After the Tsunami of 2006, Penangites rushed to sell off their beachside properties. Now, years later, sea-front properties are making a comeback.

As we enter the year of the Tiger, many opinions are being shared. Some say it is not a good year for investment, while others claim that it will thrive. The Penang property market is not spared from such speculation, and it is our duty to dispel such concerns with facts from the experts.

Expert Opinion

In an article by the Edge Daily, Michael Geh – Director of Raine & Horne international Zaki + Partners – is quoted saying: “The residential property market in Penang is poised for consolidation as speculators and investors may cash out and owner occupiers come out to cherry-pick their dream homes”.

He advises buying for your own stay for now until prices rise to new heights after a two-year consolidation period. Additionally, those interested in prime office space should opt for those with MSC status as their capital values differ by RM100 per square foot. Otherwise, the prime office market will continue to be soft as over 10,000 pre-war shop-houses are being used as offices.

Despite all that, the Penang property market is still a viable and solid option. State Tourism Development, Culture, Arts and Heritage Committee chairman Danny Law believes: “A crisis can turn out to be an opportunity. This is the time for investors to start developing (more projects) because building materials and labour are easy to come by due to the lack of competition (in the industry)”.

Furthermore, he added, the price of property in Penang is still relatively low compared to other countries in the region, making it all the more lucrative for foreign investors to consider buying in Penang.

Living Luxuriously

Penang with its beautiful sandy beaches, lush green vegetation and diversity of culture makes it an extremely exciting place to live.

That is why many developers from the Klang Valley in addition to local ones are vying to build luxury homes on the island. Top players such as Eastern and Oriental Bhd (E&O), IJM Land Bhd, SP Setia Bhd, Mah Sing Group Bhd, the Penang-based Ivory Properties Group and MTT Properties and Development are developing new projects across the island.

Despite fears of a property bubble, especially in the condominium market, developers are still optimistic. Their target market encompasses neighbouring countries and even as far as South Korea and The United Kingdom. An estimated 30% of the total market consists of foreign buyers.

Luxury homes attract buyers of holiday homes from Kuala Lumpur, Singapore and Hong Kong in addition to locals who are looking for an upgrade. Among these, seafront condominiums on reclaimed land seem to be the prime beneficiaries of a robust demand. Investors looking into these markets have seen a healthy appreciation in recent years due to short-medium term supply constraints. This trend seems to be continuing into 2010. 

Datuk Soam Heng Choon, managing director of IJM Land was quoted by the Business Times saying: “We feel that the property market in Penang is still resilient as prices are lower when benchmarked against those for integrated developments in cities like Kuala Lumpur, Singapore and Bangkok.” He added: “Also, the base lending rate is still low and some cash-rich investors are switching from the stock market to property”.

Palatable Properties

Among the more notable properties in Penang is IJM Land’s “The Light”, a waterfront project on reclaimed land along the Jelutong Expressway. It is a revolutionary integrated development with landmark buildings such as an information technology hub, promenade mall, seafront boardwalk, convention and exhibition centre, boutique hotel and marina club.

E&O Property Development Bhd’s Quayside luxurious condominium at its sea-fronting Seri Tanjung Pinang development in Tanjung Tokong is another project to look out for. Its Ariza Seafront terraces and Serviced Residences achieved at least 80% take-up within a few weeks of their soft launch. If future trends are to follow, the Quayside residences will follow suit.

Sea-front developments aside, an interesting project is taking place on two separate locations of the island. SP Setia has earmarked its two new developments to be Green Building Index-compliant. The 0.8ha “Brook Residences” located adjacent to the Jesselton area is a high-end bungalow project while “Ara Setia” is a mixed development in Sungai Ara. It may be still too early to tell, but green buildings might be the trend of 2011.