PA INTERNATIONAL PROPERTY CONSULTANTS () SDN BHD REAL ESTATE (PENANG) SDN BHD PA international Property Consultants Sdn Bhd formed in June 1980, is a full service real estate company registered with the board of valuers, appraisers & estate agents under the valuers, appraisers and estate agents act 1981.  Our Network Offices:  Our Professional Services: 1. Bahru, Johor 1. Property Valuation 2. Kluang, Johor 2. Compulsory Land 3. / Petaling Acquisition and Jaya Compensation 4. Klang, 3. Property Selling & Leasing 5. Penang 4. Property Investment 6. Ipoh, Consultancy 7. Seremban, Negeri 5. Project Marketing Sembilan 6. Property Management 8. , 7. Corporate & Advisory 9. Ho Chi Minh City, Vietnam 8. Property Market Research (Representative Office) & Consultancy

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD PA international Property Consultants (Penang) Sdn Bhd was established in year 2014, head by Sr. Michael Loo as Executive Director.

The company have undertaken valuations and related assignments for a number of Public listed and other established corporate entities, among which are:

Tambun Indah Land Berhad  Tah Wah Group Sdn Bhd  Hai Hong Development Sdn Bhd Ivory Properties Group Berhad  VST Group Sdn Bhd  United Oil Palm Industries Sdn Bhd LBI Capital Berhad  Sunrise Manner Sdn Bhd  Hwa Huat Livestock Industries Sdn Bhd Hua Yang Berhad  Metro Jelata Sdn Bhd  Jeenhuat Foodstuffs Industries Sdn Tatt Giap Group Berhad  Sunway Properties Berhad Bhd Wing Tai Berhad  Asia Plywood Company SL  Airmas Development Sdn Bhd Heng Huat Resources Group Berhad Berhad  Chye Seng Sdn Bhd Boon Koon Group Berhad  VST Group Sdn Bhd  The Light Hotel (M) Sdn Bhd B. Braun Medical Industries Sdn Bhd  Sunrise Manner Sdn Bhd  Nasi Kandar Pelita Sdn Bhd Zillion Acres Sdn Bhd  Metro Jelata Sdn Bhd  DNP Land Sdn Bhd Harta Intan Sdn Bhd  Kars City Sdn Bhd  Streamsville Sdn Bhd Hong Seng Group Sdn Bhd  Tah Wah Group Sdn Bhd  Asia Green Properties Sdn Bhd Hinlim Furniture Manufacturer Sdn  Sunway Properties Berhad  Autocity Group Bhd  Asia Plywood Company SL  The Heritage Club Berhad

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD CREDENTIALS  Registered Valuer and Estate Agent, Malaysia  Member of The Royal Institution of Surveyors, Malaysia  Member of PEPS (Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia)  Member of MIPPM (Malaysian Institute of Professional Property Managers)  Assessor Appointed by High Court in Land Acquisition appeals

EDUCATION  MSc. in Real Estate, University Technology Malaysia  BSc. in Land Development and Administration, University of Sr. Michael Loo Technology Malaysia Executive Director EXPERIENCE IN THE PROPERTY INDUSTRY PA International Property  Graduating in 2002, he joined the profession and rose to become Consultants (Penang) Sdn Bhd the Real Estate Valuation Manager at the Seberang Office of Henry Butcher Malaysia. PA International Real Estate  Michael Loo brings with him more than 18 years of post-qualifying (Penang) Sdn Bhd experience in the fields of real estate valuation, project marketing,  Registered Valuer estate agency, auctioning and project consultancy.  Registered Property Manager  He has been involved in valuation for Initial Public Offerings and  Estate Agent appointed by high court as Assessor in Land Acquisition appeals.  License Auctioneer of Penang State FOR INTERNAL CIRCULATION ONLY

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD

OVERVIEW OF PENANG PROPERTY MARKET

BY SR. LOO CHOO BENG EXECUTIVE DIRECTOR OF PAPG

This presentation is intended as general guideline only. While utmost care has been taken in its preparation and we believe the contents are accurate as at presentation time, the content does not represent any investment advice. PA International Consultants (Penang) Sdn Bhd or person(s) involved in the preparation of this presentation slides do not give any warranty as to the contents nor accept any contractual, tortuous or other form of liability for any consequences, loss or damage which may arise resulting from any person acting on or using the statement, information or opinion contained in this presentation. All rights reserved. No part of this presentation slides may be reproduced or transmitted in any form by any person(s)without the permission of PA International Consultants (Penang) Sdn Bhd. FOR INTERNAL CIRCULATION ONLY

