Speculation partly to blame, says think tank

The ever-rising prices of property in Penang are not just down to scarcity of land but are partly due to speculators, strong demand from investors and a low-interest rate environment.

Dr Michael Lim Mah Hui, senior fellow of Socio-economic and Environmental Research Institute (Seri), a think tank, said the investors comprise wealthy Malaysians and foreigners.

The price rise is making property increasingly out of reach for the average Penangites. The strong demand means that developers were putting more expensive price tags on their projects.

Lim, a banker who worked with Credit Suisse, Standard Chartered Bank and the Asian Development Bank, said from 1999 to 2008, the prices of property in Penang rose 40 per cent.

This increase is a tenth more than that for the whole country, and it is still going up.

Terrace houses in Penang now average RM700,000 to RM1.2 million, against RM445,000 to RM520,000 two years ago.

"Condominiums cost RM250 per square feet in 2008 but now the price is RM350 to RM500, depending on the location," Lim said during Seri's roundtable on housing affordability gap in George Town last week.

However, it is not surprising if entire development projects are sold out in two days now as buyers are easily taken in by attractive down payments as low as 1 per cent and the low interest rates for housing loans, he said.

The public may not fully understand the risks of adjustable-rate mortgage (ARM) when they sign up for loans, for example. An ARM gives low rates at the start of a loan but the rates go up after the promotional period.

"Such a situation can result in a (real estate) bubble, which nobody can tell when it will happen," Lim said.

He said certain developers were not helping the situation by reserving the best units for their "special customers".

"Some developers let their prime customers and insiders cherry pick the units they want first before everyone else.

"When the average house buyers visit the developers' sales galleries at the project launch, they find many units had already been sold, encouraging many of them to quickly make down payments for the remaining units as well," he said.

Lim expressed concern that there is a mismatch of supply and demand for properties in the state with many houses, flats and apartments vacant.

He said in 2000, there were 355,436 housing units in Penang but only 284,969 households, indicating an oversupply of 20 per cent.

"Since then, more units have been built. If you go round at night, you will notice that many homes are unoccupied, especially super-condominiums that are beyond the affordability of average households.

"This is also an indication that there is an undersupply of affordable housing in the state," Lim said.

He proposed that the state government study how Singapore's Housing and Development Board managed its public housing. Penang Development Corp should also undertake more land reclamation to develop more affordable homes. - By Looi Sue-Chern (Business Times)

79 comments:

March 16, 2010 at 10:03 PM Anonymous said...

More land reclaimation to develop more affordable homes? What a joke! Has anyone seen the price tag that PDC has placed on the houses it has built on reclaimed land?

However, I generally agree with the article. The price of property is beyond that of an average income employee. Penang is ALREADY in a bubble... or rather bubbling.

 
March 16, 2010 at 10:49 PM chow said...

I agree too... 1 day this bubble will explode.. just a matter of time only.. At that time our Penang property value will drop dramatically.

 
March 17, 2010 at 9:35 AM calvin said...

Why are people still buying property with such inflated price? People should show their buying power by refraining to buy overpriced properties. Then only the market will correct itself. Low-medium cost flat with leasehold title already costing 200k++..and people are still buying. What's next..low medium costing 300k++?

 
March 17, 2010 at 9:40 AM SINBIN said...

I totally agreed with this article,
With the income of 5k to 8k per month,
How do the penangites(Working class ppl) afford to buy a bloody condo which cost from 600k to 1.2m,
I am very frustrated with this.........

 
March 17, 2010 at 10:14 AM Joely2k said...

Don't worry, we all must join hands, and let the investors (those greedy folks) and property gorengs people suffer.
We should not buy what is not reasonable.
We already know this, all this while, they are just playing the market, and our penang salary does not go up exponentially in this way.
A fresh graduates during 90s, and after 20 years, it is just differences of few hundred ringgit.

I always prefer to see, who is the people that going to buy from them.
And those that buy, they thought that they can sell even higher... Haha....

The local average is not in this league at all.

 
March 17, 2010 at 11:20 AM lee said...

In fact, all these big time developers know very
well that the average working class cannot afford to buy their so called "prime properties". Hence, they are not targeting this market segment, they focus only on the super rich investors who I can say do not need any loan financing to buy them. as to whether the penang property is facing bubble. It is very hard to say now, but only time can tell, just wait and see.

 
March 17, 2010 at 11:40 AM avatar said...

In 2000, 20% oversupply = ~70,000 units are unoccupied.

Wondering what is the latest number as of today.

 
March 17, 2010 at 12:44 PM Lawrence said...

Holding power will determine the winner. Interest rate will determine the loser.

Todays enviroment, many 'wanna b investers' r just empty shelf, they rely on 5/95 financing package n interest free enviroment to survive. And the interest rate is up up trend in nex few months so we will definately see the bubble effect in nex 3 years after many projects which launched last year to complete. Almost 80% are fall into 'wanna b investers' category.

 
March 17, 2010 at 5:39 PM genesis said...

speculators are not the main cause for the price increase. i wonder why Dr. lim didn't say how many % increase for the property in KL, singapore, australia? ex. singapore, the price for certain area is higher than 2 yrs ago(b4 crisis). for the past 5 yrs, can be say that country include thailand, singapore and indonesia enjoy economy booming, but how's the situation in malaysia? the reason is we are backward compare to country suround.
somemore he need to do a study on other issue ex. the local main sector- electronic ind., and the situation happened before sept, 2008 which is the increase price in steel and petrol. the people earning compare to yr2K. the property in penang will still increase if issues below happened:-the steel price is increased. share market shoot up, inflation, decrease of our currency, head count on MM2H people , other things like unstabil political situation on the suround country, and the last but i doubt it will happen in these 10yrs is a cannel will be open to cut tru thailand from malaysia. if i were speculator, i will not speculate the property in a small and noname island like penang. i will buy the share counter which they involve in development in penang. speculators only invest in those thing is easy let go. those people who sell house need at least 6 weeks to get their money....... if you were the speculator status, you will still spend time to play on a unit that cost around USD200K and have to hold on for yrs,somemore need time to let go and turn into cash ? it is too risky lah.......

 
March 17, 2010 at 5:47 PM jeremy tan said...

i doubt there will ever be a bubble in Penang
An article by business times today:
http://www.btimes.com.my/Current_News/BTIMES/articles/20100317142950/Article/index_html

stating that penang property are expected to go up this year.
Majority of the buyers are rich foreigners e.g. europeans, singaporeans etc

Even with the 5/95 financing plan, not everyone will qualify for it. They promote such packages but the banks don't simply give it just anyone.

Besides that, Bank Negara's move by raising the over night policy rate will help to curb inflation in property prices and tighten lending to the public.

Hence, it is a positive sign for properties.

Penang has never experienced a property bubble during the 1997 crisis and the recent 2008 crisis which is equivalent to the 1930's crisis.
With Dubai falling apart, the properties in Penang continues to soar. Hence, demand is still there for properties in penang.

However, a bubble would more likely to occur in KL rather than in Penang. Prime locations would be the least affected.

 
March 17, 2010 at 6:11 PM Tim said...

For the condo within the range of RM300K-RM500K.

