Saturday, June 7, 2014

House buyers still being hoodwinked?

FOR many years, the National House Buyers Association (HBA) has been sounding alarm bells that prices of houses are getting more and more unaffordable for the average rakyat, especially the lower and middle income segment.
Based on current starting salaries of about RM3,000 per month and with prices of new launches of apartments in the Klang Valley being priced in excess of RM500,000, it is almost impossible for our younger generation and single parents to own their own homes.
Unless strong measures are taken by the Government to address the issue of steep rise in house prices, Malaysia risk facing a “homeless generation” that can cause various social issues with far reaching complication.
HBA had previously expressed its gratitude and thanks when the Prime Minister introduced stronger measures in Budget 2014 to address rising house prices such as increasing the Real Property Gains Tax and higher threshold for foreigners to buy properties and banning of the Developer Interest Bearing Scheme (DIBS).
Among the rules introduced in Budget 2014 was increased transparency in property sales price, where property developers will have to display detailed sales price including all benefits and incentives offered to buyers such as exemption of legal fees, stamp duty, sales agreements, cash rebates and free gifts.
This was supplemented by a ruling by Bank Negara that the margin of financing given by banks should be based on the net selling price, which is the sales and purchase agreement (SPA) price less any benefits, incentives and rebates given by the developer.
It has been seven months since Budget 2014 was announced and recently HBA volunteers went to various property fairs of various reputable developers to survey whether how well some of the measures announced in the budget have been implemented.
Freebies
(a) DIBS – Save for just one small developer, all projects surveyed had no DIBS, which shows that its ban had been successfully implemented.
(b) Free legal fees for SPA – All projects surveyed offered the fees if the SPA signed with their panel lawyers.
(c) Free legal fees for loan agreements – Only about half of projects surveyed offered these fees provided it was taken with their selected financiers and financiers’ lawyers.
(d) Free stamp duties for memorandum of transfer (MOT) – Only about 20% of projects surveyed offered the free MOT.
Rebates
All the projects surveyed offered rebates ranging from 5% to 10% of the SPA price, meaning that the purchaser only needed to pay about 5% down payment instead of the customary 10%. There were numerous projects which offered 10% rebate, meaning that the purchaser just needed to apply for 90% financing from the panel banks. Coupled with freebies such as free legal fees for SPA and loan agreement, the purchaser effectively did not need to fork out any cash up-front to purchase the house.
Findings
The conclusion is that developers are cutting down on their so-called freebies. Previously almost all projects surveyed offered free legal fees for SPA and loan agreement. As for the rebates, our survey suggested that the practice had actually intensified compared to previous years. In the past, many developers used DIBS where buyers paid 10% and nothing nothing until the property is completed. However, this has now turned into “pay nothing and get your property.”
Bank sales staff were also present during sales launches. The banks offered 90% margin of financing based on the SPA price and not the net selling price which is SPA price less all the freebies and rebates.
Conclusion
HBA supports transparency in the selling price and that the margin of financing be based on the net selling price as there is no “free lunch” in this world. Whenever the developer says free legal fees, stamp duty etc, the developer will factor the cost of such freebies and rebates back into the selling price of the property.
Although, it would appear that it makes it easier for people to buy properties without the need to fork out huge cash up-front, such freebies and rebates artificially pushes up the house price even further and has spill over effects, pushing up prices of existing properties and its surrounding locations further, making it more difficult for the future generation to buy properties.
The biggest challenge faced by prospective house buyers is coming up with the 10% down payment and other expenses which can cost in excess of RM70,000 and above for a RM500,000 property. Our younger generation who are struggling to make a living will not have enough savings and even for those fresh into the workforce, the funds in their EPF Account 2 is also not sufficient.
However, jacking up house prices and then offering a 10% rebate is not the solution. In the long run, it will only exacerbate the situation. Once a property price has risen to an artificially high level, it is difficult to bring it down again without negative consequences to the owners and economy at large.
Using the example of a ‘big’ developer who was offering 10% rebates and freebies such as free legal fees on SPA and loan agreement, the said property were all launched in excess of RM700,000 when the true value after rebates and freebies is closer to just RM600,000. Would it not be better to launch the said property at RM600,000 and asking buyers to pay the required 10% down payment instead of artificially hiking up to RM700,000 and then hoodwinking house buyers by giving rebates and freebies?
If the developer launches the project at RM700,000, then the next launch must even be priced higher, probably closer to RM800,000 and soon, even link homes as far as Semenyih will be priced in excess of RM1mil. Then surely, a “homeless generation” will emerge in Malaysia.
In the long run, it is better if the developer prices the property lower without the cost of the freebies and rebates and house buyers can then plan and budget their purchase accordingly and need not have to pay so much in monthly loan instalments.
Prospective house buyers must save up for their future purchase the moment they start working and forgo certain luxuries such as electronic gadgets and non-national cars.
The goals of affordable housing cannot be achieved overnight and requires the cooperation and understanding of all stakeholders.
Chang Kim Loong is HBA secretary-general. - The Star

Thursday, June 5, 2014

Tambun Indah expanding landbank

PETALING JAYA: Penang property developer Tambun Indah Land Bhd is expanding its landbank in Seberang Prai with the proposed acquisition of a 209-acre land for RM150mil.
Its wholly-owned subsidiary, Palmington Sdn Bhd (PSB), yesterday acknowledged a letter of acceptance of offer to acquire 27 parcels adjacent to the group’s flagship development, Pearl City.
Tambun Indah managing director Teh Kiak Seng said the proposed land acquisition would enlarge its remaining ongoing and undeveloped landbank in Pearl City to 844 acres from 635 acres previously.
“We are constantly looking out for landbank to expand Pearl City. This parcel of land is a good opportunity for us to strengthen our position as a key developer in Seberang Prai to capture the anticipated demand uptrend for affordable homes,” he said in a statement yesterday.
He added that this was in light of the recent opening of the Sultan Abdul Halim Muadzam Shah Bridge (Penang second bridge) and upcoming developments in and around Batu Kawan.
TPPT Sdn Bhd (TPPT) is the vendor of the land.
Tambun Indah will be paying about RM16 per sq ft, considerably lower than the market rate for land around that area.
In a news report last month, Henry Butcher Seberang Prai associate director Fook Tone Huat said vacant land prices in South Seberang Prai where the second bridge was located, were now hovering around RM40-RM50 per sq ft, compared with RM8-RM9 per sq ft prior to the announcement of the second link project in 2006.
At that market rate, Tambun Indah is buying the land at a maximum discount of 68%.
The transaction is subject to the execution of a sales and purchase agreement between PSB and TPPT, and is also subject to approval from shareholders of Tambun Indah.
The acquisition will be funded by the group’s internally-generated funds and bank borrowings. - The Star