Contents 1. Malaysia & Penang Economic Overview 2. 2018 Penang Property Market Performance 3. 2019 Penang Property Market Outlook 4. Conclusion

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD

1. MALAYSIA & PENANG ECONOMY OVERVIEW

- MALAYSIA ECONOMY KEY FIGURES - PENANG ECONOMY KEY FIGURES

This presentation is intended as general guideline only. While utmost care has been taken in its preparation and we believe the contents are accurate as at presentation time, the content does not represent any investment advice. PA International Consultants (Penang) Sdn Bhd or person(s) involved in the preparation of this presentation slides do not give any warranty as to the contents nor accept any contractual, tortuous or other form of liability for any consequences, loss or damage which may arise resulting from any person acting on or using the statement, information or opinion contained in this presentation. All rights reserved. No part of this presentation slides may be reproduced or transmitted in any form by any person(s)without the permission of PA International Consultants (Penang) Sdn Bhd. FOR INTERNAL CIRCULATION ONLY Malaysia Economy Key Figures

No 2017 2018p Change 1 GDP Annual Growth Rate (%)1 5.90 4.7% -1.2% Total Capital Investment (RM bilion) 2 200.60 201.70 0.5% 2 Approved Domestic Investment (RM bilion) 146.20 121.10 -17.1% Approved Foreign Investment (RM bilion) 54.40 80.50 48% Balance of Trade (RM bil) 1 99.00 120.3 21.52% 3 Total Export (RM bil) 935.40 998.00 6.7% Total Import (RM bil) 836.40 877.70 4.9% 4 Inflation (%) 3 3.7 1.0 - 5 Unemployment Rate (%) 1 3.40 3.30 -0.1%

Source: [1] ] Department of Statistics [2] Malaysian Investment Development Authority (MIDA) [3] Bank Negara Malaysia  Baseline growth to remain steady between 4.3% - 4.8% in 2019  Resilient private sector spending  Recovery in commodity sectors amid continues expansion in key economic sectors  Continued demand from major trade partners

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Penang Economy Key Figures

No 2016 2017 Change GDP Annual Growth Rate (%)1&2 5.6 5.3 -0.3 Penang GDP RM million RM million Agriculture Sector 1,507 1,540 2.2 1 Mining and Quarrying Sector 59 63 6.8 Manufacturing Sector 32,895 34,759 5.7 Construction Sector 2,278 2,045 -10.2 Services Sector 36,246 38,312 5.7 Balance of Trade (RM mil) 3 18,104 37,065 104.74 2 Total Export (RM mil) 172,564 233,493 35.3% Total Import (RM mil) 154,460 196,427 27.2% 3 Unemployment Rate (%)2 2.1 2.1 0.0 Notes: The statistic data by state for year 2018 is not yet ready as for now. Source: [1] Eleventh Malaysia Plan 2016-2020 [2] Department of Statistics  The GDP annual growth rate of Penang was slightly drop about 0.3% in 2017 compare to the previous year.  Amid rising external headwinds, the Penang economy to remain on a steady growth path in 2019 (Source: Malaysian Investment Development Authority (MIDA))

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Penang – 50 Years of Transformation Journey

(Source: Invest Penang)

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Penang Key Investment Sectors

(Source: Invest Penang)

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

(Source: Invest Penang)

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

(Source: Penang Institute/ Department of Statistic Malaysia)

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

(Source: Penang Institute/ Department of Statistic Malaysia)

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD

2. PENANG PROPERTY MARKET PERFORMANCE (Q1-Q3 2018) - OVERALL PERFORMANCE - RESIDENTIAL SUB-SECTOR - COMMERCIAL SUB-SECTOR - INDUSTRIAL SUB-SECTOR - OVERHANG UNITS

