PENANG REAL ESTATE MARKET Opportunities Despite Weak Sentiments…

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PENANG REAL ESTATE MARKET Opportunities despite weak sentiments…. Research Report @ Q2 2016. For internal circulation only

Malaysia’s economy grew at slower pace Penang continues to be the hot spot for Malaysia has a population of 31.7 million people property investment in 2016 with annual growth rate of 1.5%. Penang’s population stood at 1,663,000 as at 2015 with North-East District on Penang Island Gross Domestic Product (GDP) in Q2 2016 record- being the highest population density followed by ed a growth of 4%. This was contributed by the Central Seberang Perai District. The population in resilient growth in services, manufacturing and the North-East District grew at an average rate of 1.4% every year with the South Seberang Perai construction sectors. However, the sluggish District being the least dense. growth in agriculture affects the overall economic performance for this quarter.

Public and private investments in oil and gas were reported to fall substantially.

Wage growth is stable with non-performing loan reported to be falling. Unemployment rate was 3.5% as at June 2016. As at June 2016, Consumer Price Index (CPI) increased by 1.6% to 114.8 compared to 113.0 in the same month last year.

Source : Department of Statistics, Malaysia

Penang continues to be the top hotspot of property growth and investment, other than Iskandar and Klang Valley. Penang is well-placed geographically in the Indonesia-Malaysia- Thailand Growth Triangle and the Bay of Bengal and Penang has always been a choice destination for property investment.

Source : Department of Statistic, Malaysia Source : InvestPenang/Penang Institute

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Penang’s economy remain resilient The tourism industry which include traditional Manufacturing remains the core contributor of and medical tourism continues to contribute to the Gross Domestic Product (GDP) growth, fol- the stable economy growth for Penang. lowed by services. Penang is still very much connected to Malaysia’s overall economy health and Penang, a must-see destination in 2016 it was forecasted that Malaysia will experience a In October 2015, an American newspaper pub- lower GDP growth in 2016. This will thus have an lisher has listed Penang Island as one of “must- impact on Penang’s growth this year. see’ destinations in 2016. The 16 destination list in the travel section of the Los Angeles However, Penang’s economy is expected to con- Times described the George Town Unesco World tinue to be resilient as the job market remains Heritage Site as a "500-year-old history of trad- healthy with unemployment rate at 1.6% in ing and a hotel boom in progress." This news is 2015. indeed encouraging. Penang is expecting more tourists this year compared to 6.3 million of In 2016, Penang recorded the highest Foreign tourists arrivals recorded last year. Direct Investments of RM4.5 Billion compared to Indonesia formed the largest numbers of visitors other states. This contributed to 20% of the total with 39.3% out of the total international visitors FDI in Malaysia. Penang’s future success is to to Penang followed by Singapore and China. seek convergence between manufacturing and services sectors so that it will be less dependent on Electronic & Electrical sector.

Penang’s services sector see the emerging economic activities of creative multimedia and global business services. In October 2015, Penang launched Penang Accelerator for Creative, Ana- lytics & Technology (@CAT) in 2015 to promote creative & technology start-up entrepreneurship.

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Highlights of Budget 2016 - Revision on March to 31 December 2016, subject to specific Properties conditions for a period of stay not exceeding 15 days. First Time Home Buyers Only For new housing projects, houses priced below Latest Developments in Penang RM300,000 shall be limited to first time home buyers only.

