Prices are still rising

Prices are still rising

Residential property prices in Penang, which hit new highs last year, are still soaring.

According to the National Property Information Centre’s (NAPIC) housing price index, property prices in Penang have risen to a level which is higher than the average national housing price index.

Henry Butcher (Malaysia) chief operating officer Lim Ewe Tatt told StarBiz that in 2006 the housing price index in Penang has surged by 25% since 2000.

“The property prices in Penang are still rising and would breach last year’s all-time high record. The reasons for the surge have to do with the implementation of infrastructure projects, such as the second link and the Penang Outer Ring Road (PORR) under the Ninth Malaysia Plan (RM9) for Penang.

“The strong demand for residential properties can be attributed to the buoyant stock market since the beginning of 2007, the abolition of the real property gains tax, and the influx of foreign buyers from neighbouring countries. “The prices are between 10% and 20% higher than two years ago,” he said.

According to the NAPIC report, terraced houses and high-rise units are the type of properties that are in demand in the current market.

Lim said Tanjung Bungah, Batu Ferringhi, Relau, Teluk Kumbar, Batu Maung, and Balik Pulau were areas where new residential projects were sprouting.

As for commercial properties, Lim said retail lots in commercial complexes and innovatively designed boutique offices commanded better rentals than purpose-built offices.

Lim Ewe Tatt
“Rentals hovers around RM3 per sq ft for retail lots and boutique office units and about RM2 for purpose-built office units,” he said.

Raine & Horne (Penang) senior partner Michael Geh concurred that residential property prices in Penang were currently at its peak, about 15% higher than last year. “We believe that the prices for residential properties will go up by at least 5% by the end of the year.”

He said landed residential properties, such as terraced houses, were priced between RM650,000 and RM850,000 on prime locations of the island.

“The price of semi-detached houses starts from RM850,000, while bungalows are selling for above RM1mil, depending on the location and size. The price of high-end condominiums hovers RM500,000 and RM700,000 for units with more than 1,200sq ft built-up areas,” he said. “A good portion of these properties is sold to foreign buyers. Their continuing support would play a key role in maintaining prices at the current level. Another key determinant of property prices would be the affordability level of house buyers. So long as they are able to afford the current prices, property prices would be maintained or surged,” he said.

As for commercial properties, Geh said retail lots in shopping complexes commanded better demand than purpose-built offices.

“Retail lots on the ground floor of shopping complexes on the island are priced between RM12-RM20. This, of course, depends very much on the location and size of the premises. The demand for purpose-built offices is a bit soft, as there is competition from pre-war houses, which can be renovated as offices.

“There are still many businessmen who prefer to use pre-war houses as offices as they are usually fronting the road and it is easier for their customers to gain access.

“The rentals for pre-war houses and purpose-built offices hover around RM1.50 and RM3.00, depending on the location and size of the premises. For the past two to three years, the rentals for such properties had remained unchanged,” he said.

In Seberang Prai, VPC Alliance (Penang) Sdn Bhd director Kelvin Tan said the demand for residential properties on the mainland was a bit weaker compared to the island, although there was a 5% to 10% increase in the prices of residential and commercial properties.

“There are two main reasons. There are more fresh housing projects in Seberang Prai, leading to an oversupply situation in the market.

“The island still attracts foreign buyers who prefer prime locations,” he said.

Tan said the new growth areas for residential properties were in Juru and Batu Kawan, where property prices had yet to peak, due to slow demand.

“The double-storey terraced houses in Juru and Batu Kawan ranged between RM160,000 and RM200,000, whereas the price for semi-detached houses ranged between RM250,000 and RM320,000.

“Compared to the other hot areas of Seberang Prai such as Jalan Raja Uda in Butterworth, and Bukit Minyak, Sungai Rambai, and Alma in Central Seberang Prai, a double-storey terraced property is priced between RM250,000 and RM300,000 depending on location and size of the unit, and while a semi-detached house is priced from RM400,000 onwards,” he said.

Tan said the prices for commercial properties had picked up in Jalan Raja Uda in Butterworth, Juru, and Kepala Batas.

“A three-storey shop in these areas is now priced at about RM700,000, whereas a double-storey shop is priced at about RM500,000. The ground floor rentals range between RM2,500 and RMRM3,000 a month,” he said.