This presentation is intended as general guideline only. While utmost care has been taken in its preparation and we believe the contents are accurate as at presentation time, the content does not represent any investment advice. PA International Consultants (Penang) Sdn Bhd or person(s) involved in the preparation of this presentation slides do not give any warranty as to the contents nor accept any contractual, tortuous or other form of liability for any consequences, loss or damage which may arise resulting from any person acting on or using the statement, information or opinion contained in this presentation. All rights reserved. No part of this presentation slides may be reproduced or transmitted in any form by any person(s)without the permission of PA International Consultants (Penang) Sdn Bhd. FOR INTERNAL CIRCULATION ONLY

Overall Performance  Penang property market generally remained soft and flat in year 2018. As of 2018, NAPIC recorded a total of 17,087 property transactions in Penang State, an increase of approximately 3% compared to transactions registered in 2017.

 The downtrend was prevalent for all major property.

 In terms of total value, the RM10.19 billion worth of properties recorded as of 2018 was 1.9% slightly lower as compared to 2017.

 Unsold housing units may rise in the near term amid continuing adjustments in supply towards more affordable segments

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Residential Sub-sector

Transaction Volume OF Residential Property in Penang

2017 2018 Total Total Change Island Mainland Island Mainland Vacant Plot 103 170 273 110 602 712 160% Landed Residential 1128 4316 5444 1190 3494 4684 -14% Condominium/Apartment 1486 608 2094 1624 659 2283 9% Low-cost Flat/ Flat 2920 1013 3933 3146 733 4195 6.7% Others 101 586 687 139 515 1033 50% Total Transaction 5747 6343 12090 6197 6354 12551 3.81%

Notes: Others= Cluster House/ Town House/ Low-cost House/ Others; Source: NAPIC/ PAPG Research Source: NAPIC/ PAPG Research

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Residential Sub-sector

Average Transacted Value of Residential Property in Penang

Year Change RM Mil 2017 2018 Daerah Timur Laut 2657.41 2827.27 6.39% Daerah Barat Daya 882.68 883.55 0.09% Mainland Utara 494.25 533.19 7.88% Seberang Perai Tengah 788.30 805.98 2.24% Seberang Perai Selatan 590.22 415.22 -29.65% TOTAL 5412.86 5465.21 1% Source: NAPIC/ PAPG Research

 The total transacted value is about RM 5,465 million in 2018, a slight increase about 1% compared to RM 5,413 million in 2017.

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD RESIDENTIAL OVERHANG BETWEEN ISLAND VS MAINLAND Q4 2018P FOR INTERNAL CIRCULATION ONLY

Breakdown of Residential Overhang Units for Mainland Landed and Stratified Properties at Island and 29% Mainland Q4 2018p

Area/ Type of Overhang Percentage Island Residential Property Units Island 2,498 71% Landed 257 10% Stratified 2,241 90% Mainland 1,004 Landed 594 59% Stratified 410 41%

 Mismatch of supply and demand  Slower house price growth and rebalancing of supply will improve affordability

Source: NAPIC/ PAPG Research PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

Penang Residential Overhang Units Q4 2018

Condominium/ Apartment Flat Low Cost Flat Low Cost House Cluster TownHouse Detach 2-3 Storey SemiDetach Single Storey SemiDetach 2 -3 Storey Terrace Single…

0 200 400 600 800 1000 1200 1400 1600 1800 2000 Mainland Island

 Condominium/ Apartment has the most overhang units which is 2250 units compared to other types of properties followed by low cost flat (401 units) and 2-3 storey Semi Detached Houses (335 units).