First Home Financing Scheme (MyDeposit) To help the middle 40% income bracket with household incomes of between RM3,000 and RM10,000 (M40). It involves a contribution of 10% of the sale price or a maximum of RM30,000, whichever is lower, to first-time house buyers to help them buy a house not The Gurney Wharf or “Park On The Sea” more than RM500,000. Gurney Wharf was first unveiled on the 23 Febru- ary 2016 with the view to obtain feedback from the public. Once complete, it will become an icon- Public Housing ic waterfront destination for Penang. For the public housing project involving houses The seafront Gurney Drive will be reclaimed and that cost RM35,000, the government will offer, through Bank Simpanan Negara and Bank turned into a public park which will comprise of Rakyat, a financing package at a rate of 4 per seaside retail food & beverage, water gardens, a cent for more than 10,000 homeowners starting man-made 400 metres of sandy beach and a 1 March 2016. coastal grove. More than 100,000 housing units will be offered Spanning over 131 acres, the reclamation work in the government’s integrated house ownership will be undertaken by Tanjung Pinang Develop- programme. ment Sdn. Bhd. (TPD), a subsidiary of Eastern & Oriental Berhad (E&O). Visa Free for China The reclamation cost of Seri Tanjung Pinang Phase 2A which includes 131 acres of the Gurney The implementation of eVisa to several coun- Wharf is estimated at RM1.07 billion. Upon com- tries have been identified to facilitate the entry pletion, Gurney Wharf becomes the property of of tourists. the State Government. Tourists from China do not require a visa to visit

Malaysia or Visa Free, commencing from 1 Copyright reserved @ Henry Butcher Malaysia Penang 3 PENANG REAL ESTATE MARKET Opportunities despite weak sentiments…. Research Report @ Q2 2016. For internal circulation only

There will be two underpasses : The length of the new promenade is approxi-

 from Jalan Pemenang to park area (100 m); mately 1.5km. The park area will be completed to promenade (230 m) in mid-2018 whilst the seafront retail food & beverage will be ready by 2020.  from Jalan Burmah to park area (100 m); to promenade (140 m) While the reclamation work is in progress, the existing Gurney Drive is still accessible and has The reclamation work is expected to be complet- now been installed with anti-climb mesh fencing ed in the first quarter of 2017 which include 8 to measuring 2 km. This fencing is expected to re- 10 months of land reclamation and 6 to 8 months main until the whole project completes. of soil treatment and settlement.

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Penang Transport Master Plan PTMP will be financed by the sale of the reclaimed islands in the southern coast of Penang Island. Under the Penang Transport Master Plan, SRS Major works will commence in 2017 with the Consortium, the appointed delivery partner will Bayan Lepas LRT and Pan island Link 1 being the be reclaiming 1,497 hectares of land, of which priority projects. 290 hectares will be for industrial development. Heritage sites in the inner city of George Town will SRS Consortium, a joint venture with Gamuda not be affected as the LRT and future transit lines holds 60%, with Ideal Property Development Sdn. will be aligned around the perimeter of the herit- Bhd. and Loh Phoy Yen Holdings Sdn. Bhd. hold- age site and buffer zone. The tram will be on the ing 20% each. ground level. PTMP envisioned to change the transportation Some properties may be affected by the construc- and housing landscape in Penang, in terms of up- tion and may be acquired to give way for the pro- grading transport system and improve connectiv- ject. The State Government will study and identify ity and accessibility as well as reduce traffic con- the affected lots and work closely with property gestions. owners and tenants. The RM27billion PTMP will comprise a network There will also be expansion to the airport’s main of public transport, highways and roads that will terminal, training centre and multi-storey car park. be integrated with various modes of existing transport to serve the future population and sup- Penang will continue to enjoy toll-free access to port the economic growth of Penang. the highway and aims to improve the integration of the existing and future infrastructure and Table 1 Penang Island and Seberang Perai developments. Source : pgmasterplan.penang.gov.my Proposed Lines PENANG ISLAND Length No. of SEBERANG PERAI PROPOSED LINES Length No. of Station PROPOSED LINES (km) Station (km)

Bayan Lepas LRT 30 27 George Town (The Light) - Butterworth Penang Sen- 18 8 tral - Sg Nyiur LRT Ayer Itam Monorial 13 13 Raja Uda - Sg Nyiur - Bkt Mertajam - Permatang Ting- 28 21 gi Monorial

Extension northwards to Kepala Batas 13 10 Tanjung Tokong Monorial 7 8 Permatang Tinggi - Batu Kawan 14 15