Wednesday, May 21, 2014

Singapore’s central bank warns on foreign property investment

Singapore's central bank has issued a warning to investors about the risks posed by buying property overseas, as high house prices at home prompt a growing number of its residents to invest in real estate abroad.
A strong Singapore dollar and curbs on mortgage lending at home have encouraged more Singaporeans to buy property in the likes of Britain and Australia, with the Monetary Authority of Singapore (MAS) reporting a 43% rise in the value of overseas property transactions handled by local real estate agencies in 2013 compared with 2012.
MAS said in a statement that it is monitoring developments closely to ensure financial stability and that investors do not over-extend themselves.
"Risks are more difficult to assess or manage when investors are unfamiliar with conditions in overseas markets, such as the prospects for oversupply of properties, or of a deterioration in economic conditions," MAS said.
It also flagged the foreign exchange risk of borrowing in one currency but collecting rent in another.
MAS said the value of overseas properties dealt with by Singapore real estate agencies was S$2 billion (RM5.14 billion) in 2013, up from S$1.4 billion in 2012.
A recent research report by estate agent Knight Frank found that buyers from Singapore accounted for 23% of all purchases of newly built central London property in 2013, second only to British buyers who accounted for 27%. – Reuters, May 21, 2014.

Monday, May 19, 2014

E&O awaiting state govt clearance for Seri Tanjung Pinang phase 2 project


Artist's impression of Seri Tanjung PInang phase two.
Artist’s impression of Seri Tanjung PInang phase two.
GEORGE TOWN: The development of Seri Tanjung Pinang (STP) phase two in the north-east coast of Tanjung Tokong here by Eastern & Oriental Bhd’s (E&O) unit, Tanjung Pinang Development Sdn Bhd has entered a critical phase with the company awaiting the endorsement of the state government for its proposed masterplan before it can proceed with the reclamation work.
Although the state had granted an in-principle approval to E&O for the masterplan in 2011, E&O still needs the state’s clearance for the masterplan before reclamation work of the STP phase two can proceed.
The STP phase two project will involve the reclamation of 760 acres of man-made islands and 131 acres of the Gurney Drive foreshore that will be handed over to the state government for infrastructure development of a new expressway, a new Gurney Drive Promenade, and a parallel linear park for public recreational purposes.
It will be the sequel to the 240-acre STP phase one and is expected to have a development horizon of 15 years.
Time is also of the essence as E&O’s concession agreement with the Penang state government to reclaim and develop the land is subject to the completion of the reclamation work by 2019 when the reclamation concession expires. Given that the reclamation for the more sizeable STP phase two will be done further offshore in deeper waters compared with the smaller STP phase one that is closer to shore, the project is expected to incur higher costs and take a longer time.
In a recent interview here, E&O managing director Datuk Terry Tham said the company had submitted applications to the state government with regard to the endorsement of the proposed STP phase two masterplan.
“We can start reclamation only after obtaining approval from the state government, which we hope to obtain by the fourth quarter of this year. Reclamation work is expected to commence thereafter and may take three to five years for full completion.
“We should be on track to meet the deadline for reclamation of 2019 as long as we comply with all requirements set by the regulatory authorities. Development can only start after reclamation work has been completed,” Tham told StarBiz.
The Department of Environment had on April 10 granted an approval in principle for the detailed environmental impact assessment (DEIA) study and conceptual masterplan of the STP phase two project, subject to compliance to conditions set out by the DOE to ensure the project is carried out in an environmentally responsible manner and is consistent with the prevailing regulatory framework.
Tham said E&O was ready to comply with all conditions set by the authorities, which included the necessary requirement of a DEIA study and its approval. “As a responsible developer, E&O has appointed local consultants familiar with local conditions and reputable international consultants with the experience and expertise of reclamation projects worldwide, to verify and help monitor that each stage of reclamation work is consistent with international standards, irrespective of whether it is imposed on us.
Penang chief minister Lim Guan Eng told StarBiz earlier this month that E&O would be given the approval by the Penang state government if it complied with all the technical and regulatory requirements for the project.
“If all the conditions are fulfilled by the developer, the state government will have to respect the sanctity of the agreement, otherwise it will have to pay compensation to the developer for non-compliance,” Lim explained.
If given the go-ahead, E&O will proceed to call for tender proposals for the reclamation work for STP phase two with the actual reclamation work expected to begin only early next year. - The Star

Monday, May 5, 2014

长4.87公里·直通武吉占姆路 槟政府私人界耗3亿建垄尾新路

槟城4日讯)槟首长林冠英宣布,州政府将与私人发展商合作,斥资3亿令吉依山建造长4.87公里的垄尾路新路直通武吉占姆路,为垄尾交通舒困。工程预料4年内竣工,将可以舒缓垄尾路15%车流量。
槟岛市政局工程部副主任拉詹德兰说,是项工程暂命名“米桶山路”(Jalan Bukit Kukus),新路将会与现有的垄尾路平行,工程将以米桶山为起点。林冠英说,新路竣工后,州政府将重新命名。
首长是于周日在实地巡视后,召开记者会指出,垄尾近年发展迅速,人口稠密却只有一条垄尾路作为主要衔接道路。每天约有6万辆汽车取道垄尾路往市区,使到该区长期处于交通堵塞状态。
“民联执政以来,多次向联邦政府提出建造新路要求,但从第十大马计划到2016年启动的第十一大马计划中,建议都不被采纳。州政府不能等,我们只有自己建!”
他说,计划中的新路全长4.87公里,其中1.22公里路段已建竣。槟岛市政局将与私人发展商松林和国云“分摊”,由地方政府和发展商各负担1.5亿令吉,建造余下的3.65公里路段。
建议中的新路,其中还未兴建的依米桶山路有816公尺,山势陡峭和山壁与土地都是石质,增加建筑技术难度,也加重建造成本。后半段则位处山谷,来往方向均建有两条车道。


Saturday, May 3, 2014

Special Report Penang Property: Zooming in on Seberang Perai - Fast-tracking Seberang Perai’s transport infrastructure

PENANG island’s land, sea and air transpor t system is well developed compared with the mainland of Seberang Perai which is almost triple the former’s size.

However, as more restrictions on development on the island emerge — due to cost, scarcity of land and limitations brought about by its hilly landscape and its heritage zones — businesses and developments are beginning to gravitate towards the mainland, where land is plentiful.

A census by the Department of Statistics shows that as at 2010, the population of the mainland was 818,197. This figure is expected to grow to 1.01 million by 2020, and 1.17 million by 2030. This will account for about 53% of the state’s total population of 2.2 million by then.
Meanwhile, a study by the Penang state government shows that about 42.5% of traffic circulates within Penang’s island. On the other hand, 35% of traffic flow is within the mainland. Travel between Penang’s mainland and island accounts for 7% of traffic, while traffic between Penang and other states make up 14% of total traffic.

While the Second Penang Bridge’s concessionaire Jambatan Kedua Sdn Bhd expects the new bridge to siphon some 20% to 30% of traffic from the first bridge, actual traffic patterns with the new bridge have not yet been established as it was only tolled from the beginning of April. Charges range from RM1.70 to RM70.10, with motorists paying a total RM8.50 one way (in comparison, the toll for the first bridge is RM7).