Source: NAPIC/ PAPG Research PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD Residential Overhang Breakdown FOR INTERNAL CIRCULATION ONLY Island Total Unsold Locality Type Units Seksyen 9 18 Bunglow Mainland 13 27 Bunglow Mukim 9 16 Bunglow Locality Total Unsold Units Type Mukim 12 10 Bunglow Mukim 15 88 Bunglow George Town Seksyen 4 47 Condominium Mukim 11 9 Bunglow Seksyen 1 79 Condominium Mukim 14 23 Bunglow Mukim 13 679 Condominium Mukim 6 50 Bunglow Seksyen 2 58 Condominium Mukim 18 249 Condominium Mukim 14 309 Condominium Seksyen 9 62 Condominium Seksyen 6 37 Condominium Seksyen 13 14 Condominium Mukim 15 20 Condominium Mukim 12 281 Condominium Low cost George Town Seksyen 11e 51 Condominium Mukim 14 7 apartment George Town Seksyen 9w 11 Condominium Single Storey Mukim 10 206 Condominium Mukim 6 41 SemiD Seksyen 9w 10 Condominium Mukim 11 32 Semi D 2-3 Storey Seksyen 17 17 Condominium Mukim 11 45 Condominium Mukim 15 144 Semi D 2-3 Storey Mukim F 19 Condominium Mukim 14 47 Semi D 2-3 Storey Tanjong Bungah 6 Condominium Mukim 2 7 Semi D 2-3 Storey Mukim 15 108 Service Apartment Mukim 11 240 Low cost apartment Mukim 10 11 Terrace 2-3 storey Mukim J 20 Low cost apartment Mukim 14 28 Terrace 2-3 storey Mukim 17 7 Semi D 2-3 Storey Mukim 11 6 Terrace 2-3 storey Seksyen 1 13 Semi D 2-3 Storey Mukim 16 10 Terrace 2-3 storey Mukim 12 28 Semi D 2-3 Storey Mukim 11 16 Semi D 2-3 Storey Mukim 15 45 Terrace 2-3 storey Mukim E 17 Semi D 2-3 Storey Mukim 15 18 Townhouse Mukim 12 76 Service Apartment Mukim 13 9 Terrace 2-3 storey Mukim 12 28 Terrace 2-3 storey Mukim E 46 Townhouse Source: NAPIC/ PAPG Research PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD RESIDENTIAL UNSOLD UNDER CONSTRUCTION BETWEEN FOR INTERNAL CIRCULATION ONLY ISLAND VS MAINLAND Q4 2018P

Breakdown of Residential Unsold Under Construction Units for Landed and Stratified Mainland Properties at Island and Mainland Q4 2018p 21% Area/ Type of Unsold Units Percentage Commercial Property Island Island 8,355 79% Landed 122 1.5% Stratified 8,233 98.5% Mainland 2,258 Landed 776 35% Stratified 1,482 65%

Definition Note: Residential unsold under construction is units with building plan approval that are under constructed.

Source: NAPIC/ PAPG Research PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Commercial Sub-sector

Transaction Volume of Commercial Sector by types in Penang 2017 2018 Total Total Change Island Mainland Island Mainland Vacant Plot 7 34 41 3 47 50 22% Pre-war shop 106 8 114 72 4 76 -33% Shop house/ Shop Office 73 522 595 112 550 662 11% Shop Unit/ Retail Lot 275 111 386 251 81 332 -14% Office Lot 179 16 195 133 20 153 -22% Others 12 1 13 24 7 31 138% Total Transactions 652 692 1344 595 709 1304 -2.98% Notes: Others= Commercial Complex/ Purpose-built Office/ Hotel/ Service Apartment/ Leisure/ Others Source: NAPIC/ PAPG Research  Malaysian Institute of Economic Research (MIER) Report 2018 - Business Confidence Index (BCI) : 95.3 points (< 100 points) - The weakening business sentiments and slowdown in the overall trading is expected to be more apparent in the short terms.

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Commercial Sub-sector

Average Transacted Value of Commercial Property in Penang

Year Change RM Mil 2017 2018 Penang Island Daerah Timur Laut 619.86 591.89 -4.51% Daerah Barat Daya 74.89 111.48 1.34% Mainland Seberang Perai Utara 133.85 108.77 -18.74% Seberang Perai Tengah 165.68 229.64 38.60% Seberang Perai Selatan 55.44 70.16 26.55% TOTAL 1049.72 1111.94 5.93%

Source: NAPIC/ PAPG Research  The total transacted value is about RM 1,112 million in 2018, increase about 5.93% compared to RM 1,050 million in 2017.