Extension northwards to Bkt Tengah - Seberang Jaya 15 16

Extension southwards to Nibong Tebal 11 6 Tram 2 6 Total 99 76

Total 52 54 Grand total 151 130

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How did the property market perform? The residential market continued to be the most active sub-sector during 2015 capturing 71% of Property prices in Penang remained stable despite the total volume of property transactions, an the drop of total value of transaction which rec- increase from 68% registered in 2014. The orded at RM11,702 million in 2015 compared to commercial sub-sector increased to 10% RM13,770 million in 2014, a decline of 15%. compared to 8% last year and the development In terms of the total volume of transactions, 2015 land remained status quo at 7%. saw a drop of about 4,000 transactions compared The total value of property transactions in the to 25,555 units recorded in 2014. residential sub-sector in 2015 registered lower at Chart 1 Total Value of property transactions in RM6,173 million, an 18.55% drop compared to Penang RM7,579 million in 2014 while the development land sector also saw a decline in value from RM2,752 million in 2014 to RM1,941 million in 2015. The commercial sub-sector however saw a slight increase to RM2,070 million in 2015 as op- Chart 3 Volume of property transactions as at Q4 2015

Chart 2 Total volume of property transactions in Penang

Chart 4 Value of property transactions as at Q4 2015

Source : HB Research/JPPH Source : HB Research/JPPH

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Declined in volume and value of transac- Our research revealed that the CAGR for tions in 2015 property transaction per unit from 2006 to Chart 5 Penang’s overall volume and value of 2015 is about 8.4%. residential transactions as at 2015 Note : CAGR is a measure of growth rate over -21% multiple time periods.

-21% -16% Volume Chart 7 Existing and Supply of Residential 52% Property on Penang Island as at Q2 2016 5% Value 40% 5% -15%

Source : HB Research/JPPH

From the Chart above, we can see that in summary, the volume of residential transactions shot up 52% in 2011 and subsequently declined 21% in 2012 and another 21% drop in 2013. The volume dropped 16% in 2015. Source : HB Research/JPPH Similarly in 2011, the value hiked up 40%, dropped slightly and increased very marginally of Penang Island has an existing residential supply of 5% in 2013 and hiked further in 2014. Subse- 217,467 units which comprises 42,781 units of quently, 2015 saw a drop of 15% in value. landed houses and 174,686 units of stratified Chart 6 Overall Property Transaction Per Unit properties. The future supply of landed and strati- Price per unit fied properties recorded at 11,391 units and 600,000 55,445 units respectively. 500,000

400,000

300,000 [RM] 200,000

100,000

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source : HB Research/JPPH Copyright reserved @ Henry Butcher Malaysia Penang 7 PENANG REAL ESTATE MARKET Opportunities despite weak sentiments... Research Report @ Q2 2016. For internal circulation only

Residential sector is still the best It is interesting to note further that we have also performing market analyzed the CAGR for each category of prices tabulated as follows : Penang’s residential market is one of the most active market in Malaysia. Penang is amongst the Property Price Category (RM) CAGR from 2006 to 2015 top 5 areas with the highest average house prices Below 500,000 -4% after Kuala Lumpur, Selangor, Sabah and Sarawak.

Chart 8 Average House Price in Malaysia as at 500,000 to 1,000,000 14.7%

2015 Above 1,000,000 21.3%

Source : HB Research This result showed that capital appreciation performed better for property prices between RM500,000 to RM1,000,000 as well as RM1,000,000 and above which transacted at even higher prices when ownership changes.

Terraced houses has the highest growth rate

In 2011, the volume of residential transactions Chart 9 Penang State - House Price by Type from went up 40% to 30,674 units but subsequently 1999 to 2015 declined to 15,291 units in 2015. This was attributed to the softening of the property market beginning 2014 as a result of the various factors including slowdown in the sales of new launches, bleak household sentiments and low consumer confidence.