The projects obtained OC in the last 1 year - Low occupancy. (The Spring 396 units, Birch Plaza 395 units, I Regency 258 units, Birch Regency 340 units...etc)

There are also projects that are going to get OC soon. (Vista Gambier 144 units, Ixora, 148 units, Summar Place 531 units, Dipiazza 706 units...etc)

Worst still, there are more coming. (Brezza 312 units, Surin 390 units, Oasis, The Peak, 1 Wordl All Season...etc)

 
March 17, 2010 at 7:40 PM Ekky said...

Comparing the article in Jeremy's URL against the news above, it's Dr. Lim vs. Mr. Fook. Personally, I'd give Dr. Lim the benefit of the doubt.

Purely based on observation alone, The Spring is a big flop. With 100% sold-out (my guess), and 10-20% occupancy (my observation on its carpark day-n-night, since I'm staying nearby, and I commute past it every working day), the stench of bubbling bubbles is everywhere. Another fact that attests to property bubble is that, some colleagues of mine are making killing deals at sub-selling newly built condos like dpiazza and i-regency, raking in profits to the tune of six-figure, and I ain't bragging a bit. At this very moment, some others are eager to jump into the property bandwagon...

Well, we are all speculators. Some speculate that the price will keep shooting up, some others speculate otherwise, and I'm merely one of the latter. :D

 
March 17, 2010 at 10:39 PM lim said...

Genuine buyers should be mindful, dont rush in when the prices are unreasonable. The idea of "penang land is scarce" could be true, but it is more a tactic used to influence buyers. There are hundreds of new advertisements of property for sale or rent each day -- an indication of oversupply. Buy only when the prices are reasonable and affordable, help to curb the speculation. Dont let penang be another hongkong or shanghai, where the development is meaningless (many of the people there cant even afford to buy a proper shelter for the whole life)

 
March 18, 2010 at 12:45 AM Yong Khun said...

I do agree with what mentioned in this article because what Dr. Lim mentioned are just simply what we observed and on the basis of simple logic. After 1997, there were about 2 years within which the BLR is above 10%!!!

(reference: http://www.hometrik.com/index.php?option=com_content&view=article&id=11:malaysia-base-lending-rate-33-years-records&catid=46:finance-history&Itemid=29 )

Whether penang property is in bubbling is basically depending on the affordability of the buyers, either they are buying for own staying or for investment purposes. If the inflation rises, the Bank Negara will have to increase BLR and that's when everything come into squeeze on the affordability. Higher living cost due to inflation, and higher financial burden due to higher loan rate. It's all about general affordability and balance between the factors. When this come to an imbalance point, something will have to happen to balance it back, such as vast increment of penang people's income due to the excellent economic situation or, reduction of living burden such as cutting cost of living, letting go the properties on-hand at earlier-than-planned time, etc, which will lead to the bubble burst if happens to large crowd. So, if you are to invest in property, just ensure that it's within your affordability in the worst case, and don't be greedy... Nobody should hope for a bubble burst, we rather wish for the vast increment in Penang ppl's earning per capita.... do you?

 
March 18, 2010 at 7:49 AM NW said...

I am looking for a property to invest in the Penang Island, preferably in the 600k to 700k range. Expecting annual appreciations in excess of 10%, otherwise forget it

 
March 18, 2010 at 11:34 AM daniel said...

It is not news that Penang property is heavily overpriced. Sad thing is, there are so many unthinking people that go and purchase those overprice property and hope to sell them at even more ridiculous pricing. Believing in the baseless info that "Penang property price would never come down" leads to blind purchases. Some even more foolishly compares Penang pricing with those of Singapore and Hong Kong, directly neglecting the fact that Malaysian earns 2 to 4 times less than Hongkies and Singaporeans, what a joke.
Those speculators, investors, or whatever you called them, eventually have to hold and pay interest to banks continuously because no buyers. That does not surprise me, they earn it. What saddened me really is, imagine you are a genuine home buyer and live in a condo dominated by speculators, most units would be unoccupied but yours, which is at 20th floor. Imagine your unit being ransacked mid of night by 10 robbers, who is going to help you out with all your neighbours unoccupied? Worst could happen. So, does speculators promotes crime rate at Penang as well?

 
March 18, 2010 at 1:28 PM daniel said...

There are countless for sale and for rent advertisements everyday from this site and also others like mudah.com. I sometimes wonder if all purchasers not buying, we may starts to see banks lelong those units out 1 by 1?

 
March 18, 2010 at 3:22 PM Anonymous said...

Does anyone know what was the price of property when the 1997 financial crisis hit?
Looking at a 20 years history, did the price of property gradually increase despite economic downturn?
I think we are now in the recovery stage and price will probably go up. But then again, who knows... There're a lot of earthquakes around. Anything can happen.

 
March 18, 2010 at 4:11 PM Fence said...

1997…hardly leave any dent in property market here. Rather stagnant then…

Here is my view and observations.

Somehow there is overheating in property here especially on condo especially in Northern belt. Landed residential in good location is still a “safe haven”.
I am not going to criticize too much on the author however as you all might know the statistics in Malaysia is always full of question and easily challenge.

First of all, 2 main drivers of Penang economy are Manufacturing and Tourism related sector. For MM2H Penang is no. 1….so needless to say need many homes. Manufacturing already started rehiring and new MNC mega plants (eg. SJM, HoneyWell etc) have been aggressively hire new talents. This is not to mentioned the impact to vendors, restaurants, etc…..and yes property too. Penang FTZ is well known for being highest pay in Malaysia even when cost living is still much lower than Klang valley. No toll require too. Many young engineers can even buy RM600K property without further questions.

Then I have known many relatively young grad whose parents give them 10% as downpayment to buy condo and even landed house (to force them to pay so that won’t spend freely to girlfriend). Even if they lost job, the parents are there to cushion it. I got one friend who just leave his condo vacant 2 years without doing anything and still happily serving the loan while the price almost double up. Those uncles & aunties are really cash rich! Do you all know how much Penang people contribute in term of income tax?

Furthermore as Penang lack of manpower we have attracted many talents mainly from Kedah, Perak, K’tan etc….not to mentioned high pay expatriates. These people rent a lot and I believed they are not in the statistics. Then eventually they also buy property here.

How about those students study in USM and other colleges around this small little island. Where are they staying?

Apart from that we also exports talents to KL, Spore, UK, USA, China etc. but these people hearts are close to home and their parents will again encourage them to buy property/properties. Many are vacant or just become weekend/holiday home.

Last but not least….our banks are well known to be rather conservative in the region.

Penang is a very small, vibrant, and yet economical island. If you minus out the hills, airport, and Balik Pulau, you will have may be 1/3 of the small island to stay.

This is free market. And yes I also lost many opportunities too…..but so what? Unless there is law controlling it otherwise I have to continue work hard to pay off my house too.

 
March 18, 2010 at 6:17 PM concern said...

Bravo! Fence your comment very good.

 
March 18, 2010 at 9:22 PM daniel said...

