The Edge |  Nawawi Tie Leung Property Consultants Penang housing Property Monitor (2Q2022): Real estate market active during quarter

This article first appeared in City & Country, The Edge Malaysia Weekly, on October 10, 2022 - October 16, 2022.
The Edge |  Nawawi Tie Leung Property Consultants Penang housing Property Monitor (2Q2022): Real estate market active during quarter
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With Malaysia transitioning to the endemic phase of Covid-19, the primary and secondary property markets in Penang were active in the second quarter of the year, says Nawawi Tie Leung Property Consultants Sdn Bhd executive director and regional head of research and consulting Saleha Yusoff.

Based on data from The Edge | Nawawi Tie Leung Property Consultants Penang Housing Property Monitor 2Q2022, there were some price movements in the secondary market, after several quarters of flat price and rental performances.

For example, the price of 1-storey terraced houses (1,200 to 1,600 sq ft) in Green Lane increased by RM20,000, or about 2.6%, to RM800,000 in 2Q2022. Prior to the rise, it had stayed at RM780,000 since 2Q2021. Meanwhile, the price of standard 3-bedroom flats (700 to 750 sq ft) in Bandar Baru Air Itam went up by RM10,000 to RM250,000 during the quarter under review, after having remained at RM240,000 since 1Q2016.

Saleha notes that as the economy had shown signs of recovery with better job prospects, the secondary market was active during the quarter under review.

“On Penang Island, renovated landed properties in older schemes with good upkeep and maintenance still have the potential for capital appreciation as there is demand for these properties,” she adds.

Mid-market and affordable homes

The primary market was similarly active, especially the mid-market and affordable segments. Saleha observes that most of the projects launched during the quarter were positioned for these segments, and that buyers were mostly upgraders and first-time homebuyers.

“We noted that the price of residential units in the primary market increased in 2Q2022 compared to the quarter before. A few developers revised the selling price of their properties that were under construction due to the rising cost of construction,” she says.

“The take-up rate for these [mid-market and affordable] projects has been encouraging compared to the high-end segment, as most buyers are from the younger generation who are starting to have their own lives or upgrading their current housing.

“PDC (Penang Development Corp) has been active in launching affordable homes throughout the state. There were limited launches from private developers during this quarter. Many are still reviewing their development strategies due to the rise in construction and compliance costs.”

Some of the new launches in Penang in the second quarter were Suria 2, Suria Apartment, Bayu Residence, The Millennia @ Bayan Lepas and Straits City.

Launched by PDC on a 7.48-acre parcel, Suria 2 is an affordable housing project and the second phase of the master-planned Hijau E-Komuniti township. To be completed in 2025, the development offers 520 units sized from 800 to 1,000 sq ft and priced from RM72,500 to RM220,000.

Suria Apartment by PJD Eastern Land Sdn Bhd is a low-medium-cost, single-tower project in Jalan Harbour Place. Comprising 439 units with a standard size of 633 sq ft, it is expected to be completed by 2026. The selling price registered on the Ministry of Housing and Local Government website is RM42,000.

Bayu Residence in Kampung Baru, Butterworth, is a freehold strata residential project being developed by Freehold Profile Sdn Bhd. Targeting owner-occupiers, it features 18 three-storey townhouses with built-ups of 3,073 sq ft, and a 12-storey condominium with unit sizes of 1,618 to 1,825 sq ft. The price of the condo units is from RM300 psf, while that of the townhouses starts from RM870,000. With a theme of affordable garden homes, Bayu Residence offers facilities such as a swimming pool, conference room, squash arena and multipurpose hall.

Also being developed by PDC is The Millennia @ Bayan Lepas, another affordable housing project. Comprising 864 units on 8.7 acres in Bukit Gedong, the development will offer a standard built-up of 850 sq ft with a fixed price of RM300,000.

Straits Trading Co Ltd and Malaysia Smelting Corp Bhd have formed a partnership to develop a 40-acre waterfront mixed-use development, dubbed Straits City, in Butterworth. The master plan includes residential, retail, hotel and commercial components. To be completed by 2038, the RM3 billion development will start off with a 23-storey, four-star hotel offering 343 rooms, supported by retail space with a net lettable area of about 41,823 sq ft and MICE (meetings, incentives, conferences and exhibitions) facilities. The hotel component is expected to be completed by the second half of next year.