Value of residential transactions was stable throughout the last four years but declined 19% in 2015. Terraced houses recorded a CAGR of 6.9% while CAGR for high-rise was 6.5%. The growth rate of The outcome of our research unveil that the detached houses performed better at 3.7% while overall CAGR for residential properties are semi-detached houses at 3.4%. about 9.6%. Source : HB Research

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Which category of house prices have the 30% flexibility ruling allows anyone to most supply? buy affordable housing unit. As at Q2 2016, Penang State has a total existing Penang State Government’s initiative to provide residential stock of 402,494 units comprising a “roof under one’s head” is commendable with

217,467 units on Penang Island and 185,027 constant review of updating the criteria to qualify units in Seberang Perai. for purchase of affordable housing.

The planned supply was recorded at 52,854 units For affordable housing applications, the applicant with almost 38% located on Penang Island and and spouse must not own any property in any remaining 62% in Seberang Perai. Incoming state in Malaysia. However, a person who already owns a property can also purchase a unit supply was registered at 88,072 units with of affordable housing provided the market value 46,686 units and 41,386 units located on Penang is higher than the existing property that he al- Island and Seberang Perai respectively. ready owned. About 48% of the total existing residential stock The State had also applied flexibility by releasing is priced below RM250,000 followed by 29% with 30% of the total affordable housing units to Pe- prices between RM250,001 and RM500,000 and nang-born buyers regardless of whether one had 16% with prices between RM500,001 and already owned a property. Nevertheless, for non- RM1,000,000. Only 7% of the existing houses is Penang-born buyers who are under the talented priced above RM1,000,000. and skilled category, applicant must undertake to reside in Penang for a minimum of 5 years from the date of handover of keys. Existing Incoming Planned Areas stock supply supply

Penang 217,467 46,686 20,025 Table 2 : Summary of Island existing stock, incoming Seberang 185,027 41,386 32,829 supply and planned Perai supply as at Q2 2016 Penang 402,494 88,072 52,854 State

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Table 3 Affordable Housing Price Category

Type of Housing Price Range Total household Income

Affordable Housing RM300,001 to RM400,000 RM10,000

Affordable Housing RM200,001 to RM300,000 RM8,000

Affordable Housing RM200,000 and below RM6,000

Low medium cost RM72,500 and below RM3,500

Low cost RM42,000 and below RM2,500

In addition to the Shared-Ownership Scheme Demand for office space is stable (where the State funds 30% interest-free), Pe- The demand for office market in Penang is gen- nang had also introduced Rent-to-Own scheme erally stable. However, there is a lack of suitable in 2014 to help buyers who cannot afford buy- Grade A or even Grade B office buildings in Pe- nang. Typically Grade A specification includes ing their first home. This scheme allows the office buildings which are brand new or have re- buyers to rent their home at only RM100 per cently been redeveloped or thoroughly been re- month for 15 years with service charge at furbished within the last 15 years. It must also be RM15 per month. In addition, each unit will al- highly visible, although may not be significant. so be equipped with household items. The supply of office space as at Q2 2016 in Pe- nang recorded at 8.8 million sq. ft. of which 7.2 The ongoing affordable housing developments million sq. ft. is on Penang Island and 1.6 million undertaken by private developers on Penang sq. ft. in Seberang Perai. Island are as follows: On Penang Island, George Town has the largest

 Tri-Pinnacle by Aspen Group supply of office space with a total of 5.7 million sq. ft. followed by Bayan Baru/Sg. Nibong/  Ramah Pavilion by M Summit Group Gelugor with 0.9 million sq. ft. of space. The  One Foresta by Ideal Property Group remaining 0.6 million sq. ft. of space is located at Green Lane, Jelutong and Tanjung Tokong.  I-Santorini by Ideal Property Group The monthly rentals of prime office space on Pe-  Granito by BSG Group nang Island are between RM3 to RM4 per sq. ft. depending on the exact location, size and facilities provided. Copyright reserved @ Henry Butcher Malaysia Penang 10 PENANG REAL ESTATE MARKET Opportunities despite weak sentiments.. Research Report @ Q2 2016. For internal circulation only