Fence, you report base on non-facts. Let me correct them if you do it unintentionally. You mentioned many mega MNC is hiring, but you forgot to mention gigantic MNC that moves out of Penang island, one easy example is Intel moves its facilities to Kulim. MNC's are very simple, where its cheap they will move. Do you think Penang is cheap? Will you stay on the island if you are boss of MNC? Highest pay jobs in Malaysia is in Penang? It would probably be true if engineering, but definitely not Financial. But again, how high is highest? You never mention, or try to hide the facts. Young engineers, 3k salary for first class? 4k+ if you do really well for couple of years. How long does it takes to pay off a 600k unit? Can you imagine? More ridiculous is you are speaking of rich uncles/aunties for representation of Penang while they are the minorities, same goes with rich parents paying off their kids for comparison. Who of us got rich parents/uncles/aunties? Expats? There are with MNC's around, but numbers are few. Can get them to rent if you have special connection with their HR. Students? They need to stay, true, many sharing 1 room is an option if no $ and not married. Exporting talents coming home... i do not know, but i know more than 300k Malaysian migrated Mar 2008 to Aug 2009, i don't think they are coming home.
Your last statement is classic as a sales:
"You are rich ma... not rich? ok la, buy now then work hard to pay off later lorr, i also do that ma..."
For concern, nothing to say, wife sing husband follow...
I hope people use their brain before giving $$$ to these greedy people, they will try everyway to get it off your hands and still have you think it is worth it.

 
March 18, 2010 at 9:46 PM lim said...

Many young engineers can even buy 600K property without further question ? Are u sure ? I was told recently that newly graduated engineers receive about 2K+ monthly, slightly more than those received about 20 years ago. How can we just use a new grad with rich parents as an example and make a generalization like that. Any sample used in statistics must be representative.

 
March 18, 2010 at 10:40 PM TangentThoughts said...

It seems that there's a hot debate going on this topic. To buy (at high price) or not to buy?... that is the question. Well, that really depends on how you look on the situation. There are always 2 sides to a coin. If you are a genuine buyer... just go get it... Wait?! Then you'll find yourself having a few more speculative questions to answer.

1) Is the Penang property market bubbling up?
2) Will the price come down significantly when the bubble burst?
3) When is the best time to buy?

The choice is yours....

 
March 18, 2010 at 11:06 PM bang said...

fresh engineer monthly salary rm2300-3000
that say after 5 year 4000-5000
if double income family , that say 10000
minus epf , tax , 8000
if have 2 kids , baby sitter , school fee , milk ,.... rm1500-2000
household, personal ,.... expenses 2000
left 4000
may be 500 for insurance
left 3500
car loan ? 2 car ? at least 1000
affordable home loan ? 2500
if age 30-35 , can afford for 400k-500k home loan

this is just example

question is how many family have monthly income 10000

a lot with lower income , but choose to stay in a CONDO , will forcer themself to save money , cut expenses in order to pay homeloen installment , end up they stay in a 400-500k condo , but may be not even have money to go for a movie at Saturday night
or some not even have 100 per month to give their parent

There are peoples like this around us , a lot

 
March 18, 2010 at 11:20 PM JO said...

There are many rich people locally or in the region. For young couple who work for 10 years can easily earn up to 10k monthly, and can easily take up 600k housing loan. Thus no surprise to hear that many of the purchaser of Setia Pearl Island, Southbay etc are those 30++ year old youngster who referred by Fence as young engineer.

In Singapore, average household income is ~SGD5k, but a small apartment with 600sqf can cost SGD1M. Perhaps Penang is on the same track.

 
March 18, 2010 at 11:24 PM tze said...

based on past history in penang, do we see bubble causing the property price coming down ?
even the recent crisis we dont even see the price coming down,only stagnant for a while and now continue to increase. The bubble may likely only happen to condo or highrise if there is another round of prolong economy crisis (may be 10years later). Else only miracle can produce bubble.
So for those who wish property bubble to happen, pls continue to save your money now and then only u buy.

 
March 19, 2010 at 12:06 AM jeremy tan said...

fence, a very good observation.

It is a free market. Supply and Demand will meet hand in hand.

Like i have said: Penang went through 3 world crisis last year and this year and back in 1997. Did a bubble occur? No. It paused for a while and it continued to rise.

Dubai's drop in property prices due to oversupply did not even affect the property prices in Penang. Simple rule, it is still relatively cheap for those foreigners as compared to properties in their countries.

We are not talking about average earning income Penangites who buys this property. We are talking about foreigners and Chinese from overseas who buys this properties in Penang

Look at Skyhome at Tanjung Bungah, it is basically empty. So far only one unit is occupied. Why aren't the prices dropping? Instead it is being sold at a higher price if you are interested.

That is because these speculators/buyers aren't just the normal speculators. They are the ones that can afford to buy and then just leave it there for 2-3 years without doing anything with it.

The same goes for E&O project. The same buyers who bought the terrace houses, bought the Quayside project for a whopping RM750/psf. Could they be bothered whether the price drop or not? No! They have so much money, buying a property there is like placing money in a bank for them. They can just leave it empty.

We can debate night and day about this, but we all know history and statistics don't lie.

Most of the properties advertised in the newspaper are located in a place far away from the northern region of Penang.

Visit Tanjung Bungah and you will know that the people there don't only live in a bloody big house but they drive lamboghini, ferraris, bentleys, bmws, mercedes and etc. If they can afford a RM1.9 million bentley, i don't see why they can't afford to buy a RM2 million super condo such as springtide residences.

To be honest, i have a friend's uncle who resides in Australia but bought 2 units at springtide and left it there just like that. He doesn't need to rent it out. He uses it as a holiday home.

I have another friend at Skyhome, the only occupant there at the moment who owns 3 bungalows in tanjung bungah.

E&O Quayside had a lot of buyers from MM2H couples. Especially those with an Asian wife and a European husband.

Not to mention the sky mansion located at gurney drive which is 10,000 over square feet going for RM3.5 million. You must know the developer first before he sells it to you. Besides that you have to show that you are
capable of buying it. My uncle's friend bought one unit there. These people are people who can afford to buy such properties without even having to worry about repayment. They don't sweat over it.

Use some logic and you are able to figure out that the Banks don't just simply give loans out to people. There will always be a mechanism to buffer inflation by Bank Negara. If they think there are too much hot money floating around and pouring into properties or the share market and risk is rising, bank negara will immediately step in to raise interest rates and tighten lending.

 
March 19, 2010 at 12:06 AM jeremy tan said...

Do you think banks simply give loans out to people? Do you think property developers simply sell a property to you knowing the fact that you can't afford for it?

Public Bank is a good example. You have to be cash rich, basically show it to them that your account have so much money that you don't even need their money before they consider lending money to you.

Besides that, banks now a days are required to adhere with its Tier 1 capital standards set by Bank Negara. That means they must have a certain amount of money in the bank. This is to prevent too much money being leveraged into risky assets.

So please do understand that, if you guys can't afford it, doesn't mean others can't.

You can start debating about your salaries till the cows come home and at the end of the day all of you will be at square one.

Do you want to be the one sitting there watching the markets move or the one moving the markets? So wise up guys,

 
March 19, 2010 at 12:13 AM Fence said...

Right …I said “young” but not FRESH graduate. Specifically I refer to those late 20s to early 30. As I always said MNCs especially American based one.

Well without good fundamentals and real demand the price would not have increase. No doubt they are many speculators too but the real demand still strong.

Furthermore Penangites well known to be industrious and the economy is very much driven by private sectors and the local themselves. Hardly assisted by stimulus packages…..so where are bubbles coming from??

Our banks have survived few financial crisis and again I believed they would not be taking unnecessary risks to loan unworthy (like subprime in USA) loan takers. Without solid financial income proof you won’t be able to get the loan that easy.

Nevertheless I would like to take this as platform to remind (I believed many developers also hunt for our feedback here) developers not to take excessive advantage by hiking their pricing exorbitantly( RM360/sqft for condo in Glugor). If worst case scenario we suffer your reputation too will be drag down.

