Penang Island : The Pearl Of The Orient

Evaluating Penang Island’s property market with REHDA Penang Chairman, Dato’ Jerry Chan and Director of Henry Butcher Malaysia (Penang), Dr. Jason Teoh

Penang was named the second best place to retire in the world by travel magazine, Conde Nast Traveller. Truly the Pearl of the Orient, the magazine boasts Penang’s culinary wonders, thriving art scenes and historical architectures as top draws that make the island a top retirement destination. The spillover effect on the real estate industry.

According to the REHDA (Real Estate & Housing Developers’ Association Malaysia) Penang Chairman Dato’ Jerry Chan, “The market is a bit tough since the global economy is slowing down, and even our Ringgit is weakening. However, a plus point for Penang is that the tourism industry has gone up.”

PENANG DEVELOPERS

Developers in Penang face a different set of challenges compared to their peers in the Klang Valley.

“(For example) You don’t have counsellors (such as those) in DBKL (Dewan Bandaraya Kuala Lumpur).  You have Datuk Bandar or Mayor and the policies are already set-up. If you comply and follow the guidelines, your developments should be approved accordingly.

“However, in the state of Penang, we have counsellors who might raise some issues and request additional conditions in approving your developments,” said Dato’ Jerry.

“(Additionally) We all know that Penang developers have been facing difficulty in getting the APDL (Advertising Permit & Developer’s License) approved. The delay in approval not only is a challenge for developers, it is also a depressing experience for first time home buyers.”

Dato’ Jerry said there is a silver lining despite the challenges.

“REHDA and its members have a few successful cases in fighting for the APDL. Like the PRIMA (1Malaysia People’s Housing Programme), I think the government is looking at it as a win-win situation. The more (supply of) affordable housing coming in, the better it is for the first time home buyers. I think the APDL matter will definitely be resolved but it’s going to take some time.”

“Developers must not set their targets too high, they have to be more realistic. The current situation – the tightening of the loan by banks is not a shock to me because I was (already) aware three years ago. During that time, to my great disappointment, the people who suffered are the bumiputras. When they wanted to buy our low-cost units, they could not get their loans approved. I was very upset. Here we are, building affordable housings to help the people – the bumiputras especially, yet the banks are doing nothing to help them.”

“I think Bank Negara really need to make a distinction between the people who need to buy their first home and the people who want to buy their fifth home. Doing 50 cheap loans is equivalent to one expensive loan and of course, financially it would be better to do that one expensive loan.But socially, is it the right thing to do?” asked Dato’ Jerry.

WHY PENANG?

As stated by Dato’ Jerry, Penang has seven C’s to provide its home buyers and investors:

• Choice
• Cost
• Culture
• Cuisine
• Connectivity
• Care
• Coast

Penang offers choices in terms of language, homes, educations, hotels and even places of worship. This diversity gives people the ability to easily fit in. The cost of living is also reasonable and furthermore, the housing and rental cost in Penang are more affordable compared to that in the Klang Valley.

The Penang heritage is getting the reputation it deserves. The cuisine is unique because of the diverse culture. Penang also has a good connectivity and care by a good State government. And the most important part; Penang is a coast.

There is a saying that if you invest in properties on an island, like Hong Kong, Singapore and Penang, your investment will never go wrong.

“I think it’s the question of preference.” Said the Director of Henry Butcher Malaysia (Penang), Dr. Jason Teoh. “Between living on an island and mainland, people would prefer living on an island if they can afford it. Because they find that Penang has a lot to offer. The travel distance is very convenient and although you still have to put up with the traffic congestion – it is still tolerable compared to Klang Valley.” Dr. Jason added.

PENANG PROPERTY MARKET

Dato’ Jerry said “We would see some spillovers in tourism, I don’t think employment would be tough. Plus, we have some big things coming up in Penang, such as Ikea in Batu Kawan, reclamation by E&O, The Light by IJM, development by SP Setia, etc. All those new catalysts will bring new demands. I think, there would be some overhang on some high rise properties for a while, but landed properties will continue to grow strongly. Landed property prices have not come down and are way ahead of current selling prices.”

Dato’ Jerry said the market at the current time is a buyer’s market.

“Investing in Penang Georgetown heritage area is actually an obvious choice. We have done a lot of researches and we actually realised that in terms of performance, it (PR1MA) is by far the best performing asset class throughout the whole state of Penang,” explained Dr Jason.

“The preference has always been to buy dilapidated or old buildings, where there is an opportunity for you to seek the right balance in the old and the new – and how do you marry the two into a position whereby you get the best of both world?”

Overall, Penang property market seems appealing mainly due to the tourism industry. While it is not isolated from the current weak market sentiment, it gives a very colourful lifestyle to the people – the best of the country’s culinary offerings, historic architecture, a thriving art scene, international-standard health care, and an English-speaking community of expats. Penang also supports the government initiative named ‘Malaysia My Second Home’ (MM2H).