Chart 10 Existing & future supply of office A total of 11 malls with 7.6 million sq. ft. of spaces on Penang Island as at Q2 2016 retail space is expected to be completed in the next 5 years. Occupancy rates stood at about 85% and 50% on Penang Island and in Seberang Perai respectively in 2015. Generally, retail market in Penang has seen a drop in consumer spending affected by the overall economy, weakening Ringgit and the ris- ing inflation. The weakening Ringgit should however attract foreign tourists to spend more. Food & Beverage sub-sector seems to be performing better as more innovative cafes and modern restaurants open its door to the public. Retail market worsen? Monthly rentals of retail space on the ground and lower ground floors of prime malls on There is only a marginal increase of retail space Penang Island are presently recorded between in shopping complexes on Penang Island in Q2 RM20 and RM40 per sq. ft. while upper floors 2016. There is no new supply completed in are recorded at between RM10 and RM18 per Seberang Perai. The total retail space recorded sq. ft. depending on the exact location and size at 11.42 million sq. ft. on Penang Island and at of the retail outlets. 6.9 million sq. ft. in Seberang Perai.

Chart 11 Cumulative Supply of Retail Spaces on Penang Island as at Q2 2016

Source : HB Research/JPPH

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Industrial market remain stable re-model its multimedia plant in Bayan Lepas, There is an existing 1,490 industrial units on Penang. Penang Island comprising 855 units located at the Chart 12 Existing & future supply of industrial South-West District and 635 units at the North- properties on Penang Island as at Q2 2016 East District.

Future supply of industrial units at the South- West and North-East District recorded at 72 units and 68 units respectively.

The services and manufacturing contributes almost equally to Penang’s GDP at over 48%. Pe- nang’s largest trading partners are US, Japan and With the signing of the Trans-Pacific Partnership Singapore. Agreement (TPPA) which involves 12-Pacific Rim countries including Malaysia, Penang will contin- In Malaysia, Penang leads in the areas of shared ue to receive large amount of FDIs. As Penang services outsourcing (SSO), medical tourism and is export-oriented, the TPPA is expected to ben- medical devices. According to Malaysian Invest- efit larger international corporations while ment Development Authority (MIDA), Penang smaller companies will face stiffer competition. contributed nearly 20% of Malaysia’s overall The TPPA will also have an impact on the rise of Foreign Direct Investment (FDI) inflows in 2015, imports from the members of the TPPA. the highest among Malaysian states. It is also worth-noted that more investment in- There will be more than 3,000 jobs cut when terest, particularly from Singapore will generate Seagate Technology and Western Digital Corpo- more opportunities for properties and tourism ration leave Penang for Thailand beginningrelated businesses. On Medical Tourism, the August 2016. Amid the bad news, the good news cost of importing “state-of-the-art” technology shine through recently when Bosch, a leading would propel Penang to become a high-tech global supplier of technology and services an- medical city. nounced that it will be investing RM140M to Source : HB Research/Penang Institute 12Cop- PENANG REAL ESTATE MARKET Opportunities despite weak sentiments... Research Report @ Q2 2016. For internal circulation only

Drop in tourists arrival to Penang tourist from China as a result of the drop of 7.37% in Penang continues to attract local and international the arrival of Chinese tourists in 2015 compared to tourists as a result of exceeding tourists’ general 2014. It was also meant to strengthen bilateral ties expectation in terms of services, food, hotels, ac- with China after the incident of MH370. cessibility and interesting festivals that were regu- In 2015, there was a total of 6,347,618 number of larly held in George Town. local and foreigners hotel guests which comprised According to Penang Institute, the international 3,467,719 and 2,879,899 respectively. This saw a tourists arrival at Penang International Airport in drop of 7.3% from 6,847,569 number of hotel 2015 was 683,897, a decrease of 4.71% compared guests recorded in 2014. to 717,724 in 2014. Chart 13 International visitors to Penang accord- Chart 14 Registered Hotel Guests for Locals & ing to countries Foreigners on Penang Island from 2005 to 2015