I admitted I don’t have exact statistics but I have the cable of “know who” in the industries, headhunters, property developers sales and agents. My information are well calibrated and come with substance!

Only time will tell who have the last laughs 

 
March 19, 2010 at 12:55 AM calvin said...

Well, without statistics to show, we'll just be beating around the bush. One group of people will be saying there are multi-billionaires buying into properties in penang, therefore prices should remain going up. Another group of people will be reasoning that the price and the increments in property prices doesn't reflect the average income of majority of wage earners. So? the rich will not feel it, the average people will sacrifice more to pay for something that worth less.

 
March 19, 2010 at 4:43 AM belle said...

Dr Lim is a senior fellow with SERI. For those asking for statistics and facts, what other qualifications are you looking for?. Let me summarise Dr Lim's article. Oversupplying means oversupplying. Bubbles means bubbles. There is a oversupplying of overpriced condos in Penang. There is already a bubble building. It will burst in due time. To add my opinion, the REAL rich who can afford do not want your link houses or condos. The so-called 'rich' who can afford to buy cash or hold on is only a small percentange, definitely not all 80-90% of the buyers (see ekky's comment of 10-20% occupancy rate). Tell you a secret, foreigners who retire here (MM2H)retire here because of affordability not because they are rich. The current prices are already pushing their affordability. The flip-flopping of the govt's policies have greatly undermined the MM2H program, don't be overoptimistic. There is a saying, don't fall in love in what you sell, you will end up overvaluing it.

 
March 19, 2010 at 10:19 AM Plazzy said...

After reading all the comments, I feel that this is a good/healthy debate and will benefit everybody, so i am chucking in my point of view.

I am working in PG and a local as well. I have been following the property trend in PG not long, but around 5 years. What I see in the next 5 years in Penang Island.

1) If you are an investor or a retiree, wanting to invest on property, which part of Malaysia would you put your money on? Penang Island of cause, Penang island got a few major advantages, Land scarcity is one, manufacturing hub for alot of MNC, heritage site, nice beaches, great tourism spot, good food (yes all is taken into account).

2) Even if Penang Island's bubble would burst, it will never dip below the price of Penang Mainland properties. And I would stay away from condos as they are heavily oversupply.

3) I think the 2008/09 economic crisis is a really good reflection. The price did not go up, but stayed flat for 1 year, but now in 2010, it is starting to go up again. So if you are an investor, you would treat Penang property as a "blue chip". I would park my money here where its safe around 10% return every year.

4) So called Penang-kia mentality. Tell me your first impression of a Penang local. They are very very cautious of their money, in wet markets even 10 cents, 20cents they will bargain. Which super market sale, Milo cheap by 20cents, you ask all those auntie uncle.. they all know and will buy from the cheapest. In short, Penang people are some what kiam siap(stingy) and very conservative/defensive when it comes to $$. So what does this means? When Penang local buy a property, they are going to be damn sure they can pay their loans. Again, the 2008/09 crisis is a good example. Working class people, engineers...accountants.... professionals are going to be damn sure they can afford the loans before they take on one. The crisis has minimal impact on them. I don't recall seeing any major sell outs during the crisis.

Lets compare this mentality with say our KL brother/sisters. No offence but KL living expenses is really high compared to PG. Penang people will buy cloths from the 50%/70% bin, KL people would go for the latest fashion, end up you will see Penang people are more... outdated in terms of fashion. Compared to PG, KL folks would have less savings overall, and more needs of luxurious items and thus live on credit. This is reflected on the current crisis, where you can see the fluctuation of properties prices in KL rather then in PG.

4)Why not compare to HK/SG? Yes the pay grade is different, but Penang sooner or later will be trending towards HK/PG. As they say, if you want to see how PG will be like in 10 years, look at SG, in 20years, look at HK.

I am no financial specialist or any economic guru but this is my personal experience from what I see.

Please do comment as we all can benefit from this discussion!

 
March 19, 2010 at 11:16 AM kenD said...

There is nothing great if PG property prices to be like one of SG or HK.

Singaporean buying PG property. Why? Because SG property is way too expensive. And almost everything is expensive there.

If PG are like their property market, then how we Penangites afford buying our homeland property. They are "invading" and for sure many Penangites are moving out from PG and find a place more affodable just like the Singaporean did. The average income of Penangites hardly afford to buy a house if the prices continue to rise without a solid fundamental.

The article is talking about overprice and speculation. It is very obvious that Penang properties are in a speculation market.

If you buy now you are feeding the speculators/developers, if you don't buy now the price may continue to rise as no one knows when will the speculation over.

I think the Gov should step into the current situation before anything bad happens to Penang or Penangites.

 
March 19, 2010 at 5:40 PM noble said...

There is a misconception of what bubble means. When prices rise, with or without personal motive, people conveniently throw in the terminology bubble.

Most bubbles occur due to frenzy while some are due to speculative behaviour by huge funds or cumulative funds acting in tandem. Is this the case for Penang? I do see real businesses progressing, real people taking loans and paying for them etc. MNCs, like any business, will have ups and downs. Generally, people there draw a relatively 'upper' salary range. Not mentioned are the stock options which we cannot quantify but they do provide occasional handsome windfall gains which allow Penangites to buy pricier properties.

There are much debate on affordability of Penang properties and about missing the boat. However, the properties mentioned are fairly high end properties. There seems to be a mismatch on this. There are still many pockets with affordable prices such as Air Itam/Farlim, Southern parts etc..

If your topic is about mid to high end properties, then of course there are bound to have speculative activities and overpurchasers. But this does not mean there is a bubble because the supply side is not strained.

Plazzy and Fence gave some good observations and it is very unlikely that Penang properties will trend downwards. Land scarcity is a major issue as a big portion of the island are hills. Like it or not, this is a natural progression of a progressive society. Not just Singapore of Hong Kong.

And it is not something to fret about because without this progress, we will languish as a poor nation. It's good to see demand whether foreign or local. Do you want to be compared to Myanmar property or Laos property?

So lets toast to the continuous progress of Penang. Cheers

 
March 19, 2010 at 6:27 PM kenD said...

Exercising a healthy growth of development is good for Penang. Over speculating & supply will end up in bubble. It happens in every part of the world and Penang has no exception.

History can be made, don't ever expect Penang property never fall.

In some part of the world like Dubai and Beijing, as i remember 1 year ago people keep speculating that the price will continue to rise and everyone enter into the market with no regrets. And what happen today?

Even those billionaires or millionaires investing in Dubai getting themselves burnt.

Actually Penang has nothing, nothing that worth for locals and foreigners paying such high premium for property prices.

If you visit MM2H website forum, many foreigners are complaining about Penang & Malaysia in every aspect.

Applicants of MM2H dropping. If you still believe in our mainstream media reporting of how proud Penang listed as World Heritage site or how much the foreigners love Penang you may be wrong.

Without a strong fundamental in economy and you guys are expecting the property prices will continue to rise further, may it sound too optimistic.

 
March 19, 2010 at 8:38 PM Noorain said...

Hi kenD,

I am an expat living in Australia. My husband I were thinking of purchasing a condo in Penang but I am not so sure now, due to the over inflated prices and considering the living standard. I was there in 2007 and things have not improved much. I would very much appreciate if you could give me some info regarding the market in Penang. I can be contact at noorainh@gmail.com

 
March 19, 2010 at 11:44 PM ameer said...