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

COMMERCIAL OVERHANG IN MAINLAND Q4 2018P

SPT SPU 48% 52%

 Commercial overhang only occurs in mainland and is about total of 23 units terrace shops (12 units SPU, 11 units SPT)

Source: NAPIC/ PAPG Research PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

COMMERCIAL UNSOLD UNDER CONSTRUCTION IN MAINLAND Q4 2018P

Terrace Shops 29%

Semi Detach Shops 71%

 Commercial unsold under construction only occurs in mainland and is about total of 140 units.  Semi detach shops is mostly located at Mukim 14, SPS Source: NAPIC/ PAPG Research PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Retail Sub-sector  Existing supply of retail space in Penang Penang Island Mainland 18.54 mil sq ft 11.74 mil sq ft (63%) 6.80 mil sq ft (37%)  Monthly Gross Rental of selected prime retail centre in Penang Island: - Ground Floor (RM20-RM40 per sq. ft) - Higher floors (RM10 to RM18 per sq. ft)  Future Supply: Project Name Estimated NLA (SQFT) Expected Year of Completion Penang Island The Light Waterfront Mall 1,000,000 2025 Sunway - 2025 Penang World City 1,000,000 2024 Phase 3 230,000 2019 Sunshine Tower 900,000 2020 Seberang Perai GEMS Megamall 1,200,000 Pending Construction Extension 450,000 2020 Retail Mall 392,000 2020

Source: PAPG Research  Penang International Commercial City (PICC), 43.35 acres, 2018-2028 - condominiums and serviced apartments, a shopping mall, retail outlets, hotels, a business process outsourcing (BPO) tower and a medical centre.  The long-term prospects of shopping malls in Penang is moderate on average, strong population growth and higher purchasing power are crucial for the success of retail development in Penang. PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD Hotel Sub-sector FOR INTERNAL CIRCULATION ONLY  Existing 3-5 stars hotels in Penang Penang Island Mainland 44 Hotels 38 Hotels (87%) 6 Hotels (13%)

 New Completion Hotel: No of Room Rate Per Project Name Location Room Night Double Tree Resort 318 RM288-RM1,143 Jazz Hotel Seri Tg Pinang 259 RM 269 – RM429 Hompton by The Tanjung 240 RM220-RM1,600 Beach Tokong

 Incoming Supply of Hotel Rooms Estimated Expected Incoming Hotel Location No of Room Operation Rice Miller Hotel Weld Quay 50 KIV Angsana Teluk 150 KIV Bahang Courtyard By Jalan 211 2019 Marriot Macalister Holiday Inn & Suites Juru Sentral 288 2020

Perspective image of Holiday Inn & Suites at Juru Sentral

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD Industrial Sub-sector FOR INTERNAL CIRCULATION ONLY Transaction Volume of Industrial Property in Penang 2017 2018 Total Total Change Island Mainland Island Mainland Vacant Plot 8 88 96 20 73 93 -3% Terraced Factory/ Warehouse 13 119 132 29 136 165 25% Semi Detached Factory/ Warehouse 4 89 93 4 76 80 -13% Detached Factory/ Warehouse 5 39 44 13 37 50 14% Industrial Complex/ Unit 23 1 24 21 1 22 -8% Others 11 52 63 16 32 48 -24% Total Transaction 64 389 452 103 355 458 1.33% Source: NAPIC/ PAPG Research  Generally prices of vacant industrial sites and rentals of industrial buildings have been stable or registered some increases in major industrial parks.  The estimated market value of industrial vacant plot in selected industrial estates:

Tenure Price PSF Tenure Price PSF Penang Island Industrial Estate Leasehold RM50-60 RM100- Industrial Estate Leasehold Penang Science Park Leasehold RM40-45 RM140 Penang Mainland Prai Industrial Estate Leasehold RM40-45 Industrial Estate Leasehold RM40-45 Industrial Park Leasehold RM40-45 Sungai Lokan Industrial Park Freehold RM80 Industrial Park Leasehold RM40-45 Industrial Park Leasehold RM40-45 Valdor Industrial Park Freehold RM40-45 Source: PAPG Research PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Industrial Sub-sector

Average Transacted Value of Industrial Property in Penang

Year Change RM Mil 2017 2018 Penang Island Daerah Timur Laut 65.08 85.23 30.96% Daerah Barat Daya 123.05 360.92 193.31% Mainland Seberang Perai Utara 93.58 86.71 -7.34% Seberang Perai Tengah 307.77 433.40 40.82% Seberang Perai Selatan 88.69 201.56 127.26% TOTAL 678.17 1167.82 72.20%

Source: NAPIC/ PAPG Research  Total transacted value at RM 1,168 million in 2018, increase about 72% compared to RM 678 million in 2017.

