Property: Property buyers return to the market

Things are looking up in the Penang property market. There are definite signs of recovery as more homebuyers return to the market. “I would not call 2Q2009 a slow quarter for the secondary market in Penang. It was also a quarter for top property developers offering attractive packages. This overshadowed the secondary market, as there are no sweeteners here and buyers are required to submit a 10% deposit,” says Michael Geh, director of Raine & Horne International Zaki + partners, when presenting The Edge/Raine & Horne International Zaki + partners Penang Housing Property Monitor for 2Q2009.

He says developer S P Setia Bhd, for example, led the pack with its 5/95 marketing campaign that ended in July.

So, has the property market in Penang hit bottom yet? Geh believes so. “I think we bottomed out in 1Q2009. There is no longer a sense of gloom as people are buying properties here. I think this little property boom will continue for the next few months,” he adds.

Geh says there was a big property rush in 2Q2009 mainly for higher-end properties on the island. Some of the sought after projects include Setia Vista in Relau by S P Setia, Southbay Residence in Batu Maung by Mah Sing Group, Summer Place Condominium in Georgetown and The Light Waterfront Penang both by IJM Land Bhd.

Setia Vista, with 2-storey detached and semi-detached houses tagged between RM598,000 and RM638,000, offers a total of 218 units. S P Setia’s general manager (property division) S Rajoo says 150 units were taken up within a week of its launch, underlining the strong market demand for 2-storey terraced homes.

Southbay Residence, Mah Sing’s first project on the island, saw 177 units (out of 288 units offered) of 3-storey linked homes sold for a total sales revenue of over RM180 million. Prices ranged from RM785,000 to RM1.3 million.

Summer Place, comprising 531 condominium units in three blocks and priced between RM290,000 and RM490,000, also received very encouraging responses. According to Geh, the developer, IJM had sold 70% of the units on the first day of the soft launch.

Meanwhile, The Light Waterfront development, with 328 units of condos, recorded 80% take-up since its launch on Aug 1.

Geh also says that three units of Martinique — the most expensive new bungalow from Eastern & Oriental Bhd within its 1,000-acre Seri Tanjung Pinang — have been sold. These luxurious private sea-frontage bungalows, styled after grand plantation manors of the Mediterranean, have an average sale price of RM7 million. The bungalows have land of between 11,275 and 11,860 sq ft, with typical built-ups from 9,043 sq ft.

On the secondary market sampling for 2Q2009 shows there have been minimal changes in value from the previous quarter. On a q-o-q basis, there were only two upward movements in capital values and they are for 1-storey terraced houses in Bayan Baru and standard 3-bedroom apartments in Batu Uban. A 1-storey terraced home with built-up of between 1,200 and 1,600 sq ft was sold for 1.8% higher at RM280,000, while a 3-bedroom apartment of less than 900 sq ft was sold for RM240,000, a 2% increase in value.

Nevertheless, there has been a general upward trend in the prices of mainly landed properties on the island in most sampled areas despite the slowdown experienced since last year.

The highest price increase y-o-y is for 2-storey semi-detached houses in Sungai Nibong. The 3,000 to 4,000 sq ft sized houses experienced a 4% increase, from RM730,000 in 2Q2008 to RM760,000 in 2Q2009.

Bucking the trend were standard 3-bedroom apartments in Bandar Baru Air Itam, Paya Terubong, Relau, Greenlane, Tanjung Tokong, Tanjung Bungah, Batu Ferringhi, Cantonment Road and Island Glades where the decrease in values y-o-y was between 4% and 9%.

Geh says landed house prices generally do not go down, except in areas where, for example, big factories are retrenching or closing down, which causes double income losses to some families and people are forced causing some home owners to sell their property.

“But this does not commonly happen in Penang,” he says, adding that when faced with challenging economic situations, people will just be more prudent in spending, reduce credit card spending and travel less.

“Basically, there was not much change in the secondary market as the sharp movements were in the primary market,” Geh says. However, he expects the secondary market tomove up in the next quarter. “Some investors may sell their properties especially those who bought a few units which prices have increased since,” he adds.

Rent
Based on the data presented, rents remained generally unchanged in 2Q2009 except for one recorded case in Tanjung Bungah, where the average rent for 2-storey detached houses with a built-up of less than 6,500 sq ft, was RM2,450, down RM50 from 1Q2009.

On a y-o-y basis, rents on the island have generally increased by between RM40 and RM200. However, higher-end semi-detached homes on Pulau Tikus and Island Glades recorded a drop in rents from a year before.

The highest decrease was recorded in Pulau Tikus where 2-storey semi-detached houses with built-up of less than 6,500 sq ft clipped 8% to RM5,200 in 2Q2009, compared to 2Q2008.




This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 771, Sep 7-13, 2009.