely Bandar Bayan Baru and Bandar Seberang Jaya, Taman Pelangi and Komtar development area in Georgetown.

Other notable housing schemes built on state alienated lands of 99 years lease are Techware’s condominium schemes along the Sungai Nibong coastal area ie Gold coast, Putera Marine, Villa Emas, Putera Place and IJM’s housing schemes ie Tmn Sri Damai, Alphine tower, Parkview tower, Lakeside, Ocean view, The Spring etc. Others such as Mewah Court, Midland condo, Mutiara Idaman, Mutiara Heights, Pangsapuri Tanjung Tokong and Sri Saujana at Harbour city.

However, owners of leasehold high rise stratified units seeking to obtain freehold rights may have to be patient until the state government resolved legal matters with the Federal Government. More at Freehold land applications now on hold.

Several high profile townships such as the Seri Tanjung Pinang and Bayan Bay development (both on the Penang Island) and 456-acre Bandar Perda township and Bayu Mutiara in Bukit Mertajam of mainland Penang have since been granted conversion from leasehold to Freehold status. Related link at Penang projects to gain from conversion.

For more insights on Malaysia’s land administration policy, a recommended website by Ministry of natural resources and environment provides resources on Malaysia’s current land administration process, types of land titles , classification of lands etc.

For advisory on individual property investments in Penang, email to us at Izrin & Tan Properties Sdn. Bhd. or call us at +604 6588333 (Penang Office) or +603 92839782 (Kuala Lumpur Office) and we would be pleased to assist.

Aerial view of the Perai Industrial Park in central mainland Penang and its coastline. The development of the industrial parks in Penang since 1970’s have transformed Penang into the biggest industrial hub in the northern Peninsular Malaysia.

Bandar Perda, a privatized 456-acre housing project in central Seberang Perai which have been granted Freehold status…

The dynamics of today’s economy are demanding. In an increasingly borderless world where foreign investments are needed for wealth creation, a premium location is one which is both commerce and entertainment driven.

Featured article by The Star online on penang property outlook and MM2H.

Read more at Real estate in Penang set to boom…

According to the Draft Penang Structure Plan 2005-2020, the estimated housing stock for Penang State as at year 2005 totals 470,331 units. During the period 1994 – 2005, the Penang state government has approved the construction of about 121,000 units of houses. The report also stated that a total of 185,000 units of houses of various types or at an average of 12,300 units a year will be built until year 2020.

Penang needs to develop 5,000 hectares of land within the next 15 years to cater for development of which 4,500 hectares of the land earmarked for development are located in high potential areas. In order to achieve balance and sustainable development over the next 15 years, there is a need to balance development at the ratio of 30% on the island and 70% on the mainland Seberang Perai.

Penang Island, a relatively small island covering an area of 293 square kilometers with a population of 678, 000 (year 2005), has limited usable lands for development as major part of the Island is under conservation and classified as environmentally sensitive areas ie. hill lands, forest reserves and water catchments areas. The limited usable lands are mainly located along the eastern Island stretching from Tanjong Tokong area to down south Bayan Baru / Sungai Ara area.

Owing to high land cost and limited usable land for development on the Penang Island, reclamation activities at designated coastal areas such as Bayan Baru, Jelutong and Tanjung Tokong will be continued to expand the land bank on the Island. Several man-made islands around Tanjong Tokong and Jelutong coastal areas will also be created via land reclamation. New locational hotspots for potential housing development are situated towards the south-western part of the Island, these areas include Sungai Ara, Gertak Sanggul, Teluk Kumbar and Balik Pulau.

In the mainland Seberang Perai, bulk of usable lands for development are centred at Batu Kawan-Jawi area (South Seberang Perai) and Bertam -Kepala Batas (North Seberang Perai) and Seberang Jaya-Permatang Nibong (Central Seberang Perai). Other potential areas as stated in the report include Valdor, Juru and Bukit Minyak.

The future housing trends on the Island will continue to see more high density flatted developments being built whilst piecemeal housing developments will be taking place in new growth areas at the southern part of the Island. More smaller scale but high value niche housing schemes offering new lifestyles, themes and concepts with buzzwords such as super condos, condovillas, gated and guarded communities, waterfront courtyard terraced homes, super-link houses, landed garden villas, supreme and premium bungalows may emerge in prime locations at the suburbs of Georgetown and coastal areas of Bayan Bay, Gurney Drive and Tanjong Tokong. Old settlement areas in prime locations will also be make way for high rise flatted developments whilst in the inner city of Georgetown but within the ambit of heritage conservation zones, any redevelopment will be subject to heritage preservation guidelines.

The mainland Seberang Perai will see the emergence of large scale integrated township developments ie.Bandar Cassia in Batu Kawan which is planned to be the third largest township after Bandar Bayan Baru on the Island and Bandar Seberang Jaya in Central Seberang Perai as well as transformation of several other townships such as Bandar Bertam, Bandar Perda dan Bandar Tasek Mutiara. Unlike Penang Island, the future housing trend for mainland Seberang Perai will continue to see more landed properties with features of modern township amenities and services and parks (2 and 3 storey terraced and semi-detached houses and bungalows) being built as landed properties are still the preferred choice.

The future housing trends for Penang Island; more high rise flatted developments and high value niche housing schemes..

Focus on Penang Property and Housing – Part II ( To be continued)

The Penang State Government has unveiled the Draft Penang Structure Plan 2005-2020 in September 2006. The draft plan, which was prepared by Penang State Town and Country Planning Department, is a written blueprint consists of the state’s policy, direction and strategic proposals on development and land use until year 2020. The last Structure Plan for Penang Island and the mainland Seberang Perai was gazetted on 14th June 1990 and 19th September 1993 respectively.

Following the month-long public display of the Draft Penang Structure Plan 2005-2020, a total of 84 respondents have forwarded their views and objections to the Penang State Town and Country Planning Department. The respondents comprises of representatives from government agencies, political parties, NGOs, various resident associations, REHDA, housing developers and individuals etc.

Consequently, in accordance with Section 10 (3)(b), Malaysia’s Town and Country Planning Act 1976 (Act 172), a public hearing has been held at Mutiara Room 2, 29th Floor, KOMTAR during the period from 11th to 22nd December 2006 whereby each respondent was given half an hour time to present their objections and views on the Structure Plan to the public objections hearing committee. The structure plan is expected to be gazetted this year after the draft report together with the feedbacks and objections gathered during the hearing have been submitted to the higher authority for approval.

Respondents expressing their views /objections to the public hearing committee;

Please come back again for more insights on the Penang property and housing development – its future trends and directions and where are the locational hotspots as expounded in the Penang Structure Plan…(To be continued).