According to Majlis Perbandaran Seberang Perai municipal president Maimunah Sharif, while the traffic situation in Seberang Perai/Prai is still bearable, several locations in Seberang Perai have begun to experience critical bottlenecks. Three of the most affected areas are the roundabout at Seberang Jaya, the Juru Autocity Junction and the exits from the first Penang bridge and the North-South Expressway.

In anticipation of the growth in population and subsequent traffic jams, the state government is beefing up the mainland’s infrastructure to accommodate the traffic surge. It has drawn up a transport master plan for the period of 2013 to 2030 to enhance its roads and bus system, in addition to upgrading its ferries to faster catamarans. These upgrades may cost as much as RM7.46 billion.

“In addition, the proposed construction of roads and new infrastructure are also expected to help overcome traffic congestion in Seberang Perai as well as enhance economic activities in the affected areas,” she says.

These key upgrades include building new connections within the mainland and between the island and mainland. For example, the state government is looking to build the 36.5km North-South Expressway Link Road from Bandar Cassia to Kepala Batas at a cost of RM1.46 billion, and a 7km undersea tunnel from Gurney Drive on the island to Bagan Ajam on the mainland that costs about RM4.2 billion. The state government has signed a preliminary agreement with Consortium Zenith BUCG Sdn Bhd to undertake the feasibility study and design of the tunnel as well as other roads on the island.
In terms of public transport, the state government also plans to build a bus rapid transit (BRT) system in Seberang Perai. The two networks will be from Butterworth to Georgetown (18.7km, RM655 million), and through the southern mainland corridors (23km, RM945 million). So far, there are 22 suggested new routes for the first stage, says Maimunah.

To complement these bus routes, park and ride facilities have also been proposed with seven locations under consideration. These will cost RM200 million.
To enhance this new system, the state government is also planning to create a feeder bus service that links the BRT lines. This will entail restructuring and improving existing bus routes.

In addition, the state also plans to reorganise the ferry services and increase new catamaran service routes from Penang Sentral to Weld Quay in Georgetown, Queensbay in Bayan Lepas, and Gurney Quay. Currently, the ferry service shuttles between Georgetown and Butterworth.

Penang Sentral is a 49:51 joint venture between Malaysian Resources Corporation Bhd and Pelaburan Hartanah Bhd. The 23-acre integrated residential and commercial development in Butterworth is envisioned as a transport hub that will include terminals for buses, taxis and ferries. Penang Sentral will also serve as a stop for the proposed monorail in Seberang Perai and a double-tracking electric rail.

Penang Sentral had an original gross development value of RM2 billion when it was launched in 2007, but owing to funding and land acquisition issues, the project was postponed. Last year, the project was redesigned to fast-track its development and make it more user-friendly,  its project director Imran Muhamad Salim said in a report last November.

Penang Federal Action Council chairman Datuk Zainal Abidin Osman was quoted as saying in March that the development plans for the project have been submitted to the local authorities and are awaiting approval.

How will these projects be funded? Given the sheer size of these undertakings, a number of agencies from the state and federal level will be involved. These are the Unit Pengurusan Lalulintas Bahagian Kerajaan Tempatan and  Public Works Department. Meanwhile, the state government has also applied to the federal government for funding under the 12th Malaysia Plan.



This article first appeared in The Edge Malaysia Weekly, on April 21 - 27, 2014.

Special Report Penang Property: Zooming in on Seberang Perai - From oil palm estate to new hot spot

FORMERLY known as Batu Kawan, this old oil palm estate used to belong to its namesake, Batu Kawan Bhd (BKB), before the state government gazetted the land under the Land Acquisition Act 1960 in 1990. Following a lengthy legal tussle, BKB was awarded RM15,000 per acre instead of the earlier RM8,167 per acre. BKB’s attempts to raise the  compensation to RM40,000 per acre was thrown out by the Federal Court in 2001 on the grounds that RM15,000 per acre was enough compensation for agriculture land with “remote potentiality” for development.

Fast forward 13 years later and this is clearly not the case. While the place remains largely swathed in oil palm trees with a few homes visible at the fringe, massive changes are in store.  These homes are part of the 3,000 units built by the Penang Development Corporation (PDC), the master developer, mostly for those affected by land acquisition and development, in addition to an international stadium, seafood restaurant, school, reservoir and the Batu Musang jetty.

For starters, PDC has earmarked 6,400 acres in Batu Kawan for a township called Bandar Cassia and has drawn up a master plan. “The development components of Bandar Cassia are housing, commercial, leisure and tourism, institutional, golf resort, theme park medical, educational centre, hotels, parks and all the infrastructure, amenities and facilities required by the investors, workers and residents under this live, work and play concept,” PDC general manager Datuk Rosli Jaafar tells City & Country.

Residential and industrial precincts will coexist. The biggest catalyst of this development is the second Penang bridge, or the Sultan Abdul Halim Mu’adzam Shah Bridge, which was opened in March. It connects Bandar Cassia with Batu Maung on the island.

“With the second Penang Bridge in place, PDC strongly believes that Bandar Cassia will grow by leaps and bounds, and the township can be  developed within 15 years,” says Rosli.

“The development of Bandar Cassia started in 1990, immediately after PDC completed the land acquisition exercise. Since then, the master plan has been updated and aligned to respond to the economic environment and changing demand.”

Due to the two rivers that separate the township from the mainland, water features are an important aspect of the development, which is obvious in the master plan. “Another important principle adopted when PDC designed Bandar Cassia is the preservation of natural features such as mangroves, hill areas and rivers,” Rosli says.

“PDC will work with the investors and businesses to enhance the value of these natural products to achieve a sustainable and balanced development. This is to ensure that these areas are developed with minimal intervention and with adequate and effective mitigation measures.”
In terms of accessibility, Bandar Cassia is a 30-minute drive along the North-South Expressway and Batu Kawan Expressway to Penang Port. It only takes 45 minutes to drive to George Town via the first Penang bridge, while the Bayan Lepas International Airport on the island is only 30 minutes away via the second Penang bridge. In addition, at the northwestern tip of the township is the Batu Musang jetty, which is used by ferries servicing Pulau Aman.

Investment catalysts

Some of the significant developments in Bandar Cassia include IKEA, Penang Designer Village, University of Hull, KDU University College and Penang International Technology Park. Also in the pipeline are an international theme park and a golf resort, while other recreational elements to enhance livability include a sports complex, water sports centre, mangrove park and wellness and spa village.

According to Rosli, KDU University College and University of Hull plan to set up schools of engineering, accountancy, law, business studies and logistics in Bandar Cassia.

“PDC is working closely with investPenang to promote the Batu Kawan Industrial Park in order to attract high-technology and skills-intensive industries to the area. Besides the industrial park, the other development components that can create more job opportunities for the people in Bandar Cassia are commercial, institutional, education and tourism,” he says.

