Despite the onslaught of the global financial downturn, the Penang property sector in general has been resilient and relatively stable with no drastic movement in housing prices. The local housing developers have been better prepared this round to ride through the downturn with the exception of handful housing developers which are forced to slow down their construction activities or delay their project launchings during the height of the crisis. Though there are signs of market softening in 2H 2008 and 1H 2009, market sentiment for Penang property sector in the 2H 2009 has improved remarkably with more buyers/investors flocking back into the market whilst housing developers are beginning to make a come back and roll out more new planned projects in anticipation of improving economy outlook. Transaction activities in both primary as well secondary market are poised to pick up again buoyed by the continued support and lending by Malaysia’s banks with attractive financing packages at low interest rates of 3-4%.
Unlike the previous 1997/98 Asian Financial crisis, the Penang property sector at that time was badly hit due to the credit crunch of the Malaysia banking system and the sudden surge in lending rates to as high as 13%. As a result, many housing projects were stalled and abandoned, with many developers were either facing cash flow and debt servicing problems and eventually collapsed and wiped off from the marketplace such as Adorna, Penas and Cayman etc. The aftermath of the crisis has crippled the Malaysia housing and construction sector with major property sectors suffered sharp price declines as much as 30-40% from their peak levels whilst the banking system saddled with huge bad loans and high NPLs.
Some notable projects in Penang/Kedah region which have been badly affected since the times of 1997/98 Asian Financial Crisis are mostly retail/commercial and several mega projects, some of which are still in abandoned stage and awaiting revival or resuscitation:-
Bayan Central – An uncompleted commercial complex located at Bayan Bayu which commenced construction in 1997 and subsequently stalled.
Bayan Bay Marina and Leisure Resort by Eternal Resources (joint venture between Anson Perdana and PDC) which was originally scheduled for completed by year 2000 but stalled for several years. This multi-million Bayan Mall (now Queensbay Mall) was successfully revived by CP Group and commenced business in 2005.
Mainland Penang (Seberang Perai)
Plaza utama- A commercial complex comprising 6 storey shopping mall, 213 room-hotel and one office block at Bukit Mertajam town. Plaza Utama development commenced in Nov 1995 and completed in 1997. The commercial complex was opened for business after completion but ceased business after a short stint.
View of Plaza Utama in Bukit Mertajam
City Parade at Jalan Megat Harun, Bukit Mertajam – Another completed commercial building which is similarly affected like Plaza Utama and ceased operation after opened for business for a short period.
Both buildings have long been put up for sale by former Danaharta now Prokhas and still looking for potential “white knight” to revive it.
Fasda Heights (Taman Bidara)- a mixed housing project in Macang Bubok, Bukit Mertajam with about 1,000 units which was not fully completed and handover to the purchasers.
Taman Perindustrian Macang Indah- an abandoned SMI industrial park at Sungai Lembu, Bukit Mertajam.
Leisure Tower- A 11-storey integrated commercial complex at Jalan Kampung Gajah, Butterworth by HCC Group originally schedule for completion end of 1999 but only partially completed and abandoned.
Kristal Golf Resort (Suasa Kristal) - a golf resort located at Sungai Bakap, Southern Seberang Perai, ceased operation several years ago and taken over by Danaharta. The site was reportly sold to a private housing developer.
Others approved commercial complexes which have been launched but failed to take off and subsequently shelved are “Plaza Everise” – a planned 2.3 acre commercial complex at Sungai Rambai Commercial Centre and “Aseania Mall” at Bandar Perda. Both are located within bukit mertajam area. “Plaza Cayman”, another planned commercial project located adjacent to old MPSP building at the heart of Butterworth town.
Padang Meha Parklands by MBF Country Homes and Resort (Alamanda) near Kulim– a proposed RM3 billion housing/resort development near Kulim covering 5,200 hectares launched prior to 1997/98 Asian Financial Crisis which has since abandoned. Latest report disclosed that the developer has been liquidated in year 2005. More related info here: Developer liquidated, 300 land buyers in the lurch. Others include the 160 hectare residential resort scheme (Diamond Santuary) in Mukim Padang Meha near Kulim Hi Tech Park and the proposed RM1 billion Diamond Creeks Retreats with 800 hectares of land in Ulu Behrang, Perak near the proposed Proton City.
In a nutshell, the magnitude and severity brought about by the impact of the 2008/09 Global Financial Crisis on the Penang property sector is comparatively shorter and much lesser compared to 1997/98 Asian Financial Crisis. A healthier and resilient Malaysian banking system, on-going implementation of Malaysia economic stimulus package, Malaysia’s central bank prudent interest rate policy, relaxation of EPF housing withdrawals and other economic liberalization measures, have helped to cushion the impact of the recent economic downturn on the property sector. Malaysia economy is on track for a full recovery next year.