Whatever happens..let it happen..i am happy enough to have my own house,i am grateful..

If we look at other poor nations,their home is made of a few cardboards and living along pavement of the road....

Price go up or price go down,who cares.....buy what you can afford to pay...

 
March 20, 2010 at 12:51 AM belle said...

It will be a sad sad day the day Penang resembles Hongkong/Singapore. It is not progress. Among the many speculators there are a few owner-buyers and I believe too that these owner-buyers could probably afford their loans, but the problem is when they are buying at speculative prices. The point is when the bubble bursts, do they want to carry a $600,000 loan on condo that is then worth $350,000?. The condo occupancy rate is 80-90%, do you think there is more speculators or more owner-buyers?.

 
March 20, 2010 at 12:55 AM Nic said...

This is an interesting debate as many are close to Penang at heart. I am one who grew up there and left for overseas studies made my career at SG but somehow home is still Penang. I am sure they are many of my cases all over the world. Many from Penang left for overseas studies in Auz, Sg, Eu, US, UK and have made career overseas. By the age of 30s they would build family home and investments. I am one of those who has just bought 2 units condo in Penang as vacation/investment home.

As an overseas penangite it's really easy to see the appeal and attraction of Penang. The idyllic nature, real beaches, heritage, food, greenery, accessibility by air/sea, convenience, relative low cost to other countries, laidbackness in pace, casualness in life, while having access to most everything of brand and technology if one choose to. Penang is 1 hour flight to most anywhere.

People like myself would form a certain fraction of demand who buys Penang for novelty and desire to belong but in reality would leave them empty most of the time. Every year graduates leave Penang for their overseas studies and future career. I believe a sizable should return after a good 10/15 years in heart and investments while clinging on to their overseas traction.

Apart from sentimental attraction, Penang is factually Chinese by majority. Where there is Chinese concentration properties tend to trend up at premium. So long term can't be wrong. The last 3years of sharp boom followed by 08 crisis saw many grow leaps in assets and cash in Asia. Singapore has and is arguably best choice as safe haven for banking assets eg. Why else do Gongli and Jet Li buy properties in Sg. 09 has seen an arguable V recovery for Sg. As a result we do see price overheating with local government giving minimal intervention for electoral bias. The fact is they are still a lot of cash overflowing despite the higher equity ratio for bank loans. The general consensus is uptrend for 2010 and 11.

Penang is enjoying the cascading effect. I have seen
investors from Sg are buying as group enjoying bulk discounts. These does create added buying pressure for late buyers keen. The question of bubble will always be there but it could prolong for next 2 years supported by surrounding trends or it could be ten years. Do you wait then? All a question of risk/reward and holding power.

The fear is quite real. US consumer will not recover in 3yrs. Usd is expected to be weak. Gold and oil is uptrendish in general. The V may be a W recovery with a dip by 2012 but that is all coffetalk at best. So if 08 did nothing to Penang many like myself take consolation in that Penang should be a relative safe bet. Note that it's trend is not just locally supported but also from many in mainland Msia, overseas Msians, Expats, Sporeans etc. Like gold I think we may be underestimating the demand and conversely the appeal of Penang...a good place to live eat beach and watch sunset.

Cuppadiem!

 
March 20, 2010 at 1:56 AM jeremy tan said...

dear belle,
even if their is a correction, it will not be a correction of 50%. We went through 3 crisis. The recent major crisis was considered the 2nd worst crisis in the history of finance after the great depression back in the 1930s.

How is it sad if one day Penang becomes like Singapore or Hong Kong.

If Penang becomes like Singapore and Hong Kong then it would be appropriate to discuss about bubbles. We are not even close to their standards yet.

Besides that, isn't it Malaysia's goal to become a high income society?

Inflation is necessary to achieve such standards. However, it is sad that our salary doesn't increase proportionately.

As long majority of the occupants in Penang are chinese, the prices of property will continue to rise.

No offense to other races , but if you were to buy a property in a malay town, the price there will not increase a lot due to a couple of reasons that i don't wish to mention here

 
March 20, 2010 at 4:57 AM dscang said...

interesting debate

 
March 20, 2010 at 7:41 AM Guy said...

Speculators are speculators. What makes you think going through some financial crisis Penang will survive the next one? In 1997, is Penang property prices as high as now? Recent one, it simply means the bubble is not burst yet. How will the bubble not burst with oversupply and shooting prices? Simple fact. Malaysia's goal to become high income society? Speculating simply makes property prices shoot up and create virtual demands, how does it help to increase income of the people? How silly is that? Infact, it simply drives MNC's away from Penang island, it makes you lose your job.
Speculators will always try to confuse you with other facts that are non-related. They do not have any related fact and figures and will always use subjective terms like "many, alot, i know a rich friend that do this..." .
They have to do that, why? Not only because of greed, it is more because they have many units on their hands and if Penang people do not buy, they will suffer hard. So instead of them suffering, they pass the pain to purchasers. This is network marketing talk.

 
March 20, 2010 at 10:46 AM engineer lee said...

When we study about the property market in Penang, we should first understand who owns them.

They are:

1) Ordinary buyers buy for own stay

2) Ordinary buyers buy for investment

3) Speculators buying in bulk

4) Rich families (Khoo Kongsi, Cheah, chettiar..etc)

Lastly, we always tend to forget to mention about this group, yes, 5) the property developers and the land owners JV with the developers, who have an accretion of power that extends far beyond property prices.

Penang’s property market is considered inefficient where the buyers generally lack of information to assist them to make investment decision. In fact, its highly inefficient nature has help created a lot of multi millionaires who are smart enough to capitalize on such shortcoming. The market is so inefficient until buyers are not able to estimate/predict the true potential value of certain location’s property. We always scratch our head and wondering how some units can sell so good price while the similar size and category units a few miles away are not.

IMHO, Penang’s property market is more of buyer-motivated. The price is controlled by majority few (the developers, the rich bulk buyers/families/groups), not by the average citizen like us. The developers, as a participant in “oligopoly”/Rehda & Fiabci, they do have power in its market.

The logic is that : if these groups of people are not force selling their units and have the holding power to keep the surplus property stock in the market, it is not likely to witness any price drop in the near future.

So, have you seen any developer goes bankrupt or facing financial problem recently?

This is why the property price keeps appreciate like crazy despite the land cost & building construction cost spiraling drastically of late.

Even though the small investors/buyers are not buying any more, the material’s price is escalating high, the average wage-earners salary not increase at the right pace, I believe this will not give much impact to the selling price cause the developers still can hold on to their required-to-sell price.

Every supply not necessary meets every demand. Sounds weird right?

But this is the bloody reality, in other market, normally when price raise, customers will go elsewhere. However, we do not see this in Penang’s property market. During the steel bar price hike in year 2004-2005, buyers still buying despite Developer “T” increased the selling price of their units by 30%.

The developers in Penang normally have the room to hold and keep the excess property for many years, let alone that nowadays there are rarely found any developer keeping stock; the recently new project launches receive selling hot cake’s response.

How do these developers manage to hold their units?

From my observation, the reasons could be being:

1) They are growing bigger and bigger and cash-rich. Developer “T” ten years ago successfully completed their 100% sold out 488 units of condominium by coming out with merely RM 2 million as working capital & yet they made 40% profit out of it. Developer “C” earned one block by constructing 2 blocks of 367 units condominium. These people have “sapu” the lands in the whole Penang Island ten years ago, buy low sell high now, good money hah?

