George Town, under the UNESCO World Heritage site, has been apportioned into Core and Buffer Zones. The Core Zone covers an area of about 109 hectares bounded by the Straits of Malacca on the north-eastern cape of Penang Island, Love Lane to the north-west and Gat Lebuh Melayu and Jalan Dr Lim Chwee Leong to the south-west corner. The Buffer Zone (150 hectares) is bounded by the stretch of sea area around the harbor, Jalan Prangin to the south-west corner and Jalan Transfer to the north-west corner.
There are a total of 4,665 buildings with 50.2% and 49.8% located at Core and Buffer Zones respectively. It is observed that pre-war heritage property is in strong demand given its perceived immense potential capital appreciation. The demand is from both local and foreign investors. Due to limited supply of good listings, the market apparently have more buyers than sellers. The volume of transaction for the first nine months of 2013 was quite active compared to the past few years.
The average price per sq ft of pre-war heritage properties in George Town started to soar after 1999. The CAGR (1999-2013) of pre-war properties average prices per sq ft was 12.7%. The demand for the pre-war heritage properties seems pretty resilient despite economic uncertainty.
As of Q3 2013, the existing total supply of residential properties in Penang State was nearly 372,000 units with 54% on the island and 46% in Seberang Perai, or mainland. Of the total incoming supply of residential properties, about 47% are on the island and 53% of them are located at Seberang Perai.
Several new luxurious condominiums located in the north-east district were transacted at prices of above RM1,200 per sq ft. On average however, the prices per sq ft of condominiums at north-east district are in the range of RM500 to RM800.
Apart from building cost hikes, the trend towards lifestyle concept and higher quality specifications have contributed to the higher selling prices of new projects for both landed properties and high-rise condominiums.
Rental yields of landed residential properties, in general fetch a lower yield of 2% to 3%, whilst apartments and condominiums may fetch slightly higher yields hovering around 4% to 5%.
Several major KL-based property developers have made their presence felt in Penang. Nevertheless, land scarcity, particularly on the island remains a key challenge.
Selected major upcoming/under-constructions residential projects are as follows:
• Southbay, Batu Maung
• Summerton@ Bayan Indah
• Penang World City
• The Wave @ Penang Times Square
• Vertiq, Metro East
• The Light Waterfront
• Raffles Tower, Bukit Gambier
• Nadayu 290, Jalan Bukit Gambier
• Setia Greens, Sungai Ara
• Setia V Residences, Gurney Drive
• Pearl Villas @ Setia Pearl Island
• Tropicana 218 @ Macalister
• The Turf, Jalan Batu Gantung
• Icon Residence, Pykett Avenue
• The Rice Miller City Residences, Weld Quay
• The Shorefront, Farquhar Street
• The Latitude, Mount Erskine
• The Landmark, Tanjung Tokong
• Mira Residence, Tanjung Bungah
• Andaman Series @ Seri Tanjung Pinang
• Marinox, Tanjung Tokong
• Ferringhi Residences, Batu Ferringhi
Purpose Built Office
The total supply of purpose built office space in Penang State was stable with 1,064 million sqm in Q3 2013. A slight decrease (0.6%) is observed in terms of demand with a take-up space of 0.857 million sqm in Q3 2013, compared to 0.864 million sqm in Q2 2013. The occupancy rate was registered at 80.6%.
Of the total supply of purpose built office space, 76% were located on the island. On Penang island, the demand or total space occupied has registered a marginal decrease of 1% of 0.645 million sqm from the previous quarter. The occupancy rate of the office space on Penang Island was about 79.8% in Q3 2013.
The incoming supply of purpose built office in Penang State (all located on the mainland) is estimated to be 0.027 sqm. As at Q3 2013, about 0.148 million sqm of planned supply (on the island) was submitted for approval. George Town monopolizes the supply of office space, whilst there are more purpose built office building being planned in the Bayan Baru/Sungai Nibong/Gelugor areas.
Market prices and rentals were generally healthy and stable. Market prices of prime office space ranged from RM180 to RM500 per sq ft on the island, depending on the location, grade of building, size and facilities provided. Overall, the purpose built office sector is expected to remain stable.
As at Q3 2013, there were a total of 150 hotels with 14,649 rooms in Penang, accounting for about 5.7% of the total hotels and 7.8% of the total rooms in Malaysia. Hotels in Penang, in general registered a higher average occupancy rate of nearly 56.9% in Q1, 2013, compared to their counterparts in Malaysia.
Most of the smaller budget and boutique hotels, that used to cater for local and international guests, are predominantly located in the historical city of George Town. The promotional rates of boutique hotels are between RM350 to RM500 per rooms per night.
Novotel, a proposed RM100 million hotel with 250 rooms, would be developed by the Idea Group at Bayan Lepas. This RM100 million hotel would be located at Bayan Lepas and is expected to commence business in 2014.
Other upcoming hotels such as Rice Miller Hotel & Residence Mansion One Hotel, Jazz Hotel, Royal Bintang Hotel, G Hotel (extension), St Giles Hotel and Cititel Express, are scheduled to be completed in 2013/2014, while Courtyard Marriot will be in 2018.
Article written by Henry Butcher Malaysia Penang. The article represents their personal views.