Interest rate hike likely to affect demand in Penang

March 17th, 2018 No comments

penang-marketThe property market in Penang is expected to contract by at least 10% this year compared with 5% in 2017 as a result of the overnight policy rate (OPR) been raised by 25 basis points to 3.25%.

“You can argue that it is not a lot. If wages increase correspondingly and the cost of doing business remains the same, there won’t be much impact,” says Raine & Horne Malaysia senior partner Michael Geh.

However, in Malaysia, the impact cannot be regarded as insignificant, he says.

“The median household income in the country is currently RM5,228 compared to RM4,585. But (even at that level) of the income, it would be very hard for them to get a bank loan.

“The absorption of the excess supply would slow down,” he adds.

According to Geh, a conservative estimate of the incoming supply of residential properties in Penang is about 95,000.

If half of the properties can be sold, it will take the remaining 50% at least three to four years to be absorded, if the annual consumption stays constant at 12,000 to 13,000 per annum, says Geh.

He adds that with the interest rate hike, the rate of absorption will slow down, as banks are now even more selective.

“There is also the concern about buying properties near hill slopes and flood-prone areas. These properties are likely to experience a decline, following the recent flooding which destroyed millions of ringgit of property and assets.

“House buyers would exercise caution when buying either landed or high-rise properties near such areas.

“This could slow down property transactions in the state over the next 12 months.

“The pricing of properties near hill slopes and in flood-prone areas could drop below market price,” he says.

On the sub-sale market, the price of high-rise properties on the island has either stayed stagnant or contracted slightly since 2014.

In Tanjung Bungah, the present selling price is between RM720,000 and RM1mil, depending on the size and location of the properties. Batu Ferringhi’s high-rise units range between RM620,000 and RM820,000, while that of a detached landed property is from RM2mil to RM2.7mil, depending on the size and location.

In comparison, a Paya Terubong high-rise unit may be transacted between RM230,000 and RM435,000, while in Jalan P. Ramlee, a high-rise unit can cost between RM125,000 and RM405,000.

Secondary market

On the sub-sale of properties in the country, the number of transactions for the first half of 2018 is projected to dip to 76,000 from 80,000 in the second half of 2017. In ringgit value, this is expected to stay flat at RM27.6bil, according to Geh.

In Penang, the number of transactions for the sub-sale market in the first half of the year is projected to drop sightly to 5,000 from 5,200, compared with 5,000 in the second half of 2017, while the value of transactions is expected to stay flat at RM2.13bil.

The sub-sale segment constitute about 80% of the property transactions in the country.

The rental yield for Penang residential units is expected to stay stagnant with prices expected to remain flat.

Geh says the rental yield per annum for residential properties should be above 5% in order to be attractive. Rental yield for condominiums on the island is still around 3.3% to 4.2% per annum for North-East district, while for South-West district, the yield is between 3.2% and 4.6%.

“The monthly rental is between RM3,000 and RM7,000 in the North-East district, while in the South-West, the monthly rental is between RM2,500 and RM3,000, more or less the same as a year ago,” he adds.

For landed properties, the rental yield per annum is 1.6%-2.5% on the island.

“This is for double-storey semi-detached houses in the North-East district, where the monthly rental is between RM2,000 and RM4,500.

There could be more launches of serviced condominiums this year.

“The freeze on the development of properties valued over RM1mil per unit will increase the popularity of serviced condo projects. Deve-lopers would move to this segment as they would not come under the RM1mil freeze.

“With the high pricing of residential properties on the island, we can expect more young people to rent rather than buy.

“This is why we are seeing serviced condominiums being developed nowadays,” he said.



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The Skyline

March 15th, 2018 No comments


The Skyline, yet another residential development by PLB Land at Paya Terubong. Part of the Skynet City township development located along Jalan Paya Terubong. It is adjacent to Majestic Heights, just a stone’s throw away from the new 6km-long paired road (under construction) via Jalan Bukit Kukus.

This development will see the construction of a 39-storey condominium, offering 290 residential units.

Project is still pending for approval. More details to be available upon official launch.

Project Name : The Skyline
Location : Paya Terubong, Penang
Property Type : Condominium
Built-up Size: (to be confirmed)
Land Area: (to be confirmed)
Total Unit: 290
Indicative Price : (to be confirmed)
Developer : PLB Land

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UPCOMING: Butterworth / Atta Global Group

March 14th, 2018 1 comment


A proposed residential development by Park Avenue Construction Sdn Bhd (a wholly owned subsidiary of Atta Global Group) at Butterworth, Penang. Strategically located along the ever-bustling Jalan Raja Uda, Adjacent to the Elements Garden by Oriental Max Group. It is about 15 minutes drive from Penang Bridge.

This development comprises a 14-storey condominium featuring 112 condominium units, and 8 units of 3-storey terrace houses.

More details to be available upon official launch.

Project Name : (to be confirmed) formerly known as Elements Residence
Location : Raja Uda, Butterworth, Penang
Property Type : Residential
Built-up Size: (to be confirmed)
Land Area: (to be confirmed)
Total Unit: 112 (condo), 8 (3-storey terrace)
Indicative Price : (to be confirmed)
Developer : Atta Global Group

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Taman Slim Jaya

March 12th, 2018 No comments


Taman Slim Jaya, a low-density mixed development by Asiamas Housing at Jelutong, Penang. Strategically located along Jalan Slim, just a stone’s throw away from Setia Sky Ville development scheme by S P Setia.  It is only mere minutes drive to various high schools, namely Heng Ee secondary school, Penang Free School and Han Chiang College.

The proposed development comprises 4 unit of 2-storey shop offices and a gated & guarded housing scheme with 22 unit of 3-storey terrace houses.

Project Name : Taman Slim Jaya (formerly known as Jelutong Residences)
Location :
 Jelutong, Penang
Property Type : Residential & shop offices
Built-up Area: (to be confirmed)
Total Units: 22 (3-storey terrace), 4 (2-storey shop office)
Indicative Price: (to be confirmed)
Developer : Asiamas Housing Sdn. Bhd.

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Atta buys land in Penang to undertake mixed development

March 9th, 2018 No comments

atta-global-acquisitionAtta Global Group Bhd is acquiring property development company Sungguh Gemilang Development Sdn Bhd for RM12 million.

In a filing with Bursa Malaysia today, the metal recycler and trader of metal related products said the proposed acquisition is a strategic move in line with its proposed diversification into property development and would generate synergistic benefits to the group.

Based in Penang, Sungguh Gemilang owns a plot of vacant freehold land in Butterworth measuring 7,100 sq m. The planning approval for the land was obtained in April 2016 while the building plan approval was granted in June 2016.

The land is valued at RM12.5 million, as indicated by Henry Butcher Malaysia in a report dated March 3, 2018 while the net book value is RM10.42 million as at Dec 31, 2017.

Sungguh Gemilang intends to develop a residential project comprising eight units of terrace houses, a 14-storey condominium and facilities.

Atta said the purchase consideration comprises cash of RM1.15 million and an assumption of liabilities of RM10.85 million.

Based on the management account for the financial year ended Dec 31, 2017, Sungguh Gemilang’s net loss and net liabilities stood at RM269,870 and RM446,029 respectively.

Atta said it will fund the proposed acquisition with internally generated funds. Upon completion of the proposed acquisition, which is expected within six months, Sungguh Gemilang will be parked under Park Avenue Construction Sdn Bhd, a wholly owned subsidiary of Atta.



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