“Penangites have waited for many years for IKEA to open for business. Penang is now proud that it has chosen Batu Kawan as its new base in the northern region. IKEA’s presence is a boost for PDC in its efforts to make Batu Kawan a more attractive place for all to live, learn, work and play.

“Another important project in the pipeline is the premium shopping centre Penang Designer Village, which will be another booster. All these will offer lots of business and leisure activities to the locals, besides attracting tourists from neighbouring states and foreign countries.”

He says PDC is expecting 250,000 people to live in Bandar Cassia. In view of this, some 50,000 homes will be built to cater for all strata of society. They include 11,800 units of affordable housing — 3,372 low-medium cost apartments and 8,428 medium-cost apartments — to be built over 15 years. According to PDC, affordable homes are priced at RM250,000 on the mainland. PDC plans to launch the first phase, comprising 149 low-medium cost apartments and 371  medium-cost apartments, this month.

For residential properties, the average density is around 50 units per acre. To cater for the targeted population, PDC aims to have up to 170 million sq ft of commercial space with an average plot ratio of 3:1 in Bandar Cassia.

“The provision of the infrastructure, amenities and public facilities is based on a population of 250,000 and 170 million sq ft of commercial floor space,” he says.

Besides residential and commercial properties, Bandar Cassia will also feature the 831-acre Batu Kawan Industrial Park (BKIP) in the south. According to Rosli, earthworks for east BKIP (436 acres) have been completed while that for west BKIP (395 acres) is being carried out.

“With a view to promote local small and medium-sized enterprises, phase one of the SME Village will be located in the BKIP,” he says.

Phase one comprises four semi-detached factory buildings, 40 terraced factory buildings and 27 factory lots. The factory buildings are under construction. Phase two, which comprises a service centre, will commence construction soon.

As Bandar Cassia is considered a greenfield site, the ground must be raised above the flooding level before development. The township will be divided into catchments with different development platform levels and land earmarked for monsoon drains to prevent floods.

PDC is now building a number of roads to improve connectivity inside and outside Bandar Cassia. The Bandar Cassia Highway will linked to the second Penang bridge via a cloverleaf flyover within the township. PDC is also building Persiaran Cassia 2 and Lingkaran Cassia Selatan, to the west of BKIP. Up for completion in the second quarter of the year are Persiaran Cassia Selatan 3 and Lingkaran Cassia Selatan.

Besides roads, Bandar Cassia will also provide footpaths and bicycle lanes as well as public transport to connect to centres of activity such as workplaces, parks, service centres  and other neighbourhoods, says Rosli.

“To enhance the connectivity of people, PDC will encourage friendly linkages of buildings through verandahs, linear parks and footpaths. In the design of roads, pedestrians and cyclists will be separated from motor vehicles.”

Bandar Cassia is currently served by 900mm water mains and a reserve reservoir with a 10 million gallon capacity.

Electricity supply to the industrial areas is currently at 33kV, but this can be upgraded to 132kV if required by the industry or development. Rosli says Tenaga Nasional Bhd has begun work on the main intake substation on a 21-acre site, which will be connected to the national grid.  This substation will supply power to Bandar Cassia at 275kV.

The township will have at least four sewage treatment plants, which will be built in modules, with an ultimate capacity of 100,000 population equivalent.


This article first appeared in The Edge Malaysia Weekly, on April 21 - 27, 2014.

Special Report Penang Property: Zooming in on Seberang Perai - Developers betting on growth prospects

ABUNDANT and more affordable land as well as a large population have attracted more developers to invest in Seberang Perai. There are also more job opportunities in the mainland now as industrial businesses shift their operations there. More young adults have also moved from the island to the mainland as property prices are more affordable there.

As several major projects are set to take off in Bandar Cassia in Batu Kawan, those involved in Seberang Perai’s real estate market are expected to reap the rewards of their investments.

Developers from outside Penang have made inroads into the mainland. They include Sunway Bhd, Mah Sing Group Bhd, IJM Land Bhd, Eco World Development Group Bhd, Malton Bhd, DNP Land Sdn Bhd and Global Oriental Bhd. Meanwhile, the local players include Ivory Properties Group Bhd, Tambun Indah Land Bhd, Tah Wah Group Sdn Bhd and Asas Dunia Sdn Bhd.

According to Ivory Properties chief operating officer Goh Chin Heng, the second Penang bridge turned the mainland into a “different ball game”. He says the mainland has the longest industrial belt in the country and industrial investors are keen to invest there, shoring up demand for housing.

“With a two-car lane and a motorcycle lane on the second bridge, it will definitely bring Penang island closer to Batu Kawan, just like the case of Hong Kong Island and Tsim Sha Tsui,” he says.
Top: DNP Land’s BM Impiana township will also feature an AEON shopping mall that  is scheduled to open in June
Bottom: 
DNP Land’s Jesselton Hills in Bukit Mertajam
Going forward, he expects Batu Kawan to be the new satellite city on the mainland, while Simpang Ampat and Juru will be the new hot spots thanks to the second Penang bridge and new catalyst projects.

“Batu Kawan has the potential to become another growth area, with retail outlets, themed shopping and leisure activities on a mega scale in one area. In the Bukit Mertajam area, Alma Town will be the popular hot spot while Butterworth, Bagan Ajam, Sungai Puyu, Teluk Air Tawar and Sungai Dua will benefit from the undersea tunnel, which is expected to be completed in 2025. In terms of value creation, homebuyers may see a 30% to 40% appreciation but this would be in a longer period compared with the island’s appreciation rate.”

Goh says the island will feature more stratified properties while landed properties will still be preferred on the mainland. Luxury condominiums on the island are priced at RM1,200 to RM1,500 psf, while affordable units are from RM600 to RM800 psf. Meanwhile, affordable condos on the mainland are priced from RM300 to RM350 psf.

“If we make a general comparison of the island and the mainland, the price of similar products of the former is 2.5 to 3 times higher than the latter. Generally, we expect the gap between the two to narrow, especially in the Batu Kawan area as it transforms into a well-planned township.”

According to Goh, the group’s key projects on the island are City Residence, City Mall, Mount Erskine, Penang Times Square and Island Resort. “We have also started the first phase of Penang World City and the remaining phases are in the planning stage.”

On the mainland, it will soon be completing the third and last phase of Aston Villa at Bukit Mertajam. Over at Bandar Cassia, the group and IKEA will be developing an IKEA store and mall on a 245-acre parcel at a cost of RM484 million.

“The main focus of the state government should be to plan and develop the infrastructure, such as the roads and drainage, well. We are glad to see that the state government is welcoming more investors to set up their businesses on the mainland, and we believe that the state will work more closely with the local planning authority to support development approvals.

“Apart from that, the state and relevant authorities should work together on solid waste solution planning as we are expecting a significant growth in the population on the mainland in the near future. The state should also continue playing its role in the development of affordable housing.”