Happenings

There were several real estate happenings during the quarter under review, including the Penang government approving about RM8 million of funds to be allocated for repairs along the slopes of Lorong Bukit Kukus in Paya Terubong. The repair work is expected to be completed by 2024. Several landslides at hill slopes had occurred during the last few years in the area, where there are about 400 houses.

The groundbreaking ceremony of the RM200 million Gurney Wharf was held in May. It is a project by the state government that aims to offer Penangites the opportunity to have a better quality of life, in line with the Penang2030 vision of “a family-focused green and smart state that inspires the nation”. It is expected to be fully completed by 2025.

Also in May, The New Esplanade was officially opened. Part of the North Seafront Masterplan covering the area from Dewan Sri Pinang to Fort Cornwallis and the entrance to Swettenham Pier, it is expected to be a new attraction for tourists to enjoy the seaside.

During the same month, Ikano Centres announced “Klippa” as the name of its integrated retail hub in Batu Kawan, comprising 1.6 million sq ft of gross leasable area, including the 80,000 sq ft Ikea and McDonald’s drive-thru. With a potential population catchment of about 520,000 people within a 30-minute drive, Klippa is expected to be the new retail and leisure hub for locals and tourists.

Meanwhile, a supplementary agreement between the Penang government and Rayston Consortium (Butterworth) Sdn Bhd (RCSB) was endorsed in May, to reclaim and develop the coastline for mixed-use developments and port activities from Bagan Ajam to Teluk Ayer Tawar. The Bagan Ajam coastline reclamation involves a total land area of about 582ha, of which 100ha have to be surrendered to the state government and 272ha set aside for public facilities. The remaining 210ha will be developed by RCSB. The agreement is part of the obligations agreed in 1999 for RCSB to build, operate, manage and maintain the Butterworth Outer Ring Road.

In June this year, Mitsui Fudosan Co Ltd announced a 70:30 joint venture with Malaysia Airports Holdings Bhd to develop an outlet mall (Mitsui Outlet) close to Penang International Airport (PIA). No further details of Mitsui @ PIA are available.

The Seberang Jaya Public Market and Hawker Centre is an ongoing reconstruction project by PDC. Dubbed the People’s Market or Pasar Rakyat, the 12.5-acre development was 30% completed as at 2Q2022, and is slated to reach completion in 1Q2023. It will be able to accommodate 220 street stalls, and an additional 250 stalls inside the market complex.

Industrial sector

Saleha notes that Penang has continued to attract investments in its industrial sector, given its strong ecosystem and the availability of a talented workforce that have supported the growth of its industrial activities, especially in the electrical and electronics, and medical devices sectors.

“The state recorded RM6.3 billion of approved investment in manufacturing in 1Q2022, of which 98% were foreign direct investments (FDIs). Demand from industrial players has been good. More industrial parks have been planned to tap into the growing demand from investors in the next three to five years. These developments will not only bring investments to the state, but also create more jobs for locals,” says Saleha.

There are several upcoming industrial developments, including the Penang Technology Park in Bertam, Kepala Batas, by Ideal United Bintang International Bhd. With a total land area of 800 acres, it will be developed in phases with Phase 1 spanning 200 acres and targeting industries such as semiconductor, medical devices and aerospace.

Another upcoming industrial development is the Batu Kawan Industrial Park 2 (BKIP 2) in Byram by PDC. It is an extension of the existing BKIP, with a total land area of 1,156 acres and targeting a similar profile of players as BKIP.

LEM Malaysia Sdn Bhd is planning to have a new production plant in Penang Science Park North, Simpang Ampat. The Switzerland-headquartered company is involved in electrical measurement for renewable energy, automation, power network and e-mobile applications.

“It announced a capital investment of about RM70 million to build the 12,000 sq m plant, which is expected to be completed in 2024. Upon its opening, the plant is projected to create 500 jobs over the following five to eight years,” says Saleha.

“We also noted several transactions in the market, namely CapitaLand Malaysia acquired industrial properties in Valdor for RM80 million, while Pensonic sold a piece of land with a factory in Bukit Tengah Industrial Park for RM15.8 million to HZ Green Pulp Sdn Bhd.”