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| An aerial view of the Gurney Drive and Kelawei Road neighbourhoods, an upmarket commercial and residential areas in the North-East district. |
THE current challenging situation in the property market plagued by high
rejection rate of bank loans, inflationary concerns and prospects that bank
interests will hike, is pushing developers to initiate new products and sales
strategies to sell their products.
Since late last year, Penang and Kuala Lumpur-based developers have
devised various strategies to counter the dampened property market.
These strategies include launching affordable properties in prime areas,
tagging innovative projects at around RM800 per sq ft, and building new projects
within integrated mixed-developments or green environment.
Penang-based developers, Ideal Property Group and BSG Property Group
are responding with plans to build affordably priced residential properties in
prime areas, changing the landscape of affordable homes.
Affordable property projects in Penang, according to the state
government’s guidelines, are priced between RM200,000 and RM400,000, targeting
the first-time buyers’ market.
Until about a year ago, Penang island’s south-west district was known as the
locality for affordably priced properties.
As an example, since 2008, Ideal Property has developed over 4,000 units
of such housing worth some RM3bil in gross development value (GDV) there. But
since late last year, Ideal and BSG started looking at building affordably
priced properties in Tanjung Tokong, a prime residential neighbourhood in the
north-east district.
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| The completed Lagenda@Southbay landed properties by Mah Sing in Batu Maung. |
“Our affordable schemes, marketed under the I-Condo brandname, are priced around RM300,000 to RM400,000.
“We provide quality finishes and a wide range of recreational facilities. All the units come with a free car park,” Ideal executive chairman Datuk Alex Ooi discloses.
BSG Property also plans to launch 998 affordable condominiums in Tanjung Bungah in mid-2015.
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| Ideal Property executive chairman Datuk Alex Ooi. |
Under the state’s affordable housing guidelines introduced last year, developers are allowed to build 2.8 times or a total of 122,000sq ft of built-up area on an acre of land, all comprising affordable homes.
Penang’s softened property market has become a signal for developers to be more caring and innovative. This year sees more affordable, innovative and value-added housing schemes in line with the state government’s policy.
Innovative projects to attract buyers Under the old guidelines, the plot ratio was also 2.8 times, but developers had to make sure 30% of the units have low-medium cost price tag of RM72,500, and another 35% in the RM200,000 to RM400,000 price range.
“For example, they can build 144 condominiums of 850sq ft in built-up, or a mix of 750sq ft, 900sq ft, and 850sq ft units as long as the total built-up area of the units did not exceed 122,000sq ft on one acre.
“This is why you can see developers getting involved in the affordable home projects in prime locations.
“These affordable properties will put pressure on mid-range houses priced between RM500,000 and RM700,000,” says Real Estate & Housing Developers’ Association (Rehda) Penang chairman Datuk Jerry Chan.
Inflationary concerns and fear of an interest hike are also influencing developers to plan for innovative value-added schemes priced around RM800 per sq ft, according to Raine & Horne Malaysia senior partner Michael Geh.
From market surveys conducted, developers are aware there is still strong demand for properties tagged at about RM800 per sq ft, provided the homes are well designed and fitted with the essentials of modern-living, and located within a mixed-integrated development or in a secured and green environment.
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| Penang REDHA chairman Datuk Jerry Chan. |
“It is a smart way of selling residential properties, as the commercial environment will create demand for the homes from those working in the business hub.
“Even if the buyers do not want to stay there, they will also have no problem renting out the properties,” Geh observes.
Eco World’s EcoTerraces in Paya Terubong are fitted with essentials such as cabinets and wardrobe, air condition, vanity top and water heater for each of the units to attract buyers.
“Eco World is also allocating at least 70% of the 13 acre site for green space, which is an unusual sizeable green space for a project in the suburb of the island.
“This is another way to sell properties during challenging times like now,” he says. The secondary property market provides an alternative for house buyers looking for homes on strategic locations in Penang.
“It is still a very vibrant market, as a significant percentage of transactions in the local property market are in the sub-sales segment, due to the fact that the homes are ready and there are more choices in terms of location for the buyer to choose,” Geh adds.
According to Chan, there has been at least a 30% decline in property transactions so far this year, compared with the same period last year.
“Moving ahead, we can expect to see little or no appreciation for high-end condominiums.
“The mid-range high-rise properties with price tags of RM400,000 to RM500,000 are likely to see appreciation.
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| IJM Land Bhd (Northern Region) senior general manager Datuk Toh Chin Leong. |
On bank loans, Rehda Penang deputy chief Datuk Toh Chin Leong says for some projects, the rejection rate is as high as 50%.
“It is very common nowadays for developers to return the deposit payment when the loan facility is turned down.
“This is something you don’t see three years ago, but is happening more and more often in the past 18 months,” Toh says.
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