2) The tactic of optimum usage of the unsold units. Developer “I” set up companies to buy the unsold units. Each time of the transaction, they mark up the units’ selling price. After few transactions taken place, the over-bloated far-fetched units were used to secure loans from the bank. This money is used again to churn out the subsequent mega projects. This process goes on and on.

I really feel sorry that ordinary people like us can no longer have the luxury to own cheap property like in the old days. However, when thinking positively, I realize that this is the golden time for us to grab hold of this once-in-a-lifetime opportunity to create wealth and to prosper.

Buy if we can afford, cause if we don’t we might miss the boat.

Above just my humble 2 cents worth. Thanks.

 
March 20, 2010 at 6:52 PM Jacquie said...

A place full bags snatchers, where corruption filters down from the top to the bottom, slave labor still exists, less fortunate people are considered worthless, the unhygienic filth, the traffic jams, rude disregard of law, etc. The list goes on. It resembles the third world. I say good luck to you lot

 
March 21, 2010 at 1:49 AM Smart Alex said...

Regrettably but true, listen to Jacquie. Don't compare Malaysia (Penang) to HK/Singapore. Most foreigners do not differentiate Penang from the overall environment in Malaysia. 'Quality' foreigners do not want to come to a country they don't treat their own people nice. Penang is currently the only bright spot in Malaysia on world standing, but realistically, this can change overnight with political change. Most 'quality' foreigners are not going to take the risk. If there is a change, don't talk about property price correction, talk about collapse, even malaysians overseas don't want to come back. Good luck.

 
March 21, 2010 at 5:09 AM belle said...

I compiled the flwg facts & figures from newpaper articles so readers can decide for themselves.

1. Penang avg annual hsehold income $42,000
Penang avg house price $578,000 14.2xincome
2. National annual hsehold income $38,987
National house price $180,000 4.6xincome
3. cost of sq footage in Penang
2008 $250/sf
2010 Now $350/sf, Some $500/sf, New $600/sf
4. 2nd Qtr 2009 terrace house $520,000
2010 Now $700,000, New $1.2m
5. Past 2 years developers invited speculators to take up 50% of their newly launched projects priced from $220,000 to $250,000. The speculators then tacked an additional $50,000 to $100,000 in each of their subsale
6. 2000 hsehold in Penang 284,969
2000 housing units build 355,436
2000 oversupply 70,467
2010 Increase or Decrease??
7. MM2H. Approved applicants
year 2002 to 2006 totaled 8,723, yes 8,723
Last year, govt repackaged MM2H programmed.
2007-2009 Increase or Decrease?
2010 Increase or Decrease??

Go Figure. Draw your conclusions.

 
March 21, 2010 at 6:27 PM Ella said...

WHAT GOES UP MUST COME DOWN. INEVITABLY

 
March 22, 2010 at 3:55 AM belle said...

Dear Jeremy

This is a courtesy reply. I am going humour you as a 'friend', although I fully sympathized with Guy's frustration.

1. When speculators and their condos are in stratosphere (good place to jump when the time comes), they can't see the bottom and they cannot even begin to fathom the fall. If the trend continues, the drop will be far worst than the optimistically conservative 41% that I quoted.
2. What is different with current trend from the previous crisis, is the availability of 'creative' loans fueling the already overheated market that started last year. It is where the bubble started (not true property value). Property investments in Britain, USA and Australia, gives better value NOW.
3. Why it is sad if one day Penang is just another Hongkong or Singapore?. Because I am not a pigeon. I do not want to live in 'pigeon' housing. As fellow human kind, I also do not wish for a society where there is NO middle class; just working class toiling to pay their mortgages through their bleeding noses, the indigent, and the rich.
4. Let's not insult anyone's intelligence. I feel silly to even indulge you in this inflation=high income issue, but I will nonetheless, for the sake of discussion on this blog.
It is absurd to suggest that whipping up property prices would create high income. Your employer is not going to care if you are unable to pay your overpriced mortgage. The low income:expense ratio in Malaysia does not afford much in terms of standard of living, we definitely can agree on that. However, you do not take on additional EXPENSE, like a big mortgage, to increase your income. You don't have money, you go out and buy things, money will come to you??. What kind of logic is that?. Cutting off the nose to spite the face?. What a rational person would want to do is to try to his income (not expense). I guess it is exactly what speculators are trying to do (nothing to do with actual property value, but just whipping up as much as they could get in between the sell and the buy, at the expense of ordinary joes). I also will impart a simple Arithmetic lesson we all learn in primary school on your 'inflation=high income theory'. The difference between +30 and +30 = ZERO. If you create a inflation of 30%, and miraculously also increase your income by 30% (I am cutting you some slack here), you are back to 0, what is the difference?. Are you going to have a higher standard of living. Now, why do I think you already knew all that?. Speculators are using the tactic lawyers like to use, throw everything, nonsense and all, at their targets and hopefully something sticks.

This is just a courtesy reply; no point going back and forth. Our cows will never come home. Guy's cows are missing ee.. We can agree to disagree. Let the readers judge for themselves.

 
March 23, 2010 at 11:01 PM jeremy tan said...

dear belle:

1) I do hope the bubble that you claim do materialize or else you will be humoring me as a 'friend'

I am not sure how much you earn a month. Too bad if your salary doesn't increase proportionately to inflation.

I am not too sure whether you know how market works.

In case if you misinterpreted my explanation. Let me explain it to you once again. Whipping up property prices doesn't= to high income society

However, a high income society would be able to buy properties within their means (let it be an expensive condo or a cheap price)

We are no where close to Hong Kong or Singapore. Hence, if there was a bubble, these 2 countries would experience it first. Not here in Penang.


A free market is a free market. People who are able to afford it will be able to buy it. It is a fair system. It is not up to you to say that you want a country with this amount of poor people, middle class and rich people.

Whether you like it or not. Poverty exist , so does the middle class and the rich. However, the rich determines how the market goes. It is a free market, those who can afford it will get what they want.

Simple rule, if you can't adapt and find a way to raise your income than don't complain. People have a profession and if their profession earns them more than RM120,000 a year, they have the rights to invest.

Back to my main point, do you think the banks do really give out loans as if like they were selling TOTOs/4D Magnum to everyone?
After the crisis, we have all sorts of risk measures to ensure the loans are given to people who can afford to finance it, whether the BLR goes up or down.

Your thinking is very naive, you think in terms of whether you can afford it or not. Given the situation you are in (most people) you will conclude that since you can't afford those expensive houses/condos the rest won't be able to.

I don't mean to boast, think about it, if you can't afford a property will the bank approve your loan?

I am speaking from experience since i own 5 properties in Tanjung Bungah and Tanjung tokong area.

I know a lot more people who owns more properties than i do in Tanjung Bungah and they can very well afford it. Call it speculating, investing etc as you please. They don't even sweat about it.

Btw, inflation is necessary. If inflation don't exist, more foreigners will just come in and take advantage of our cheap properties here in Penang . Inflation is a global issue. See the bigger picture before you teach me 30+30=0 maths. It is just very naive to think so simple.


Btw, i am not insulting your intelligence. I am just drawing the bigger picture for you to see.

We have cheap apartments in Ayer Itam, Jelutong, Sungai Ara,batu maung,rifle range, for those low to middle income group. How cheap do you want properties in Penang to get? Is RM60,000 good enough for you?