Another company that has made inroads into the state is Mah Sing, with its acquisition of a 76.38-acre tract in Jawi, near the toll of the second Penang bridge. The land will be developed into Southbay East, a township with affordable homes to cater for the middle class. Named after the more upscale Southbay City mixed-use development in Batu Maung on the island, the township has an estimated gross development value (GDV) of RM400 million. It will comprise linked homes, linked semi-detached homes, townhouses and shops. Its first phase will likely feature terraced houses priced at about RM500,000 each, a price point that analysts feel is acceptable for the area. Southbay East will be a gated-and-guarded community with clubhouse facilities.

Notably, this is Mah Sing’s first project on the mainland and its sixth in Penang. The group had acquired the land for RM12.80 psf, which is deemed reasonable compared with similar acquisitions nearby, namely IJM Land’s acquisition of a 70-acre tract at Pekan Sungai Jawi for RM18.50 psf.

IJM Land is planning to develop a small township there, with a preliminary GDV of RM300 million to RM350 million. It already has a township on the mainland, namely Pematang Sanctuary. This upscale freehold 100-acre township mainly comprises 2-storey semi-dees and 2-storey bungalows. Prices range from RM520,000 to more than RM772,000, which translates into a GDV of about RM200 million.

Meanwhile, Eco World has a new freehold project in Bukit Tambun on the mainland. Called EcoTrees, the 58.18-acre development is located near the second link and next to the North-South Expressway. According to a spokesperson, it will have landed and strata properties, with a small mall comprising shops and offices. The first phase is targeted to be launched in 2015.

Meanwhile, DNP Land, a subsidiary of Wing Tai Malaysia Bhd, has projects coming up in Alma, Bukit Mertajam. They are the Mahkota mixed-use development, Sentinelle Ville gated-and-guarded landed luxury homes and Jesselton Hills gated-and-guarded high-end landed homes.

Mahkota will comprise 360 units of serviced apartments with built-ups of 1,156 sq ft onwards and a row of 3-storey shopoffices. The project will come up directly opposite AEON Jusco, which is scheduled to open in June. Meanwhile, Sentinelle Ville will comprise 66 units of 3-storey semi-dees with private lifts. The land areas will be from 34ft by 85ft onwards, while built-ups will be around 3,609 sq ft. Construction has just begun.
Left to right:
Goh: If we make a general comparison of the island and the mainland, the price of similar products of the former is 2.5 to 3 times higher than the latter
Tan: If there is a multi-national company that is coming to Penang, I can assure you that they would not set up their factory on the island
Jesselton Hills will be a 120-acre development with 800 units of 2-storey and 2½-storey semi-dees, bungalows and 2-storey superlink homes. There will be 136 units of semi-dees with built-ups of 2,478 to 2,960 sq ft and land areas of 36ft by 72ft and 39ft by 79ft onwards. Meanwhile, the 198 superlinks will have built-ups of 2,408 sq ft and land areas of 23ft by 75ft.

“You can see a paradigm shift where the population  is moving to this side and the job market [is growing]. If there is a multi-national company that is coming to Penang, I can assure you that they would not set up their factory on the island. [On the contrary], you can see the foreign directi investment really come into the area [Bukit Mertajam, which is on the mainland],” says DNP Land’s senior general manager of property division northern region K C Tan.

“Why did we choose Bukit Mertajam? Mainly because it’s an industrial park and they have done very well here. Many multi-national companies are also coming here.

“The emergence of Batu Kawan definitely inspires a lot of confidence,” he says.

Malton, on the other hand, has entered into a joint venture with landowner Batu Kawan Bhd to develop a 300-acre parcel in Batu Kawan. According to a research note by RHB Research Institute Sdn Bhd, the parcel had a potential GDV of RM3.88 billion as at June last year. The launch of phase one is scheduled for mid-2014 and will comprise shopoffices and superlink homes with a GDV of RM440 million.

Meanwhile, Sunway is developing Sunway Wellesley, an 82-acre freehold development in Bukit Mertajam. Unveiled in April last year, the first phase comprises 31 units of 3-storey shopoffices and has been fully sold. Meanwhile, phase two comprises 154 units of 3-storey townhouses, 60 units of 3-storey semi-dees, and 11 units of 3-storey shopoffices.

According to RHB Research Institute in a note dated Aug 19, 2013, Global Oriental owns 350 acres of undeveloped land in the Bandar Cassia township. The tract has an estimated GDV of RM2.3 billion. One of the more recent launches in the township is Callisia 2, which comprises terraced houses with built-ups of 22ft by 67ft. The houses are priced at RM359,000 and have been fully sold. The research report also notes that the next phase will comprise terraced houses, superlinks and semi-dees in a gated-and-guarded precinct. Indicative pricing is at RM500,000, RM555,000 and RM750,000 respectively. The note also says that Global Oriental plans to build a retail mall once Bandar Cassia’s population grows further.
Top: Bukit Tambun Bottom: Tambun Indah Land’s flagship Pearl City in Simpang Ampat
Tah Wah Group has a 130.5-acre parcel on the mainland, primarily in Bukit Mertajam, Kubang Ulu, Bagan Ajam and Kepala Batas. Meanwhile, it has launched 854 units of 3-storey terraced houses, 3-storey semi-dees, 3-storey bungalows, condos, and 2-storey and 3-storey shopoffices over the past two years. These are located in its Orange Villa, Orange Villa 2, Orange Selayang, Orange Garden and Orange Regency developments.

Tambun Indah Land, meanwhile, has ongoing projects in 101.26 acres of land in Butterworth, its flagship Pearl City in Simpang Ampat, Bukit Mertajam, and Jelutong on the island. They are Carissa Villas, Pearl Indah 3, Pearl Residence, Pearl Impian, phase one of Pearl Avenue, Capri Park, BM Residence, Straits Garden, Camellia Park and Permai Residence. Its cumulative GDV is RM971.6 million.

Its remaining projects worth RM3.8 billion are mostly in Pearl City, with the rest in Bukit Mertajam. They are Taman Bukit Residence, phase 2 of Pearl Avenue, Pearl Harmoni, Pearl Tropika, other phases of Pearl City, and Rain Tree Park 1 and 2.

According to a RHB Research Institute note on March 6, terraced houses in Pearl City have seen their values increase by 10% annually over the past six years, while semi-dees and bungalows have appreciated by 5% to 10% on average.

“This is a good indication of demand for affordable housing. We believe the house price in South Seberang Perai will continue to hold up, given the higher entry cost [namely, land cost borne] by other developers,” it said.

According to RHB Research Institute, Tambun Indah Land is eyeing 40% of buyers from Penang Island this year, up from 28% in 2009. Notably, there are also more buyers from Kedah, northern Perak and Kuala Lumpur, who have most likely been drawn by the growing job market in Penang.


This article first appeared in The Edge Malaysia Weekly, on April 21 - 27, 2014.