4,000 Germany 3,500 Thailand 3,000 UK 2,500 USA 2,000 Taiwan TOTAL 2014 1,500

Australia Million TOTAL 2015 1,000 Japan 500 China - Singapore Indonesia

0 50,000 100,000 150,000 200,000 250,000 300,000 MALAYSIANS

Source : HB Research/Penang Institute Source : HB Research/Penang Institute

The largest number of tourists was from Indonesia (268,892) followed by Singapore (144,581) while China (62,215) was the third contributor to the international tourists arrival. 2015 saw a drop of the number of tourists from all countries compared to 2014. The extension of visa fee waiver until Decem- ber 2016 was hoped to increase the number of

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Hotel rooms continue to be in demand Pre-war heritage properties continue to The average hotel occupancy rate hovers around attract investors 65%. During low period, the rate could drop to 35% Penang’s prewar properties remain the favorite while at peak season, hotels reported occupancy property investment portfolio with the local and foreign investors alike. Its unique old charm archi- rate to be up to 85%. City hotel usually performed tectural heritage with eastern and western influ- better than beach hotels. ence continues to attract property investors, par- Despite the opening of new hotels in Penang such ticularly from Singapore. as St Giles Wembley (415 rooms), Olive Tree (250 rooms), G Kelawei (208 rooms), Citi Express (234 Since 1980, prewar property prices shot up to as rooms) and other boutique hotels in 2015, there is high as RM2,800 per sq. ft. still a low supply of hotel rooms in Penang. New hotels expected opening in 2016 : There are only 54 units of prewar property transac-  Double Tree Resorts (318 rooms) tion as at Q2 2016 with the highest recorded at RM2,277 per sq. ft.  The Jazz Hotel (226 rooms)

 OZO George Town by Thailand-based ONYX Hospitality Group (132 rooms) Some of the recent transactions of prewar properties in George Town city in 2015 are as follows :  The Rice Miller Hotel & Godowns (67 rooms)

 Vouk Suites @ Mansion One (48 rooms) Streets Price (RM) Price Per Sq. Ft.

The number of boutique hotels boomed during the Love Lane 1,766,000 1,632 last few years and have now become steadier. Love Lane 4,000,000 2,277

Jalan Muntri 3,000,000 1,685

King Street 2,000,000 2,105

King Street 2,000,000 1,961

Carnarvon 2,000,000 1,090

Lebuh Melayu 2,200,000 1,185

Source : JPPH

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Value of prewar heritage properties Prewar property prices recorded an increase to remain stable ten-folds after 15 years. Based on our price anal- ysis from 2000 to 2015, the CARG was 16.6%. 2015 saw a slight decline in prewar property transactions to 150 units compared to 176 units Recently, Penang government has announced its in 2014. plan to introduce a rent control policy involving prewar buildings due to the extensive Chart 15 Transactions of Prewar Properties hike in rentals of certain prewar buildings in on Penang Island from 1987 to Q2 2016 George Town city. It is mulling to cap rental hikes to 20% over a period of four to five years and will be imposed on buildings built before Second World War or before 1948. This measure is to preserve the living heritage culture while reducing further gentrification. Performance Indicator for all sectors

Residential

Chart 16 Price Index of prewar Properties on Office Space Penang Island from 1980 to Q2 2016

Retail

Hotel

Industrial

Prewar Heritage

Land

Source : HB Research/JPPH

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What is the Penang Real Estate Market Outlook for 2016?

 The real estate market outlook seems rather  More emphasis on affordable housing. uncertain.  Investors and home buyers are careful  Weak market sentiment in primary & in their selection of properties. secondary market are expected to gain Properties at the right location in well- momentum leading to poorer performance connected areas with good this year. infrastructure and public transports are  Better quality lending policies have resulted the factors influencing their property in higher loan rejections. purchases.

 The volume of transactions are expected to  Buyers are also more selective and feel decline further. more comfortable buying from developers with good track records.  However, demand is still strong for project with catalytic components such as well-  Developers are offering good planned business and transit-oriented incentives and special sales packages to developments that provide connectivity and attract potential buyers.

easy accessibility.  Young Malaysian workforce will  Bank Negara’s recent cut in the OPR underpin demand for property resulted in the lowered interest rate will purchases.

help reduce the loan burden for businesses  Healthy fundamentals due to Penang and consumers. diaspora, young population  Prevailing buyers’ market have influenced demographics, shrinking average house- sellers to accept more reasonable prices. hold size, low unemployment rate, sustainable local & foreign investments will  Fewer speculative activities. continue to support the local market.  Buyers have more choices due to the increased supply of secondary properties for sale.

