Home values set to rise as big-name players race to build high-quality developments on Malaysian island.
WHEN it comes to Malaysian property, foreign investors seldom set their sights beyond Johor, Kuala Lumpur (KL) and Malacca. But the island of Penang in the north is starting to come into its own.
Malaysia’s foreigner-friendly policy means that Singaporeans can buy properties freely in the country, as long as they are worth more than RM250,000 (S$110,000).
Home prices in Malaysia’s second-smallest state have been on the rise and property players say the area is drawing the attention of overseas buyers.
‘Prices are generally on the uptrend and properties located in prime areas have seen significant price increases of 10 per cent from a year ago,’ said Mr Tan Chai Liang, a consultant with Izrin & Tan Properties in Penang.
Still, the island’s properties remain affordable. In general, prices of Penang homes have ‘a lot of room for appreciation’, said Mr Michael Geh, a senior partner at property firm Raine & Horne.
In the high-end segment, homes are 30 to 50 per cent cheaper than those in KL, he added. Luxury condominiums in the KL city centre range from RM700 to RM1,500 per sq ft (psf), compared with RM400 or RM500 psf for Penang’s priciest condos.
But Penang is playing catch-up. The state’s government has been pouring money into large-scale infrastructure projects that are helping to boost home prices. Also, more developers are now investing in Penang. ‘For many years, there wasn’t much development in Penang. But now, bigger developers are coming in and bigger projects are being built,’ said Mr Geh.
Well-known developers from KL have begun to descend on Penang, lured by the lower land prices, which can be as little as a quarter of those in KL.
Since 2004, these developers have announced projects worth about RM30 billion to be built in Penang over the next 10 to 15 years.
The big players include luxury developer E&O Properties and leading construction and property firm CP Group.
With their entry into Penang come more high-quality projects and the promise of escalating property values.
Indeed, their arrival has helped home prices in the southern and south-western districts of Penang shoot up by more than 20 per cent in the past year, according to Malaysia’s Star newspaper. For instance, a condo development called Coastal Towers is now selling units at RM235,000 each, compared with RM180,000 previously, said Mr Geh.
Attention is also on the northern coast, which hosts a 9km tourism belt. Districts to look out for include Gurney Drive, Tanjung Bungah and Batu Ferringhi, where a slew of resort condos and waterfront villas are being built, said Mr Tan.
For a three-bedroom condo in these areas, investors can expect to pay RM350,000 to RM650,000, he added.
Annual rental yields are 6 per cent to 8 per cent for quality condos in prime areas.
For ’super condos’ with large floor areas of 4,000 sq ft and above, prices range from RM1.5 million to RM2 million, Mr Tan said.
Some high-profile projects include CP Group’s 74-acre Queensbay development, with shops, homes and offices. On sale now is the 160-unit Bay Star condo, which is 70 per cent sold at prices ranging from RM450,000 to RM1.4 million. CP Group estimates rentals at RM3,000 to RM8,000. Bay Villas, also a Queensbay project, will be previewed in Singapore next year. It has 86 freehold waterfront villas, each with a built-up area of 5,000 to 6,000 sq ft and priced at RM3.8 million to RM5 million.
Another Penang development being marketed in Singapore is Seri Tanjung Pinang, an integrated seafront development that its developer, E&O Property Development, says is similar to Sentosa Cove.
E&O, which opened its first overseas marketing office in Singapore last week, said it has received ‘keen interest’ for its Acacia semi-detached homes, priced from RM1.45 million each.
In December, it will launch its seafront villas - at RM2.5 million to RM6.5 million each - and may also sell the condo units in Singapore next year. Other homes in the development include courtyard terraces, which start from RM735,000 and offer rental yields of 6 to 10 per cent.
Since 2004, well-known developers such as luxury developer E&O Properties and leading construction and property firm CP Group from Kuala Lumpur, have announced projects worth about RM30 billion (S$13 billion) to be built in Penang over the next 10 to 15 years.
Source: The Sunday Times, Singapore 28 Oct 07
For advisory on property investments in Penang email to us at Izrin &Tan Properties Sdn. Bhd. or call us at +604 6588333 (Penang Office) and we would be pleased to assist.