Special Report Penang Property: Zooming in on Seberang Perai - Tapping the mainland’s potential

THE first thing that strikes you when you arrive in Batu Kawan in mainland Penang using the newly opened second bridge is how bare the area is. Plantations and trees flank most stretches of the road running through the town and there are few cars and some houses. Several cleared tracts ready for development can also be seen.

Traffic picks up and more houses and shops appear as you head further inland but it is a far cry from the bustling, congested and more developed island of Penang.

The island has been the state government’s focus for development over the past few decades and it has grown rapidly. Today, it is regarded as one of the most livable cities in the country and a popular tourist destination. Its property market has also thrived, becoming one of the most vibrant in Malaysia.

Be that as it may, the mainland, which is known as Seberang Perai, has been steadily generating a buzz with its growth potential since the announcement of the second bridge in the Ninth Malaysia Plan in 2006. The excitement has intensified with the opening of the bridge, particularly in the 6,400-acre Batu Kawan where the bridge’s exit is located.
The PDC has several high-impact projects in the works in the largely undeveloped Batu Kawan
Seberang Perai, which is split into North, Central and South, is about three times the size of the island and as at 2010, it was home to 818,197 people compared with 708,127 on the island. Some of the towns in the North are Butterworth, Kepala Batas and Bagan Dalam while Alma in Bukit Mertajam and Juru are in Central Seberang Perai. Batu Kawan, Valdor and Bukit Tambum in the South.

Central Seberang Prai is the most mature of the three districts while the South is the least, says Michael Geh, director at Raine & Horne International Zaki + Partners.

But things are changing in the South. “Developers have started buying land there, infrastructure is being developed and major projects are being built,” he says, adding that the stimulus has been the opening of the second bridge.

“The land has always been there, but prior to the bridge, there was no reason to develop it.”

Geh feels, however, that while the opening of the second bridge has spurred interest in the South, this district will take time to grow.

“I keep hearing non-Penangites talking about how exciting places like Batu Kawan are now that the second bridge is open. Such perception … will drive development … but it will not be instantaneous.”

While much work needs to be done, Seberang Perai has several factors working in its favour. The state government, via relevant agencies, has in recent years started rolling out plans to boost the growth of Batu Kawan, including high-impact projects such as the Penang Designer Village, Swedish furniture giant IKEA’s new store, a golf resort, a theme park and a university town. These, coupled with the scarcity of land and high property prices on the island, and ample undeveloped land in the mainland can make Batu Kawan an appealing and cheaper alternative for homebuyers.
Ample cheap land

The mainland has vast tracts of agricultural land for the palm oil, coconut and poultry industries, which in turn create demand for factories and houses, says Tan Chai Liang, director at Izrin & Tan Properties Sdn Bhd.

“With the opening of the second bridge, the mainland’s property market is set to grow. This is partly because development land is scarce on the island while the prices are high. Other factors are an increase in new industrial set-ups and the inflow of investment into the mainland, particularly South Seberang Perai.”

Goh Chin Heng, chief operating officer of Ivory Properties Group Bhd, notes that Seberang Perai has the longest industrial belt in the country and after taking into account the above factors, he believes more industrial players will invest in the mainland. “This will create huge demand for housing, especially in the South.”

According to Datuk Jerry Chan, Penang branch chairman of the Real Estate and Housing Developers’ Association Malaysia (Rehda) and managing director of Asas Dunia Bhd, the price of land in the mainland is about a quarter of that on the island. “The price of prime land for housing on the island ranges from RM800 to over RM1,000 psf while on the mainland, it is difficult to push prices past RM100 psf,” he says.

Geh notes that in general, land prices have increased by about 15% per year over the past five years while Tan believes the highest increase in land prices has been in South Seberang Perai. Nevertheless, land here is still inexpensive compared with that in the more established towns of Butterworth, Seberang Jaya and Bukit Mertajam.

Chan, meanwhile, opines that high prices and the scarcity of land on the island will push more developers and industrial companies towards the mainland.

“You can see far greater industrial expansion on the mainland. It’s not because people are naturally opting for the mainland. It’s because of the shortage of industrial land and land in general on the island. More factories mean more jobs and people go where the jobs are.”
From left to right:
Geh: The land has always been there, but prior to the bridge, there was no reason to develop it
Tan: Houses in the range of RM250,000 to RM500,000 will remain the popular choice for mainland residents
Chan: What you can build on the island and Seberang Perai are two different things
Emerging growth corridors 

The areas that will benefit most from the opening of the second bridge are those closest to it, says Peh Seng Yee, director at CH Talhar Williams (WTW) Penang.

“In the South, we are looking at Batu Kawan, Bukit Tambun and areas along the old trunk road, such as Simpang Ampat, Jawi, Sungai Bakap and Nibong Tebal. These areas are the closest to the second bridge. In the North, Bertam, which has ample land, will see growth.”

Tay Tham, director of Knight Frank Penang, concurs. He adds Alma in Bukit Mertajam to the list of potential hot spots while Shanmughananthan Jeevan Muniandy, managing director of Sri Shan Realty Sdn Bhd, picks Nibong Tebal, Sungai Bakap, Valdor and Simpang Ampat because the price of land in these areas is below RM15 psf.

“The new growth corridor of Batu Kawan-Valdor will become the new property hot spot. Agricultural land with improved accessibility is likely to see its value increase manifold in the long term, but it will depend on the zoning, location, frontage, provision of infrastructure and amenities in the surrounding areas,” says Tan.

Big developers from the Klang Valley have begun to notice the mainland’s potential. Last year, Mah Sing Group Bhd acquired 76.38 acres of freehold land in Jawi for RM12.80 psf; Eco World Development Group Bhd acquired a 60-acre tract near Simpang Ampat for about RM30 psf; and IJM Land acquired a 70-acre tract in Jawi for RM56 million in 2013.

Over in Bukit Mertajam and Bukit Minyak, DNP Land Sdn Bhd (a subsidiary of Wing Tai Malaysia Bhd) has a total landbank of 270 acres with an estimated gross development value (GDV) of RM1.8 billion and Sunway Bhd has its 82-acre mixed-use development Sunway Wellesley.

Penang-based Tambun Indah Land Bhd, which developed the RM2.7 billion Pearl City in Simpang Ampat, has eight acres in Bukit Mertajam with an estimated GDV of RM63.7 million. Tambun Indah has a remaining landbank of 584.56 acres in Pearl City with a GDV of RM3.8 billion. In Valdor, Asas Dunia has a landbank of 1,000 acres.

The area that has garnered the most interest is Batu Kawan, previously an oil palm plantation owned by Batu Kawan Bhd and later acquired by the Penang government in 1990.

The Penang Development Corporation (PDC), which has been tasked with the development of Bandar Cassia in Batu Kawan,  and has its master plan to turn Bandar Cassia into an eco-city. PDC is a state government agency set up to spearhead Penang’s social-economic development.

