Changing property market of Penang

Scale models of affordable projects in prime locations at Ideal Property Group office in Bayan Lepas.

Legislation, bridge and location are some factors affecting prices

UNTIL about a year ago, Penang’s south-west district was known as the locality for affordably-priced properties.

Since 2008, Ideal Property Group has developed over 4,000 units with a RM3bil gross development value (GDV) there.

These include One World, One Residence and Fiera Vista in Bayan Lepas, priced between RM300,000 and RM800,000. These have become landmark projects.

In the sub-sale market, prices have since increased from RM380 to RM500 per sq ft (psf) for high rise condominium, and more than 50% for landed units.

With the Penang second bridge project completed last year, new launches of high-rise properties hit about RM550 psf last year.

The very expensive ones are located in prime locations such as Tanjung Tokong, Tanjung Bungah, and Pulau Tikus neighbourhoods in the north-east district.

For example, when the Marinox Sky Villas, a leasehold condominium in Tanjung Tokong was launched in 2012, it was sold at around RM650 psf. This has increased to over RM600 psf last year. 

Similarly, condominiums in City Residence at Tanjung Tokong by Ivory Properties priced at RM750 psf in late 2013 have increased to over RM1,000 psf today.

The location of affordable properties within the RM200,000-RM400,000 price range has started to change, due to the state government’s incentives to sell to first-time house buyers, the high rejection of bank loans, and the slowing down of the economy.

Late last year, developers have formulated plans to build attractively priced properties in Tanjung Tokong and Tanjung Bungah.

Real Estate & Housing Developers’ Association (Rehda) Penang chairman Datuk Jerry Chan says the state government has made it attractive for developers to launch properties in the RM200,000-RM400,000 range for first-time house buyers.

Under the state’s affordable housing guidelines introduced last year, developers are allowed to build 2.8 times or a total of 122,000 sq ft of built-up area on one acre, comprising solely affordable homes.

“For example, they can build 144 condominiums, each with a 850 sq ft built-up. Or a mix of 750 sq ft, 900 sq ft, and 850 sq ft units as long as the total built-up area of the units does not exceed 122,000 sq ft over one acre,” Chan says.

Under the old guidelines, the plot ratio was 2.8, but developers had to make sure that 30% of the units have low-medium cost price tag of RM72,500, and another 35% in the RM200,000 to RM400,000 price range.

“This is why you can see developers getting involved in the affordable home projects in prime locations. These affordable properties have exerted pressure on mid-range houses priced between RM500,000 and RM700,000,” Chan says.

The issue with affordable homes is that if you need to dispose the property within a five-year period, the seller cannot sell it for more than what they pay for.

“The property can only be sold to the buyer approved by the state government. This is unfair to the seller as he may spent considerable sum to renovate or improve the property,” he says.

Ideal Property is also shifting its affordably priced projects into the Tanjung Tokong area. Group executive chairman Datuk Alex Ooi says the group would launch affordabe homes under the I-Condo brandname in prime locations of the island.

I-Condo units will be well equipped with convenient access and upgraded public amenities, according to Ooi. 

“We will soon launch the RM800mil I-Santorini in Seri Tanjung Pinang, Tanjung Tokong and the RM1bil Autumn projects in Bayan Lepas.

The projects comprised a total of 4,515 affordable housing units of 850 sq ft to 900 sq ft, priced between RM300,000 and RM380,000, targeting first-time house buyers.

“The I-Santorini scheme is located on a 9.9-acre leasehold site in Seri Tanjung Pinang, a stone’s throw from the Tesco hypermarket,” Ooi says.

The market has in the past 12 months become increasingly very challenging, as property prices, which have reached all-time high levels in early 2014, are beginning to correct themselves, according to Ooi.

There are now new range of condominium properties in Bayan Lepas priced over RM450 psf, compared to RM600 psf in early 2014.

Even in the prime locations of the north-east district, new launches are about 30% below the usual RM1,200 psf for condominiums.

“The difficulty in obtaining bank loans has dampened the market. In view of the challenging circumstances, we decided to stay focus on affordable projects priced between RM300,000 and RM400,000,” he adds.

Ooi said the state government also made it attractive for developers to build affordable housing by reducing development charges to RM5 psf from RM15 psf previously.

“Since the cost of building an affordable high rise unit is between RM150 to RM200 psf, without taking into consideration the land cost, it is still possible for us to price our products competitively and still make a decent profit,” Ooi says.

There is a perception in market that affordable projects are similar to low-medium-cost houses, according to Ooi.

“I-Condo will totally change that perception. Purchasers can get a condominium at affordable price tag. Our affordable units come with quality finishes, equipped with a wide range of recreational facilities, and come with one free car park,” he says.

Ideal Property Group, which benefited from the acquisition of two public listed companies Ideal United Bintang Bhd and Ideal Sun City Holdings Bhd, is in the process of injecting its assets into the two listed entities.

Another Penang-based developer, Aspen Group Holdings Sdn Bhd plans to launch in 2015 the RM499mil Tri-Pinnacle project in Tanjung Tokong, comprising largely affordable and low-medium-cost homes.

The Tri-Pinnacle comprises two blocks of affordable condominiums with a RM390mil GDV and a block of low-medium-cost units with RM100mil GDV. 

“The Tri-Pinnacle has 859 affordable units with built-up areas of 800 sq ft, priced at RM299,000, while the LMC are priced at RM72,500.

“We have received 25,000 registrations from eligible first-time home buyers,” he says. - The Star