When the words “Penang Island” come to mind, almost everyone will think of its heavenly char koay teow or its nasi kandar. While the island is famous for its scrumptious food, it is also synonymous for its sky high property prices especially in terms of landed residential homes. We join Mr Michael Geh of Raine & Horne International Zaki + Partners Sdn Bhd Senior Partner to discuss the affordable residential properties in Penang.
All around the world, there seems to be a sense of exclusivity and elitism to owning a piece of property on an island, and Penang Island is no different from any other island, where it commands higher property prices compared to those on the mainland. That, coupled with the local saying that “Penang properties will never drop” is one of the reasons that property buyers have been falling over themselves to grab the latest landed property offerings in recent years.
A Bubble Ahead?
It is this surge of demand that has caused property prices to increase and basic economics tells us that when prices sky-rocket, in time, a bubble pop will follow. In the case of Penang, rumours have been going around that a property price bubble pop is looming akin to a sword of Damocles, threatening to crash property prices on the island at any moment.
However, according to Raine & Horne International Zaki + Partners Sdn Bhd’s Senior Partner, Mr Michael Geh, it is the speculative buyers of uncompleted higher class condominiums who face the biggest risk of the bubble pop.
“I think the only ballooning of property prices comes from speculative purchases of condominiums in the under-construction category within the price range of RM700,000 to RM1,300,000,” he tells iProperty.com
“Overall, pop or no pop, the residential property market in Penang is likely to hold firm especially in strategic locations on the island, such as in Pulau Tikus, Minden, and Tanjung Bungah,” he said.
For first time home buyers, his advice is to hunt around for landed residential properties on the secondary market as the new launching prices for such properties have peaked of late. He feels that the high prices of new property developments in the state would not yet be a factor “forcing” first time home buyers to the mainland where properties a much more affordable.
“I think for first time home buyers, it makes more sense to buy off the secondary market and do some renovations on the property,” he said, referring to “relief zones” such as Teluk Kumbar and Sungai Ara.
The Second Bridge Effect
However, for those with more cash to spare, one can look to the newer developments which are taking place in the southeast district of Penang especially in the areas of Balik Pulau and Batu Maung.
While once upon a time these areas were frowned upon for property development, ownership of landed residential properties in areas such as these have become increasingly popular, thanks to its price point which is still affordable for the majority of wage earners.
“The popularity of Balik Pulau was reflected when PLB Land, who recently launched a residential landed property project there saw most of its units snapped up over a week long property exhibition was held in Queensbay Mall,” Geh said.
That said, these affordable prices may not last for long as Geh said Batu Maung has seen marked increases of property buyers there.
He said that property prices in Batu Maung had soared lately and is expected to continue escalating as much as 15% per year due to the construction of the island’s second bridge linking it to the mainland.
With the increased connectivity between the island and mainland, it is expected that a host of facilities and amenities will sprout up at both ends of the connection which would also prop up property prices.
“As such, property prices on the Batu Kawan side have begun to pick up,” Geh said, adding that the property buyers comprised more of home buyers in Batu Maung and more of investors in Batu Kawan.
Investors, however, may face difficulties in securing loans in the coming months due to Bank Negara’s (Malaysia’s Central Bank) move to impose stricter guidelines in tackling household debt and to curb excessive borrowing as well as speculative activities.
Nonetheless, Geh said that there could be an increased boost for the Penang property market around the corner as many companies had begun to enquire about plant relocations and subcontracting jobs due the floods that hit Thailand recently. - By iProperty.com