The PDC has several high-impact projects in the works that are aimed at boosting growth in Batu Kawan. In August last year, it called for a request for proposal (RFP) to buy 190ha in its Bandar Cassia township. Of the 190ha, 87 are designated for a theme park while 60 are for a golf resort. Eco World Development Group Bhd is considered a forerunner to win the bid, which is expected to open at RM45 psf.

Two months later, PDC signed a purchase and development agreement with PE Land Sdn Bhd to construct the RM1 billion Penang Designer Village. PE Land is part of Pan Sarawak Group, which owns and operates The Spring shopping mall in Kuching, Sarawak.

The development, the land premium of which is RM37.94 psf, comprises a shopping mall offering discounted products from luxury brands, a 300-room hotel, several F&B outlets, a landscaped garden and residential units. It is due for completion in three years.

In January this year, it was announced that IKEA will set up a store in Batu Kawan. Ivory Properties Group Bhd and Aspen Vision Development Sdn Bhd have set up a special purpose vehicle — Aspen Vision Land Sdn Bhd (AVL) — to work with IKEA on planning the new township with AVL holding a 49% stake and IKEA 51%. The total cost of the 245-acre tract is RM484 million.

According to Goh Chin Heng, Ivory Properties’ chief operating officer, AVL has signed a joint-venture agreement with Ikano Pte Ltd to develop the IKEA store (100% owned by the Swedish company) on 20 acres; the IKEA mall (70% IKEA; 30% AVL) on 55 acres; and a mixed-use development (20% IKEA; 80% AVL) on 170 acres.

Just last month, Paramount Corp Bhd acquired a 30-acre tract in Bandar Cassia from the PDC for RM65.55 million. The institutional tract was transacted at RM40.50 psf and the development land at RM55 psf. The tract is slated for a university metropolis that will be anchored by Paramount’s KDU Penang and an integrated development.

Malton Bhd has 300 acres in Batu Kawan that are slated for a mixed-use development with an estimated GDV of RM3.88 billion. Phase 1, said to comprise shopoffices and superlink homes, is targeted for launch in the middle of this year.

Also in Batu Kawan, Global Oriental Bhd has a remaining landbank of 350 acres in Bandar Cassia meant for a residential development with a GDV of RM2.3 billion.

Goh says Batu Kawan will be the next satellite city in the mainland while the other upcoming hot spots are Simpang Ampat and Juru due to their close proximity to Batu Kawan.

“Batu Kawan has the potential to become something that has never happened in Penang before — a town where retail outlets, theme parks and leisure activities are all in one place on a mega scale. Another hot spot will be Alma in Bukit Mertajam and in Butterworth, you have Bagan Ajam, Sungai Puyu, Teluk Air Tawar and Sungai Dua after the proposed undersea tunnel is completed in 2025. In terms of value creation, I think buyers can expect an appreciation rate of 30% to 40% but this would be in a longer period compared with the island’s appreciation rate.”

Locations in the mainland will not be the only beneficiaries: property experts have singled out Batu Maung and Balik Pulau on the island. The second bridge starts at Batu Maung, where Mah Sing’s 88-acre Southbay township is located.

Penang-based developer MTT Properties & Development Sdn Bhd has a 300-acre township - Botanica.CT - in Balik Pulau. MTT Properties & Development is the property arm of MTT & Priority Group of Companies.

Balik Pulau, in particular, would be a good choice for those who want to live on the island, but cannot afford the prices in George Town, says Geh.

“The prices of houses in Balik Pulau are about 50% of those in George Town. Many of our buyers are young professionals working in the Free Trade Zone (FTZ) in Bayan Lepas as the distance from Balik Pulau to the FTZ is shorter than if you were living in George Town,” says Angela Teoh, group executive director of MTT.

In fact, says Geh, most people would be happy to live in Balik Pulau instead of Batu Kawan or Bukit Tambun as most prefer to stay on the island where there are more activities and amenities.

Says Teoh, “Having an address in the mainland is not the same as having an address on the island. So, if Batu Kawan is developed with a strong industrial base, I’m sure those who work there will want to live in Balik Pulau.”

A market for home occupiers


The property market in the mainland is traditionally meant for home occupiers, says Geh.

“It’s not for investment or buying a property as a second home. People will buy a home in the mainland first and a second home on the island. I don’t see a reversal of this trend in the future. The mainland will remain a home-occupier market.

“People who move from the island to the mainland are mostly those who want landed property. I personally know people who sell their apartments on the island to buy a comfortable semi-detached house in the mainland,” says Geh.

Landed homes make up the bulk of properties in the mainland as they are still the residence of choice for most Malaysians, especially where land is ample.
The 300-acre township Botanica.CT is being developed by MTT Properties & Development
“The island has more high-end products and prices of landed properties are almost more than double those in the mainland,” says Tay.

“If you were to buy a terraced house in Sungai Ara on the island, it will cost you at least RM800,000. To be able to afford that price, you will need a net income of RM10,000 and obtain a 90% loan with a 35-year tenure. How many people, especially the young, can afford that?” asks Teh Kiak Seng, managing director of Tambun Indah.

Citing Tambun Indah’s Pearl City as an example, Teh says a terraced house in a gated area costs about RM410,000 while a similar house in a non-gated area is about RM370,000.

Geh says property prices have increased over the past five years — around 5% year on year on both the primary and secondary markets. “It has been a steady rise with the secondary market accounting for most of the transactions.”

The upside in Seberang Perai is greater because of the lower land prices, which translate into cheaper houses, says Rehda’s Chan.

“However, I can’t say if the price gap between Seberang Perai and the island is narrowing as we don’t have much to compare with at the moment. What you can build on the island and Seberang Perai are two different things.”

Tan believes the price disparity between the island and the mainland will remain. “The island will become the choice residential area for the wealthy and higher-income group while the middle and lower-income group will opt for more affordable houses in the mainland.

“Affordable landed homes with security services in a modern township complete with amenities and facilities are safer bets to appreciate over time. Houses in the range of RM250,000 to RM500,000 will remain the popular choice for mainland residents.”

Tan also notes that for the price of a condominium of below 850 sq ft on the island (RM400,000 to RM500,000), buyers can own a landed home in the mainland.

According to Teh, there is already an increasing number of buyers from the island. “Last year, some 37% of our purchasers were from the island and the year before that, it was about 20%. This year, we foresee an increase to 40%. More and more people from the island are buying homes in the mainland, especially young couples and professionals because they have no choice.”

Tan and Peh believe that this trend will continue because of affordability, the potential for long-term growth and price appreciation, and the increased accessibility via the two bridges.

While Shanmughananthan agrees that this trend will continue for some time, he believes younger buyers, in particular graduates, will eventually buy properties on the island when they have more money. “The island simply has more to offer and is a more prominent address.”

