This article first appeared in City & Country, The Edge Malaysia Weekly on December 6, 2021 - December 12, 2021

With the reopening of international borders, the tourism industry in Penang will recover gradually, says Nawawi Tie Leung Property Consultants Sdn Bhd executive director and regional head for research and consulting Saleha Yusoff, after observing that hotel bookings in Penang have increased significantly since the lifting of the interstate travel ban.

“With clearer guidelines on the MM2H (Malaysia My Second Home) programme, we expect interest from potential MM2H buyers to return, as Penang Island has remained one of the top destinations for MM2H participants,” she tells City & Country.

In presenting The Edge | Nawawi Tie Leung Property Consultants Penang Housing Property Monitor 3Q2021, she notes that there were no new launches during the quarter under review, owing to the implementation of the Full Movement Control Order from June 1.

She adds that developers continued to market their ongoing projects and existing products to clear stocks. Other than the Home Ownership Campaign, many deve­lop­ers also introduced attractive promotions or campaigns to boost sales.

The proposed Kulim International Airport in Kedah has been in the limelight recently. The airport is part of Kedah Aerotropolis, which in turn is part of the Northern Corridor Economic Region.

The 9,800-acre Kedah Aerotropolis is said to be a metropolitan subregion, whose infrastructure, land use and economy are centred on an airport. Its proposed site is in Mukim Sidam Kiri in Kuala Muda District. It will also consist of the Sidam Logistics, Aerospace and Manufacturing Hub (SLAM).

Both the airport and SLAM are expected to support the growth of e-commerce in the region and Southern Thailand, as well as help accelerate the advancement of hi-tech industries, such as the maintenance, repair and operating (MRO) supplies subsector.

According to news reports, the Kedah state government had in August signed a deal with developer ECK Group to set up a special-purpose vehicle to build the new Kulim airport by 2026.

Saleha notes that the estimated cost of the airport is RM6 billion, including land acquisition. It is forecast to create 15,000 to 18,000 jobs and expected to raise the state’s gross development product to 7.5% as well as bring in a gross income of RM1.18 billion by 2026.

While it aims to serve 800,000 passengers a year, the catchment area for cargo is expected to come from the northern region, southern Thailand and the western part of Kelantan.

“The number [of passengers] is forecast to grow to 9.1 million by 2044 and 16.2 million by 2054, assuming Penang International Airport will not expand beyond its 12 million capacity and [there is] no expansion of airports in Alor Setar and Ipoh. The forecast for cargo traffic at the Kulim International Airport is 34,124 tonnes, which is about 10% of Penang Airport’s current capacity,” Saleha says.

“We expect limited spillover effects, especially on the residential and industrial markets in the northern side of Mainland Penang. Direct impact would be felt by existing and ongoing developments in established areas such as the Sungai Petani industrial area and Kulim Hi-Tech Park, because the labour cost is lower in Kedah than in Penang. Owing to strong demand for qua­lity industrial properties in Sungai Petani, prices have risen 15%.”

She adds that the Kulim airport might attract business players from Penang, such as logistics companies, business services and financial institutions. She expects some players to set up new operations closer to the airport, but well-established ones may continue their businesses in Penang, which may in turn create demand for expansion to cater for the potential demand from the Kulim airport.

In presenting data for the Penang Housing Property Monitor 3Q2021, Saleha notes that the secondary market has been soft since the beginning of the Covid-19 pandemic. Except for Bandar Bayan Baru, prices of 1-storey terraced houses in selected locations on Penang Island dropped between 5.6% and 10.7% year on year in the quarter under review.

“Asking prices ranged from RM520,000 to RM850,000. Buyers are mainly the silver-haired population, who prefer senior-friendly properties, such as 1-storey landed homes,” she says.

“Similarly, asking prices of 2-storey terraced houses on Penang Island dropped 7.1% to 16%. Attractive promotion packages in the primary market and low interest rates have contributed to lower asking prices in the secondary market.”

Prices in Mainland Penang remained unchanged over the last few years at between RM180,000 and RM220,000 for 1-storey terraced houses and between RM290,000 and RM390,000 for 2-storey terraced houses.

Prices of semi-detached and detached houses have remained strong, owing to the limited supply on Penang Island. Only limited schemes in Island Park and Tanjung Tokong showed prices that were lower than a year ago. Prices of 3-bedroom flats and 3-bedroom apartments remained flat.

“Prices in 3Q2021 had dropped to the lowest, and we expect a rebound in the next quarter or early next year, based on the asking prices at the end of the quarter,” says Saleha.

Meanwhile, the rental market fared better because of weak economic conditions and the uncertainty of employment opportunities. Overall, asking rents of 1- and 2-storey terraced houses have remained stable, owing to the soft leasing market and the variety of choices at newly completed high-rise units with competitive rents.

Saleha reckons that the rental market was driven by the locals because of the need for social distancing and a proper living environment to cope with the work-from-home requirement during the Full Movement Control Order period.

“Asking rents for 3-bedroom flats and 3-bedroom apartments also remained flat. Owing to the high infection cases of Covid-19 among foreign workers, there was a significant number of inquiries for hostels to accommodate factory workers in proper housing, especially in Batu Maung, Paya Terubong and Relau,” she says.

“As for yields, while rents remained stable on Penang Island, prices have dropped from a year ago, thus increasing the rental yield slightly. Yields in Mainland Penang remained stable, as there was no significant movement in prices and rents.”

Nevertheless, the Penang property market recorded a better performance in 1H2021 than 1H2020, with a total of 7,960 overall transactions, versus 5,836 in 1H2020.

Saleha says the residential sector recorded the highest number of transactions at 6,065 units and contributed 60% of the value of transactions.

“Based on the level of activity in the market, we expect a lower total of transactions in 2021, though we noted quite a significant amount of interest at end-3Q.”

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