Do you know why a bubble is never possible in Penang? .Let me tell you why. It is the rich who determines the benchmark for home prices in Penang. It is fair because they can afford it. To be honest, they don't even sweat over it.

You can flood the property market with 100 of RM60,000 apartments
As long the rich are holding on to their properties, the market will hold and continue to increase.

 
March 23, 2010 at 11:34 PM buyer said...

wow, 5 prop in tjg tokong n tjg bungah. u must know alot but why so stupid. RM120K is rich ah. small bulls got the biggest shit.

 
March 23, 2010 at 11:50 PM jeremy tan said...

rm120k for the slightly better off income people in penang just in case you misunderstood. Not the rich. If you do earn even RM120K in Penang it is considered better than the majority. Yes i own 5 properties.


Why so stupid? I should be asking you the question. Why so shallow?

Small bulls got the biggest shit? Don't hate the bull because he owns 5 properties. The bull shits the most because he can afford to.Thats all i am saying.

 
March 23, 2010 at 11:58 PM Penang Info said...

Thats the problem earning RM120K per annum and tied up 5mil loans in mortgage. And they don't even sweat.

How many millions do you have in your bank my dear Jeremy?

5 properties? you own or bank owns?

How much you can earn a month? RM50K?

 
March 24, 2010 at 12:10 AM jeremy tan said...

3 properties at Tanjung Bungah fully paid off. 2 currently on 50% loan each. If you need to know, the Brezza and Quayside resort condominium.

How much i earn? More than you. Yes i don't sweat over it.

 
March 24, 2010 at 12:11 AM brain said...

a pen-pushing small fry at a bank, sweating shit big time over his 5 condos. well, the market will teach him 5 lessons. haha.

 
March 24, 2010 at 12:18 AM jeremy tan said...

it is 3 bungalows and 2 condos. In case you want proof: go look up who owns the brezza level 20 block A 1450sft unit with gurney drive view and quayside resort condominium unit 17-7-D.

If you are a real estate agent you would know all the transactions that took place after the S&P

Think big if you want to be successful. I don't even know why i bother replying. I guess it is fun to see you guys debate

 
March 24, 2010 at 12:26 AM Bezbuy said...

Why are you guys bashing each other here? Jeremy is giving his opinion, whether you agree with it or not, just like everyone else including Belle. Just keep an open mind to the various opinions and make up your own mind. If you disagree, do provide some productive counter argument rather than personal attacks. I thought this is supposed to be civilized discussion forum for buyers.....or maybe I was wrong.

 
March 24, 2010 at 1:00 AM brain said...

how abt d address for yr 3 bungalows?. any equity left, ah. can use as collateral for your 2 condo loan, u know.
don't want ppl bash, small fry don't act like big fish mah. think he know more than dr lim, LGE/govt. shit little ok, don't shit like ppl don't know what shit is.

 
March 24, 2010 at 1:03 AM Mr.Business said...

Jeremy Tan has given a very good opinion.

Some people do not have the awareness that there are a lot of rich people in Penang. They just know to complaint, complaint and complaint...

 
March 24, 2010 at 5:58 AM Tim said...

Hi Jeremy Tan or Mr. Business,

I read quite some of your comments. The comments are insightful.

Not sure you can help to comment Marina Towers (Tj Bungah) & Twin Towers.

I passed by them a few weeks ago. They look impressive. Good for investment?

 
March 24, 2010 at 3:38 PM Ekky said...

Well, I agree that we should try to debate constructively, and not steer into personal attacks. Everyone is entitled to his own views, and in this case, there's no right or wrong.

In my opinion, it is a worrying sign in Penang that there are more and more vacant apartment units around, and the land is becoming scarcer and scarcer. The fact that “the properties have value, but not market”, is, a clear indication of bubble. But whether or not this bubble will eventually burst, is questionable at best.

I have heard from many people that unlike KL, Penang is a cash-rich state. There are many cash-rich Penangites. This translates to stronger holding power, and definitely will suppress the bubble from bursting.

I disagree with the fact that Penang property market has survived for all past economic crises, and thus it’s safe from a collapse. The most pertinent fact is that, manufacturing contributes more than 43% of the state GDP, second only to tertiary sector (meaning servicing and tourism), which contributes around 53%. However, tertiary sector is in turn heavily leveraged on manufacturing, which implies that manufacturing is the veins and arteries of Penang.

When we look at manufacturing, what do we see? We see big companies like Intel, Agilent, Motorola, Seagate, Bosch, Dell, and so forth. These are the main pillars of Penang. In my opinion, if these pillars fall, Penang would sink. Question: What was the selling point of Penang’s FTZ back in the 70s? Answer: Cheap labour. Question: What is the selling point of Penang’s FTZ now? Answer: Cheap labour (though some may disagree). We have yet to move out of this mire. With the strong emergence of Vietnam, we are greatly challenged.

Steering back to the issue at hand. It is beyond our control whether or not these pillars would fall. It can happen overnight. Just look at Intel, PG6 and PG7 are closed down in 1 night. This of course doesn’t impact the overall economy, because Intel consists of 3 main production plants, namely PG6, PG7 and PG8, with PG8 being the biggest production plant. Look at Dell in Bukit Minyak, about 700 employees are out of work due to a recent restructuring.

No economy is too big to fail, except perhaps US. Look at the gigantic projects in Dubai, they fall eventually. Look at Japan, it’s been experiencing deflation since 1990, and it’s still deflating. Nikkei was 39k 20 years ago, it’s floating around 10k now.

As the Chinese saying goes “Big trees beckon winds”. Penang is still standing strong, mainly because it’s extremely minute, compared to entities like Dubai, Japan, and US. But, this is not to say it is healthy. The market is far from being healthy.

Lastly, we can argue that even if Penang sinks, its property market will still survive, because foreigners would come in and wrestle everything. But, do we want that to happen? I for one would not want that to happen.

 
March 24, 2010 at 6:13 PM Bezbuy said...

In my view, we should plan for worst and hope for the best. To me, that means buy within what is affordable, and have fund reserves for at least 1year (which should include your monthly expenses and payment installments), in case you lose your source of income.

 
March 24, 2010 at 11:52 PM JO said...

No doubt there are many speculators in penang property market, but there are even more cash rich people around who can easily hold a few luxury property with affordability. Do you see before people who buy million RM property with cash?

All professional and data lover out there, do you want some data and statistic to show this?

Buy property within affordability will prevent you to fall into bubble trap. Repayment of RM2K per month is affordable by many people today. 10 years later they still pay RM2K per month. At that time RM2K per month is consider nothing. so why not buy now within our affordability?

Data lover, do you want the data to tell how many % of people in penang can afford RM2K per month for property installment?

 
March 25, 2010 at 3:23 PM noble said...

In every market, there are consumers and there are those with surplus money who hold the extras in various forms e.g. stocks, properties, land, bonds, forex, etc

I don't want to generalise and neither am i promoting Jeremy's story but I have spoken to developers of some projects and there are indeed cash buyers, to the tune where 40% of the units of some of the popular projects were cash purchasers.

The flip side is while it is true that if they don't sell, the deemed demand is there, it also reflects Belle's view that there are empty units and possibly an overpriced situation.

My own take on this is that while this is not a new phenomenon as property investment is one of the many investment vehicles people partake in, the rise in price in recent years has created different groups of people ala.. people who bought will continue to champion the growth story to fuel their asset prices and those who missed the boat will say otherwise. Those with 'ammunition' is likely to be fence sitters but skewed to side with the latter as they would probably have bought and won't mind to see continued increase in their assets but so what if it's the other way, because they can buy some more.

