This article first appeared in City & Country, The Edge Malaysia Weekly on February 22, 2021 - February 28, 2021

After a year of battling the Covid-19 pandemic, there does not seem to be an end in sight with many countries continuing to impose lockdowns, albeit of differing severity. In Malaysia, the third wave of the outbreak and the subsequent Movement Control Order (MCO) 2.0 have added to the uncertainties in the country’s economic outlook.

However, amid the current turmoil, there is some good news for Penang. In presenting the 4Q2020 Penang Housing Property Monitor, Raine & Horne International Zaki + Partners Sdn Bhd senior partner Michael Geh says data from the National Property Information Centre (Napic) shows that the state’s property market saw a major spike in terms of transaction volume in 3Q2020, and he expects this trend to have continued into 4Q2020.

“This is based on my observation on the primary and secondary markets … It could be similar or even higher than that in 3Q2020, mainly due to the HOC (Home Ownership Campaign 2020) and low interest rate,” he tells City & Country.

“On the ground, I have noticed that many agents, bankers and lawyers are very busy, and this includes me, a valuer. Many people are buying properties; it is not at all doom and gloom. The perception is that the market is not doing well, but there is brisk business activity. Many developers also managed to hit their sales targets in Penang last year.”

Napic property sales data shows that the total number of residential properties sold in Penang in 3Q2020 was 3,446 (preliminary figure), more than double the previous quarter’s 1,545 units and a 6.35% jump from 3Q2019.

During his presentation of the 3Q2020 Penang Housing Property Monitor, Geh had said then that he saw increased activities that quarter and believed that they would continue to trend upwards. He attributed the increase to the reintroduction of the HOC, exemption of the Real Property Gains Tax and relaxation of the financing margin limit for a third property, saying they would spur the secondary market and keep the property market buoyant in 2020.

The availability of properties priced at RM300,000 on the market is one of the contributing factors to the rise in activities, says Geh. The government’s efforts in providing properties at this price have provided Penangites with more alternatives to own a home, he adds.

Another piece of good news recently involves the RM46 billion Penang Transport Master Plan (PTMP). At end-January, State Works Committee chairman Zairil Khir Johari was reported as saying that the proposed Penang South Islands (PSI) will start soon as the formal approval for the Environment Management Plan (EMP) will be obtained once the MCO is over.

He noted that SRS Consortium Sdn Bhd — the project delivery partner — had complied with all the conditions needed for the approval. Gamuda Bhd, which owns 60% of SRS Consortium, is said to be starting reclamation works of the 2,300-acre Island A — the largest of the three islands to be reclaimed — this quarter (1Q2021).

This came after Penang Chief Minister Chow Kon Yeow’s Jan 15 announcement on the commencement of the PTMP’s first project — the full construction of a 6km bypass connecting Tun Dr Lim Chong Eu Expressway to Ayer Itam beginning Feb 1.

The construction of the bypass, which commenced on Oct 31 last year, is part of PTMP’s Package Two that includes the controversial undersea tunnel from Persiaran Gurney to Bagan Ajam in Seberang Perai. The feasibility study of the undersea tunnel project was completed last December by concession company Consortium Zenith Construction Sdn Bhd.

Also, Penang Port Commission (PPC) announced that the North Butterworth Container Terminal has been gazetted as a free trade zone starting Feb 1. The status is aimed at growing the terminal internationally and making it the first choice for foreign exporters.

PPC chairman Datuk Tan Teik Cheng was reported as saying that the free trade zone will be divided into several more zones, including industrial, commercial and special zones.

On these announcements, Geh notes that the undersea tunnel will benefit the property sector, especially the Gurney area, owing to its proximity to the entrance of the tunnel. The PSI, meanwhile, is expected to have multiplier effects that could benefit various industries.

“The free trade zone status at the Butterworth container terminal will have a positive impact as more jobs will be created there, especially for the industrial and logistics sectors. With these announcements, there will be positive sentiments in the state for the next few months,” he says.

The 4Q2020 Penang Housing Property Monitor shows flat performance in the schemes sampled, after slight movements in price and rental stagnation in the previous quarters.

Schemes that saw movements, albeit marginal, in transacted prices during the quarter under review included 1-storey terraced houses (1,200 to 1,600 sq ft) in Green Lane and Sungai Ara, where prices fell RM30,000 and RM20,000 respectively to RM820,000 and RM730,000.

Before this,  in 2Q2020, the prices of 1-storey terraced houses (1,200 to 1,600 sq ft) in Jelutong and Sungai Dua had dropped RM10,000 and RM20,000 respectively to RM900,000 and RM780,000.

Meanwhile,  2-storey semi-detached houses (3,000 to 4,000 sq ft) in Island Park continued to see a declining trend, falling to RM2.1 million in 4Q2020 from RM2.2 million the previous quarter. The average price of these semidees had been steady at RM2.25 million since 4Q2015, but decreased to RM2.2 million in 2Q2020.

Rents in the schemes sampled also remained stagnant in general, except for 1-storey terraced houses (1,200 to 1,600 sq ft) in Bandar Bayan Baru, which increased RM100 to RM1,100, and standard 3-bedroom flats (700 to 750 sq ft) in Paya Terubong, which increased RM50 to RM500.

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