Room for improvement


While the mainland has growth potential, there is still a reluctance to live there. Rehda’s Chan says much of this can be attributed to the state government’s lack of focus on the mainland.
A commercial and housing part of Butterworth
“We have the same government, but you can see how different the island and mainland are. The island is cleaner and much better developed. The same kind of effort has not been put into the mainland for a long time. So, are we going to finally see the ugly duckling turn into a swan?” he asks.

“On the island, people are complaining about the congestion and high property prices. I’d tell them, here’s an alternative, why don’t you buy a house in the mainland instead? It’s cheaper, it’s not as congested and for the same amount you pay for a small apartment on the island, you can get a nice landed property.

“If I were the government, the first thing I would do is even things out in the mainland. There is much room for improvement.”

Knight Frank’s Tay believes many Penangites on the island are reluctant to move to the mainland because of the good living environment on the island with its array of eateries and shopping centres. It’s easier to get around there and there are fewer foreign workers.

“The heavy industrial sites are mainly in the mainland, so there’s much more noise and pollution,” he says.

“The island is more vibrant and it is well known as a tourist destination. When people say they want to go to Penang, what they mean is the island. The mainland has its strengths too — less congestion and more affordable housing — but you have to create appeal and make it a more desirable place to live,” says Peh.

Geh feels that the state government should lead the charge in developing the mainland. “The government should be the catalyst to get the ball rolling, which it has started to do on its land [Batu Kawan]. Now [it should focus on] the rest of the mainland.”

Chan says the first thing the state government needs to do is to make the mainland as livable as the island.

“George Town is one of the more livable cities in the region, but what about the mainland? You should aspire to be the best, but you should strive to be the best across the board, not just in one area. If you look at Singapore, whatever they do and aim for is across the board.”

All the consultants agree that infrastructure and public transport need to be looked into.

“Infrastructure and public transport are insufficient. The mainland is a vast area with a lower population density than the island. Priority has always been on the island’s public transport due to tourism,” says Tan.

Tay concurs, noting that at present, the number of buses and taxis in the mainland is insufficient.

“The infrastructure bottleneck in Batu Kawan is a key concern as the existing trunk roads are unable to cope with the sudden influx of vehicles and need upgrading. There is also a need to have new links to Batu Kawan as well as the smaller towns of Sungai Bakap, Jawi, Simpang Ampat and Nibong Tebal to cater for increased investment and industrial activities,” says Tan.

According to the Seberang Perai Municipal Council (MPSP), based on a study before the completion of the second bridge, about 20% to 30% of the traffic from the first bridge was expected to move to the second bridge.

“As the second bridge was opened not long ago, traffic census and traffic flow patterns on the second bridge and in the vicinity of Batu Kawan have yet to be fully identified. However, based on our monitoring, an increasing number of vehicles is passing through Jalan Bukit Tambun and Bandar Cassis since the second bridge opened,” says an MPSP spokesman.

MPSP agrees that there is a need to improve the infrastructure and public transport, and several projects have been put in place towards this end in the Penang Master Plan 2013-2030. They include road widening and upgrading exercises costing more than RM1.2 billion; a bus rapid transit system from Butterworth to George Town and in the South’s corridors; and an extension of park and ride facilities.

Other than livability, infrastructure and public transport, Tan and Tam feel that there is a need to have better zoning and planning for industrial, residential and commercial developments.

“The state government should expedite the implementation of the local plan for South Seberang Perai and unveil the master zoning plan for Batu Kawan to ensure more transparent and coordinated planning and development strategies. At the end of the day, equal focus should be given to the mainland to promote balanced and sustainable development within Penang,” says Tan.

With careful planning, coordination and implementation, the mainland has a bright future and one that is a long time coming.


This article first appeared in The Edge Malaysia Weekly, on April 21 - 27, 2014.

Special Report Penang Property: Zooming in on Seberang Perai - My Space: Bridge to growth

TO say that the opening of the Second Penang Bridge has injected new life into the real estate potential of Seberang Perai is an understatement.

While the ordinary property investor is still debating to what extent the area’s prospects will be boosted by the enhanced accessibility, Seberang Perai has been on the radar of astute property developers since the second bridge project was announced back in 2006.  

Naturally, interest from developers grew when work started, and it intensified with the completion of the bridge coupled with indications of the Penang government’s commitment to develop the mainland. The bridge, spanning 24km and costing RM4.5 billion, was opened to the public on March 1.

As it stands now, the landscape in the mainland is a far cry from the hustle and bustle of Penang island. A good portion of it is covered in plantations and vegetation, reminiscent of how a stretch of Jalan Damansara in Kuala Lumpur — between Bandar Utama and the junction with Jalan Kepong — used to be like in the early 1980s. A recent trip to the mainland shows that the area is still primarily agricultural, even in Batu Kawan, where one end of the second bridge sits.

Meanwhile, established and high-profile developers based outside Penang have been flocking to the mainland. So, one can expect the unveiling of interesting and creative development concepts that will spice up the market there.

Generally speaking, land prices in the mainland, although they have moved up in recent years, can still be cheaper by more than half that on the island. This would make homes in the mainland a lot more affordable and attractive, thanks to the second bridge.

Those who cannot afford to own a home on the island can now look at the mainland as an alternative. At the same time, property owners on the island looking to cash out can relocate to the mainland with a hefty bank balance to boot.

However, not everyone on the island would be willing to make the mainland their home despite the enhanced accessibility.

The appeal of the island — apart from having all the amenities city dwellers would want — lies in a unique blend of heritage, art and culture, and food. The island’s attractions have been drawing tourists in increasing numbers, both from within and outside the country, especially in recent years. Many KLites are known to own weekend homes on the island.

On the part of the state government, efforts to promote Penang island are ongoing, such as featuring Penang in a popular Chinese serials screened on Astro Wah Lai Toi.

A growing expatriate community and rising tourist arrivals, meanwhile, have led to the mushrooming of boutique hotels, quaint cafes and eateries. Some of these have, in turn, become attractions on their own.

Will such activities migrate to the mainland to take advantage of the significantly cheaper real estate costs? I don’t think so.

Here’s why. Interestingly, the value of an address is tied to how sexy it is deemed to be. A loose measure of that would be how popular the preferred address is. The location factor is important as are accessibility, amenities and the profile of residents.

Take Damansara Utama in Selangor. For a very long time, real estate values in the development remained inferior to those of its neighbour Bandar Utama, just beside it, and Taman Tun Dr Ismail, located across the road.

It has only been in the last 10 years or so, thanks to a surge in demand for landed homes, that prices in Damansara Utama have managed to narrow the gap with those of its neighbouring developments.

Property prices on Penang island, which is more established in the eyes of investors, will stay ahead of prices in the mainland. Considering the development game plan unveiled thus far by the state government, one can expect more excitement on the real estate scene, both on the island as well as the mainland.


Au Foong Yee is managing director of The Edge Communications Sdn Bhd 


This article first appeared in The Edge Malaysia Weekly, on April 21 - 27, 2014.