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TOP 10 TIPS ON PROPERTY INVESTMENT IN PENANG

1. Choose a registered real estate agent 8. Pick the right type of loan for your (REA) with license registered with the type of investment. Discuss with your Board of Valuers, Estate Agents and banker for advice. Appraisers Malaysia (BOVEA). To 9. Appoint a registered property search for REA : manager to manage your property if http:www.lppeh.gov.my/ your intention is to buy-to-let. A prop- 2. Select a registered real estate negotia- erty manager must be registered with tor (REN) from the REA that you have BOVEA. appointed. A REN holds an identifica- 10. Appoint an established solicitor to tion card which is registered with BO- prepare the legal documents. VEA. Only a registered REN can deal in property transactions. To search for REN : http://www.lppeh.gov.my/ Costs of buying a property

3. Select a property that suits your needs  Stamp duty at the right location  Legal fees 4. Find out about any proposed develop-  Disbursement fees ment planning around the subject  Search fees property  State consent, if any 5. Seek independent advice from a repu- table registered valuer on the market  State levy, if any

value of the property.  Real Estate Agent’s fee, if any* 6. Do an investment appraisal to assess the returns and risk prior to making Costs of selling a property decision.  Real Estate Agent’s fee, if any* 7. Leave the price negotiation to the REN as he or she has the experience in  Advertising costs sales closing.  Legal fees 17

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Shoebox units to kick off in Penang?

KUALA LUMPUR (July 27): Escalating housing prices and the changing needs of young buyers have spurred interest in shoebox-sized apartments on Penang island, said Henry Butcher Malaysia (Penang) Sdn Bhd director Jason Teoh.

"Currently, there is no supply of shoebox-sized apartments in the (Penang) market, but I observe that shoebox-sized apartments with facilities will have strong demand from young working adults who are looking for homes offering a modern lifestyle," he told TheEdgeProperty.com after sharing his outlook of the northern region of Peninsular Malaysia.

He noted that although land scarcity will be an issue for new developments in George Town, Penang, there are opportunities for developers to look into, such as redeveloping existing old buildings or old houses into shoebox apartments to cater for the needs of young homebuyers.

On the overall market view, Teoh said developers in Penang have always been confronted with various challenges in the overall supply chain, such as lack of suitable land for development. There are fewer new launches in recent times and pent-up demand seems to be broiling.

"Developers with projects in the right locations with the right concept and prices will attract buyers despite the weak market sentiment," he added.

A good example of a recent well-received residential project in the southwest district of Penang island has seen a remark- able take-up rate of 80% without any aggressive marketing campaign.

However, he noted that the outlook on Penang’s property market remains uncertain if economic and market sentiment continue to be weak, hence, transaction volume is expected to decline and there will be fewer speculative activities.

"In the long run, Penang’s property market will be supported by healthy fundamentals — such as the growing young population, shrinking average household sizes, low unemployment rate and sustainable local/foreign investment — which could help regain market confidence," he explained.

Teoh said Penang island is a small place, and being small has its advantages in terms of the density of economic agglom- eration.

"Given that infrastructure development is now in the making, greater connectivity between places and people and, more importantly, between people and people would augur well for the future of Penang," he noted.

Teoh said the Penang Transport Master Plan, which includes construction of the monorail, bus rapid transit (BRT), highways and roads, undersea tunnel and sky cab, is now pending the consent of the authorities.

Once the plan is approved, it will be the greatest catalyst for the property market in the northern region.

He was speaking at the Malaysian Property Summit Mid-Year Review 2016. TheEdgeProperty.com and The Edge Malaysia are the media partners of this event. Source : TheEdgeProperty.com | July 27, 2016

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