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Development Land Sub-sector Significant Transaction/ Events in Year 2018/ 2019 Approx. Size Transaction Location Tenure Vendor Purchaser Transaction Fee (Acres) Analysis Mustiara Sdn Bhd Simpang Ampat 10.67 Freehold TPPT Sdn Bhd (subsidiary of Tambun RM131 million RM14 psf Indah Land Bhd) Batu Kawan Batu Kawan 52 Leasehold Development SB & Micron Technology Inc RM91 million RM40 psf penaga Pesona SB Kepala Batas/ 204.70 Freehold LBI Capital Bhd Sunrich Conquest Sdn Bhd RM81 million RM9.1 psf Tasik

Kepala Batas/ CIMB Islamic 138.50 Freehold Titanium Greeview Sdn Bhd RM55 million RM9.1 psf Tasik Gelugor Trustee Berhad

Palma Indah Sdn Tasik Gelugor 179.75 Freehold Scientex (Skudai) Sdn Bhd RM109.59 million RM 14 psf Bhd

Source: JPPH/ PAPG Research

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD

3. 2019 PENANG PROPERTY MARKET OUTLOOK

1. INDUSTRIAL PROPERTY SECTOR IS EXPECTED TO GROW STABLE AND POSITIVE 2. BATU KAWAN AS THE NEW GROWTH MODERN SATELLITE CITY 3. THE AWAKEN OF BUTTERWORTH TOWN 4. THE PENANG TRANSPORTATION MASTER PLAN (PTMP) IS IMPORTANT TO PENANG ISLAND IN ORDER TO KEEP THE LIVEABILITY OF THE CITY. 5. PENANG SOUTH RECLAMATION (PSR)

This presentation is intended as general guideline only. While utmost care has been taken in its preparation and we believe the contents are accurate as at presentation time, the content does not represent any investment advice. PA International Consultants (Penang) Sdn Bhd or person(s) involved in the preparation of this presentation slides do not give any warranty as to the contents nor accept any contractual, tortuous or other form of liability for any consequences, loss or damage which may arise resulting from any person acting on or using the statement, information or opinion contained in this presentation. All rights reserved. No part of this presentation slides may be reproduced or transmitted in any form by any person(s)without the permission of PA International Consultants (Penang) Sdn Bhd. FOR INTERNAL CIRCULATION ONLY

2019 PENANG PROPERTY MARKET OUTLOOK 1. INDUSTRIAL PROPERTY SECTOR IS EXPECTED TO GROW STABLE AND POSITIVE

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY Total Approved Investments in 2018 – Penang (Manufacturing)

 According to Malaysian Investment Development Authority (MIDA), Penang recorded investments of RM5.78 billion in year 2018, comprising RM3.69 billion in foreign direct investment (FDI) and domestic investment of RM2.09 billion. The top country for Foreign Direct Investment is Japan and followed by China. (Source: Malaysian Investment Development Authority (MIDA)) PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

 Notable investment in Penang:

Company Investment Location Investment Capital (RM) SHEET Metal New Plant Batu Kawan 150 million Industrial Park Pentax Medical New Plant Bayan Lepas Not available Jinjing Technology New Plant Kulim Hi-Tech Park Not available Micron New Plant Batu Kawan 1.5 billion Technology Industrial Park

(Source: PAPG Research/ MIDA) FOR INTERNAL CIRCULATION ONLY

 Penang’s future economic success is to seek convergence between manufacturing and services sectors.  The State Government recognised the need to diversify the state’s economy and make it less dependent on the E&E sector, hence expanding the contribution of the services sector, especially the Global Business Services (GBS) industry.