My humble view is that Penang properties is at a plateau now, could dip a little if at all, and should continue its uptrend albeit at a slower pace. Fyi, manufacturing is picking up again, go check tech stocks and you can see the uptrend and this augurs well for Penang. I think we should not take a narrow view that because some sections of the tech MNCs were closed, it meant that MNCs are closing their operations. Penang is now attracting a new wave of investment although it's only a trickle in terms of FDI, diversifying from semiconductor to solar and medical manufacturing.

It's important that our state ruling government recognises that infrastructure & human resource capability needs continuous enhancement for sustainable growth. As long as Penang people recognises that their efforts are important and continue to channel towards building Penang as a society, the prices will trend upwards.

Penang cannot be compared to Singapore or Hong Kong because things are operating from a state perspective with limited state authority/powers whereas those are countries...without mentioning that Penang is opposition state. Will Penang realise more of its potentials despite the challenges? Hope so.

 
March 25, 2010 at 6:12 PM tkguy said...

noble ,
mind to share which developer you talk to ? which projecrt with 40% cash buyer ?
solar and medical manufacturing ? which company invested in Penang island ?
b. braun ? old storylah . any new company ? solar ??? in penang island ?

please be specific . how to convince peoples by statement like I talk to some developer ? 40% owners of some project are cash buyer ,....

 
March 26, 2010 at 12:28 AM noble said...

sorry, it's not my intention to be specific and am not here to convince anyone, just sharing my observations

Island there's St Jude and PMC Sierra, mainland penang and in kulim has a couple more...can't just look at the island in isolation right? anyway, you can check with investpenang

i guess you didn't get my point because i didn't write the above to justify the property issues hotly debated above but rather sharing some observations and importantly, my intent was to highlight the potential difficulties for penang as an opposition state but it still made good progress, and that i hope what i wrote would continue to drive the message that collective efforts are required to move the state forward

 
March 26, 2010 at 9:37 AM belle said...

Good to read from penangites who make penang, uniquely penang. Developers can never build that. To each its own. We can still make plenty of money without deceit or misinformation, and without losing our idealism and compassion. We will be all the more prouder and richer. Time will be our witness. Winners will buy losers drinks. Losers will order plenty of drinks. Good luck all.

 
March 27, 2010 at 5:37 PM Fence said...

Just a nice story to share if you think Pg properties is on the bubble path. And if u believe Pg is just 10years behind Spore.

http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_506818.html

BTW, please dont sound like as if Pg MNC come here for cheap labour solely, we have many edges over other nations. We hv a solid design engineers too....pls dont belittle our Penangites/Malaysians contributions to MNCs such as Intel, HP, Altera, Agilent, Bosch, Motorola, Sony, (just to name a few) etc.

 
March 27, 2010 at 9:16 PM concern said...

Don't compare Penang or Malaysia with Singapore, for sure Malaysia far behind, even Singapore stop progress for 10 year Malaysia still lack behind. Don't be "katak di tempurung" go travel, and see yourselves.

Don't manipulate others and own selves.
Learn to accept things.

 
March 28, 2010 at 6:15 PM Yunos said...

I was born and grew up in Penang, left for overseas in my adulthood, returned to Penang after 20yrs.(due to my commitments) later for a visit. To my disappointment Penang, and Malaysia generally, has taken one step forward and two steps backwards. You may have more high rise buildings, but everything else is still the same as though time has stood still. Poverty, pollution, the place has got it all. Stop bragging; things will not change for the better at least for the next century. Manufacturers will go overseas where the labour is cheap; not for any other reason.

 
March 28, 2010 at 6:21 PM Dennis said...

Took me quite a while to read and absorb all the posts here.

As I'm from the finance industry, I'd say some of the forumers got a very good grasp of the property market and trend in Penang. They present mostly factual observations and draw parallel with similiar markets. Also, the cooler heads restrain themselves from personal attacks and name calling.

My take on whether Penang property is in a bubble or not?
... Reality is a bitter pill...

 
March 28, 2010 at 9:02 PM KK said...
This comment has been removed by the author.
March 28, 2010 at 9:05 PM JS said...

hi jeremy tan, would appreciate your comments on bungalow development in penang.

 
March 30, 2010 at 7:56 AM brain said...

american? who? if american, would know better, don't you think?. after all they went through the bubble n crashed. more credibility than 'katak dalam kotak'.

wronglah, 'katak bawah tempurong'. no 'bawah kotak' becos maybe in america, no coconut. you think they got 'katak' ah?

wat a bloody idiot. i must b british.

anyway, if there were foreigners, we welcome your views, n we are happy to hear from the horses' mouth since there are these people r always 'imaginating' about foreigners. to clear the confusion some tries to create, adjustable rate is the same as floating rate. www.wikipedia.org - argue with that katak.

 
March 30, 2010 at 8:29 AM buyer said...

i know a katak in a kotak under the tempurong in malaysia.

Espece d'imbecile, just maybe i am french, you stupid idiot.

 
March 30, 2010 at 8:42 AM buyer said...

error : last comments above from brain and buyer are response to comments under 'making homes affordable' blog.

 
April 1, 2010 at 9:01 PM Andrew said...

Actually, I know quite a lot of Malaysians who return from overseas - buying up property in Penang. Some of these have worked for several years in China. There are also some who are Australian PR's who have made their fortune in Australia and have decided to retire in Penang. Believe me, there a lot of these guys. The rest are of course engineers and managers from multinationals like Intel, Motorola, Agilent who have made some money from their company shares and stock options. During the big financial crisis 10 years ago, high rise properties usually suffered first. Landed property not so much. If you buy for your own stay - you should be fine. If you are investing - do consider bargain 2nd hand properties, and refurbish old houses on your own. You don't have to follow the crowd.

 
April 15, 2010 at 1:47 AM silversurfer said...

It is clearly not an ideal situation. But the reality is that the market will always have buyers flush with liquidity.

The real speculation happens when many buyers are known as what is known as the flippers. They buy the property without the ability to service the loans. The intention is to flip them by reselling them at a modest profit (perhaps marking up 5-10%) quickly.

The thing is in Penang, what I can see is that the supply still far outstrips the demand as far as the luxury developments go. To see this, just look at most of the developments. The developers tends to still have units on hand unsold even months, or years after launching. This situation means that there is little viable market for the real speculators since buyers can still buy them at the market price.

Because of this, no one is going to be able to flip properties at a ridiculous profit within a short period of time. And because of this, prices are not going to crash in the foreseeable future since the supply can still meet current demand.

Is it out of the reach of most Malaysians? Probably yes. But as some have pointed out, there are indeed many affordable properties. The issue is when you want to live a luxury lifestyle on a pay that cannot sustain it. That's when the envy comes in and the wish that the property prices will crash.

So far I am not seeing that. A saturation point will be reached at some point, but it's not now.

 
April 18, 2010 at 12:26 AM Kevin said...

i don't have external facts...but my own personal fact is... my salary didn't really grow that much for the past 3 yrs AND only last year i was fearing and shitting in my pants for losing my job and only after 1 year suddenly property prices pushing up like crazy?

??????????

 
August 1, 2011 at 12:41 PM Swim Coaches Network said...

What goes up and up and never comes down..?

 


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