Penang Property Market
During the first half of 2009, the property market in Penang faced some degree of uncertainties due to the global economic slowdown. Coupled with the lacklustre stock market and generally negative business sentiments, the first 3 to 4 months was a challenging period for the Penang property market with overall sentiment being cautious about the differing performances of the various property sectors. The few positive points were the low interest rates (which was only good for property purchasers or businesses seeking financing), the generally healthy trade surplus and reasonably high savings rate.
There was a breather of hope when the Government unveiled the stimulus package in various stages to alleviate the financial crisis during the first quarter of 2009.
During the second half of 2009, the property market in Penang enjoyed some degree of optimism as some established developers including listed companies from other states have moved north to venture their real estate developments in Penang.
The residential market continued to be the most active sector during 2009. Many developers have "jumped on the bandwagon" sourcing for major landbanks on the island as well as in new growth areas in Seberang Perai Tengah and Selatan on the mainland. More upmarket landed houses and condominiums with new benchmark prices were launched during 2009 and sales of residential properties especially landed housing located on the island were strongly stimulated by the recent initiatives undertaken by the government through Budget 2008 in which mortgage payments can be made via EPF withdrawal, relaxation of the Foreign Investment Committee (FIC) rules for the purchase of property by foreigners, the extension of the Malaysia My Second Home (MM2H) programme and the attractive mortgage packages and "easy" financing offered by financial institutions. The housing sector this year has seen more innovative designs and some price increases in schemes developed by established developers in popular areas on the island of Penang. Three Klang Valley based developers viz. Sunway, E & O Properties, Mah Sing and S P Setia are also currently involved in this sector.
Some developers have shifted their focus to emphasise more on high end condominium developments. However, medium market apartment developments continue unabated although prices have remained unchanged.
MARKET PROSPECTS
The housing market especially on Penang Island continues to be popular among purchasers of residential units. However, the market is expected to very competitive as many new residential developments are being launched and constructed in the past two years. Strategic location, innovation design and good development concept are the main criteria that determine the success of a housing project.
Generally, with relatively strong liquidity in the market, the demand for landed houses on Penang Island is expected to remain healthy.
Market values of houses on Penang Island are likely to increase moderately. However, should the supply of houses in choice locations such as Pulau Tikus, Tanjung Tokong/Tanjung Bungah area and Greenlane continue to be limited, market prices may appreciate further in the short term, due to good demand. This, in turn, may have some positive spill over effects on the pricing in other neighbouring residential areas.
Rentals for apartments / condominiums on Penang Island are generally expected to remain stable in the immediate short term. The initial enthusiasm in the high-end sector in the Penang Island area in the beginning of 2009 came as expected, and was seen to be "tailing-off" towards the end of last year particularly after the budget announcement of reintroducing real property gains tax (amended now to only tax gains within 5 years at 5 percent). However demand is expected to remain optimistic in the longer term given Penang's young population, strong affinity for property investment and the general favourable sentiments.
Developers would need to more cautiously study the market and identify a niche of which they can fill, target a different segment of the market and offer products with unique selling points.
Developers' selling prices have touched unprecedented benchmark levels in the past year. Compared against current rental rates, these condominiums may not achieve satisfactory yields for most investors. It is also uncertain that these prices or capital values are sustainable in the longer term. More future supply coming on stream would also put pressure on rentals and capital values.
However, with Penang being marked as an International city in the making and its destination as a tourism hub in the northern region particularly after its inscription as a UNESCO heritage site, many analysts and investors are confident in the long term investment potential of the State. Henry Butcher's collaboration with Malaysia Airlines through its innovative My1malaysiaproperty program in its various overseas road-shows and exhibitions has demonstrated that foreign real estate investors are optimistic of the Malaysian real estate market given its many positive attributes vis-a-vis many traditional real estate destinations.