 As of today, there are more than 26 GBS companies in Penang with world-class companies such as AMD Global Shared Services, Air Asia Global Shared Services, Citigroup, Dell, IHS – serving their global operations. FOR INTERNAL CIRCULATION ONLY

On-going Industrial Development in Penang

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY New Proposed Kedah International airport

 RM1.6 billion for the development of Proposed Kedah International Airport  Proposed Infrastructure development about RM 300 million for manufacturing and logistic industrial hub at Sidam, Kulim  Proposed development of a highway about RM1.7 billion from proposed Kedah International airport linking to Penang Second Bridge

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

Future Trends - 4th Industrial Revolution  The 1st Industrial Revolution - Invention of steam engines The 2nd Industrial Revolution - Discovery of electricity of mass production and specialisation of work The 3rd Industrial Revolution - The invention of computers and internet. The 4th Industrial Revolution - Revolves around the Big Data Analytics (BDA), Cloud Computing and Internet of Things (IoT).  The transition to Industry 4.0 requires huge levels of change and new skills not only within discrete functions, such as manufacturing, but also across the entire industry — touching almost every part of the supply chain.  This latest industrial revolution will allow for greater changes in Penang industrial arena and allow the Penang state to progress as a high income economy.  The National Policy on Industry 4.0, titled “Industry4WRD” provide basis and support for firms to make leap into Industry 4.0. FOR INTERNAL CIRCULATION ONLY

Notable Projects in 2018 – Penang (Manufacturing)

Source: Invest In Penang

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

Emerging Industrial Development Trend: Integrated Industrial Park and office

Source: Invest In Penang

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

2019 PENANG PROPERTY MARKET OUTLOOK 2. BATU KAWAN AS THE NEW GROWTH MODERN SATELLITE CITY

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

BATU KAWAN DEVELOPMENT PLAN

HP Inari Hotayi Electronics Batu Kawan SME Village

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

The Opening of IKEA, Batu Kawan  IKEA’s first store in the northern region of Malaysia.  Comprising 43,678sq m of retail space RM650 million project

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

Batu Kawan  A new growth second modern satellite city at Mainland and will fully transform within 10-20 years.  Batu Kawan Industrial Park (BKIP) where some major MNC industry players such as VAT, Honda, Sandisk, BOSE, HP, Haemonetics, ClassA, and etc. have set up their factories and create job opportunities in Southern District of Seberang Perai.  Aspen Vision City by Aspen Group, One Auto Hub by PKT Logistic, Utropolis by Paramount Property, Mall by PE Land, IKEA Mall and the Eco-Horizon by Eco World are some other upcoming notable developments that will position Batu Kawan be the next well- planned satellite township. KDU Batu Kawan campus to begin operations in 2020

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

2019 PENANG PROPERTY MARKET OUTLOOK 3. THE AWAKEN OF BUTTERWORTH TOWN

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

http://www.theedgepro perty.com.my/content/1 075990/best- performing-housing- projects-penang- islandBEST PERFORMING HOUSING PROJECT ON PENANG ISLAND 24 February 2017 FOR INTERNAL CIRCULATION ONLY

1st Intervention – Butterworth Old Town  Rejuvenation the old town through the expansion of Taman Pantai and through the Butterworth Fringe Festival (BFF)  What will happen to the heritage building if the old Butterworth town be the next George Town? PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

2nd Intervention – Penang Sentral  The hub will house the ferry terminal, bus terminal, train station and the cross-channel cable car once completed.  The vision is to setting up a Central Business District by leverage on the transport hub for commercial development of the underutilised land surrounding the area.

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

Expected Phase Development Ready 1 One Stop Transportation Hub 2017 2 5 Storeys retail mall 2019 3 22 storeys office tower 2021 4 24 storeys hotel tower - 5-8 To Be Confirm -  The one stop transportation hub which comprises shops, ticketing counters, prayer rooms, a food court, a nursery and 900 car park space is expected to be completed in 2017.  This development will change the cityscape of Butterworth Town and it might be a boost for the residential and commercial property in this area.

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD FOR INTERNAL CIRCULATION ONLY

Customs Inspection House for Yokohama Bay’s shipping activities in the early 1920’s turn into one of Yokohama’s most popular family or date spots. Inside the building there are many unique shops and restaurants. “Just look at all the warehouses at the Butterworth seafront. The potential for them to be turned into art houses or commercial tourist buildings is huge. All over the world – in Yokohama, Sydney and London – you see 3rd & 4th intervention – Prai River warehouses and old buildings being turned into  Prai river and the coastline cleaning art, culture, commercial and tourism spaces, works, aimed at developing both areas and that’s my long-term vision for Butterworth.” into recreational spaces and tourist attractions. – Joe Sidek, GTF festival director

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2019 PENANG PROPERTY MARKET OUTLOOK 4. THE PENANG TRANSPORTATION MASTER PLAN (PTMP) IS IMPORTANT TO PENANG ISLAND IN ORDER TO KEEP THE LIVEABILITY OF THE CITY.

