This article first appeared in The Edge Malaysia Weekly on August 7, 2023 - August 13, 2023
The growing divergence in the value of industrial land between Penang Island and Seberang Perai is hard to miss.
There is no end to developers prepared to undertake reclamation work for industrial, commercial and residential development on the island even though land prices are significantly higher there than on the mainland.
In the latest development, Penang Development Corporation (PDC) awarded Titijaya Land Bhd the mandate to undertake the reclamation of 20.8 acres of seafront area in Bayan Lepas. Titijaya will incur an estimated reclamation cost of RM72.5 million, which is about RM81 per sq ft.
In return, it will get 45% of the net developable land, or about seven acres, with PDC getting the rest as its portion of the reclamation agreement. Based on the current valuation of an adjoining land in Bayan Lepas, the value of Titijaya’s reclaimed land is easily about RM10 million per acre.
Just across the sea in Batu Kawan, developed industrial land with infrastructure comes up to less than RM3.5 million per acre.
There is ample land for the development of industrial parks in Batu Kawan, which has a direct connection to the Bayan Lepas Airport via the Second Penang Bridge. The development stretches from Batu Kawan right down along the coast to Nibong Tebal and Parit Buntar, which borders Perak.
Connectivity to the island is relatively good, even more so with the underutilised Second Penang Bridge where traffic is low.
Based on the current trend, the value of land on the island will grow significantly higher over time. That being the case, shouldn’t any reclamation works be shelved for the longer term where a significantly higher value can be derived?
The best parcels of land on Penang Island, whether reclaimed or otherwise, should be monetised carefully over the longer term for better returns.
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