Property prices set to rise as big-name developers descend on the island Oct 22, 2007
Penang’s Luxury Property Market Catches Up
Property prices set to rise as big-name developers descend on the island Oct 22, 2007
Home prices in the island of Penang has been on heading north, with properties in prime areas taking the lead. The introduction of foreigner-friendly policies has made Malaysian real estate more at
tractive to foreigners. And while foreign investors rarely set their sights beyond Kuala Lumpur (KL), Johor and Malacca, Penang is starting to draw their attention. Recognising this trend and lured by the lower land prices, developers from KL have been wasting no time in making in roads on the island. The entry of these big players into the high-end segment has brought about a supply of high-quality projects and the promise of escalating property values. Property prices in the south and southwest district of the island have already seen increases of 20 percent from a year ago. Major developers from KL who have entered the Penang market include: SP Setia Bhd, E & O Property Development Bhd, CP Land Sdn Bhd, Mah Sing Bhd, Jelutong Development Sdn Bhd and Abad Naluri Sdn Bhd. Since 2004, they have announced projects worth about RM30 billion to be built in Penang over the next 10 to 15 years. Despite the rising prices, Penang’s properties are still affordable and have a lot of room for appreciation according to industry observers. Homes in the high-end segment, are 30 to 50 percent cheaper than those in KL. Luxury condominiums in the KL city centre range from RM700 to RM1,500 per sq ft (psf), compared to RM400 to RM500 psf for Penang's priciest condominium units. The state government’s funding of large scale infrastructure projects such as the monorail, second bridge and Penang Outer Ring Road, have aided in boosting the attractiveness of the island and as a consequence, local property prices. Districts near the 9km tourist belt on the northern coast, such as Gurney Drive, Tanjung Bungah and Batu Ferringhi have become hotspots. Numerous resort condos and waterfront villas are being built here. Prices of a three-bedroom condo in these areas would range from RM350,000 to RM650,000. Quality condominium projects in prime areas can fetch annual rental yields of 6 to 8 percent. For 'super condos' with large floor areas of 4,000 sq ft and above, investors can expect to pay RM1.5 million to RM2 million. Despite their relatively high prices, a number of the projects are already selling “very well” because of their good location, innovative designs and high quality. Some high-profile projects include CP Group's 74-acre Queensbay mixed-development, which comprises shops, homes and offices. The 160-unit Bay Star condo, which is currently on sale, have prices ranging from RM450,000 to RM1.4 million. The project is 70 percent sold. The sea-fronting Seri Tanjung Pinang project in Tanjung Tokong by E&O Property Development has also been a hit. 500 units of the landed residential units launched earlier were sold at prices starting from RM800,000. The seafront villas, which will be launched in December this year, will be priced from RM2.5 million to RM6.5 million. Other homes in the development include courtyard terraces, which will start from RM735,000 and promise rental yields of 6 to 10 percent. From the success enjoyed by the developers of these upmarket properties so far, it is evident that Penang not only has a promising domestic market, but a foreign one too. Many of these properties have successfully drawn positive attention from foreign buyers and investors - as can be seen by the number of second homes snapped up by foreigners. These overseas investors are now negotiating to purchase some RM20 million worth of properties, which are priced between RM500,000 and RM1.5 million.