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD Penang Transport Master Plan (PTMP) System Project Penang Island 1. George Town - Bayan Lepas LRT 2. Tram – Georgetown Heritage Area 3. Ayer Itam Monorail Public Transport 4. Monorail Penang Mainland 1. George Town – Butterworth LRT 2. Raja Uda – Sg Nyiur – Bukit Mertajam – Monorail 3. Bus Rapid Transit (Permatang Tinggi - Batu Kawan line) Highways 1. Pan Island Link 1 2. Pan Island Link 2 & 2A Roads 1. North Coast Pair Road - 1. Butterworth - Kulim Expressway (BKE IC) Interchange (IC) 2. Juru IC Missing Links and Road 1. - Perda Upgrading 2. Bukit Minyak Undersea Tunnel Gurney Drive - 1. Tun Dr Lim Chong Eu Expressway to Pair Roads 2. Tanjung Bungah - Batu Ferringhi - Teluk 2. Gurney Drive to Tun Dr Lim Chong Eu Expressway Sky Cab Jelutong - Penang Sentral

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD Proposed Public Transport Network

Source: Penang Transport Master Plan FOR INTERNAL CIRCULATION ONLY

The Impact of Penang Transportation Master Plan (PTMP) to Property Market  The benefit of PTMP to property market 1. Enhance accessibility to sub-urban residential and commercial hub 2. Alleviate the existing heavy traffic load 3. Traffic dispersal for existing and future property development/expansion 4. Open-up the opportunity for future land development  The demand and value of those residential and commercial property located near to LRT Station is expected to increase.  The realising of PTMP subject to the obtaining a LRT license from the federal government.

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2019 PENANG PROPERTY MARKET OUTLOOK 5. PENANG SOUTH RECLAMATION (PSR)

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD Penang South Reclaimation

Source: Penang Transport Master Plan FOR INTERNAL CIRCULATION ONLY

PA INTERNATIONAL PROPERTY CONSULTANTS (PENANG) SDN BHD

4. CONCLUSION

This presentation is intended as general guideline only. While utmost care has been taken in its preparation and we believe the contents are accurate as at presentation time, the content does not represent any investment advice. PA International Consultants (Penang) Sdn Bhd or person(s) involved in the preparation of this presentation slides do not give any warranty as to the contents nor accept any contractual, tortuous or other form of liability for any consequences, loss or damage which may arise resulting from any person acting on or using the statement, information or opinion contained in this presentation. All rights reserved. No part of this presentation slides may be reproduced or transmitted in any form by any person(s)without the permission of PA International Consultants (Penang) Sdn Bhd. FOR INTERNAL CIRCULATION ONLY 1. The overall weak Ringgit, low crude oil and commodity prices coupled with geo-political issues worldwide will continue to affect the economy to a certain extent. 2. Malaysia’s economy in 2019 is estimated to remain stable with GDP growth forecasted between 4.3% and 4.8%. 3. Penang property market generally remained soften in year 2018. 4. The property market activity in 2019 might be consolidated, but the fundamental is still stable and healthy. The price correction process will be go on to bring a new equilibrium. 5. Industrial property sector is expected to grow stable and positive with the consistent efforts of state in seeking convergence between manufacturing and services sectors. 6. Batu Kawan a new growth second modern satellite city at Mainland and will fully transform within 10-20 years. 7. The mainland is indeed going through massive transformation, Butterworth Town is expected to be another up coming hot spot after Batu Kawan. 8. Even though the Penang Transport Master Plan (PTMP) is still uncertain for any material effect on the property market, the public transport is a MUST in Penang Island in order to keep the liveability of the city.

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http://www.theedgepro perty.com.my/content/1 000715/batu- kawan%E2%80%99s- future-potential BATU KAWAN’S FUTURE POTENTIAL 10 December 2016 FOR INTERNAL CIRCULATION ONLY

http://www.theedgepro perty.com.my/content/9 75832/penang-hill- bungalows-%E2%80%94- unique-investment BUNGALOW – A UNIQUE INVESTMENT 21 November 2016 FOR INTERNAL CIRCULATION ONLY

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