This article first appeared in City & Country, The Edge Malaysia Weekly on July 1, 2024 - July 7, 2024

Penang’s residential property market was flat in the first quarter of 2024 as it is typically less active after the year-end holidays, says Saleha Yusoff, executive director and regional head of research and consulting at Nawawi Tie Leung Property Consultants Sdn Bhd (NTL), in presenting The Edge Malaysia | Nawawi Tie Leung Property Consultants Penang Housing Property Monitor 1Q2024.

“Also, at the end of the year, people tend to focus on closing their books, which includes handling taxes and reviewing financial goals. They may delay major financial decisions like buying or selling a home until these tasks are completed,” she adds.

According to data provided by the National Property Information Centre (Napic), the number of residential property transactions in Penang in 1Q2024 stood at 4,134 units, about 4% higher than the volume registered a year earlier (1Q2023) at 3,975 units. In terms of property values, the state registered RM1.88 billion worth of transactions, or 7.4% more than in the previous corresponding quarter at RM1.75 billion.

However, on a quarter-on-quarter basis, there was a drop in both transaction volume and value in 1Q2024. In 4Q2023, the number of residential property transactions in Penang stood at 5,340 units valued at RM2.3 billion.

According to NTL’s data, the residential property market’s performance was mainly flat for both landed and high-rise properties on the island and mainland on the primary and secondary markets. Nevertheless, certain schemes such as the secondary market in Jelutong (high-rise) and Bukit Jambul (high-rise) — both on Penang island — witnessed huge jumps in value during the quarter in review.

Prices in Jelutong rose to RM696,000 in 1Q2024, an increase of 11% from RM627,000 in the previous quarter. Meanwhile, prices in Bukit Jambul shot up 27.8% to RM685,000, from RM536,000 in the previous quarter.

Saleha says Jelutong, which is about a 10-minute drive from George Town and close to the Penang Bridge, is a mature middle-class neighbourhood with good infrastructure and amenities, such as Jelutong Market, food and beverage outlets and convenience stores.

“As the area is well developed, the demand for properties on the secondary market is good, driving prices higher. The current asking prices range from RM610 to RM950 psf, depending on the location, quality and age of the properties. The area is also popular for Airbnb stay. Jelutong’s strategic location in Penang, offering proximity to key areas, schools, workplaces and leisure spots, makes it a highly desirable place to live too,” she continues.

As for Bukit Jambul, with its strategic location and proximity to the industrial zones and amenities, it has attracted consistent demand on the secondary market, especially among professionals and investors seeking stable returns, driving prices higher, says Saleha.

She expects the relaxation of the requirements for the Malaysia My Second Home (MM2H) programme to spur Penang’s property market. Introduced in 2002, the programme allows foreigners to buy property and live in Malaysia for an extended period. It was temporarily frozen in August 2020 to allow the Ministry of Home Affairs and the Ministry of Tourism, Arts and Culture to comprehensively review and reassess the programme. Since October 2021, the Immigration Department has handled all new MM2H applications and matters related to the processing of applications and logistics.

Under the revamped MM2H programme, applicants are divided into three tiers: Platinum, Gold and Silver, which require a fixed deposit of US$1 million, US$500,000 and US$150,000 respectively, along with other criteria and conditions.

Saleha reckons that the extension of the Home Ownership Campaign, or HOC 3.0+, from January to December 2024, as announced by Penang Chief Minister Chow Kon Yeow, will help first-time buyers to own a home and assist developers in promoting affordable housing.

The campaign features a 10% reduction in the price of affordable homes. This means the price ceiling of RM300,000 on the island would be lowered to RM270,000, while the price ceiling of RM250,000 on the mainland would be reduced to RM225,000 for units with a built-up of at least 850 sq ft.

She believes that Penang’s property market will remain on a positive path as it is backed by various ongoing and proposed developments. Major infrastructure projects, such as the Penang International Airport (PIA) expansion, Bayan Lepas LRT and Penang Silicon Island, could boost demand for properties in the state.

Earlier this year, Malaysia Airports Holdings Bhd called for tenders for the PIA expansion project, which includes a new main terminal building, a multi-storey car park and the construction of an ancillary building, the Air Traffic Control Tower and the office of the Civil Aviation Authority of Malaysia.

PIA is poised to become the second largest airport in the country when the RM1.5 billion expansion project is completed in 2028. Currently, 16 commercial aircraft can park at the terminal. With the expansion, PIA will be able to accommodate 28 planes at a time, as well as have another six parking bays and six remote parking bays.

The new design will nearly double PIA’s annual handling capacity of 6.5 million passengers to 12 million passengers per annum, equaling the capacity of Kota Kinabalu International Airport, which now has 16 aircraft parking bays.

The PIA expansion will include the construction of a new multi-storey car park with 1,700 parking bays, increasing the total capacity to 3,400. It will also double the terminal’s gross floor area to 115,000 sq m from 55,000 sq m.

It was reported that the physical work will start in 3Q2024 and the terminal expansion construction work, which will take 33 months to complete, in 3Q2025. The works are slated for completion in 2Q2028.

Reclamation work on Penang Silicon Island began on Sept 1, 2023, after the environmental management plan was approved by the Department of Environment in July last year. The man-made island spans 2,300 acres (930.78ha), and the Penang government plans to reclaim the first 400 acres by end-2025. It plans to have infrastructure developments, green-blue networks, public amenities and other facilities (888 acres), industrial zones (720 acres), housing (388.1 acres), mixed-use developments (164.3 acres) and commercial components (139.6 acres) on the island.

The upcoming Mutiara LRT Line, previously known as the Bayan Lepas LRT line, is part of the Penang Transport Master Plan (PTMP). Chow recently announced that the line would be extended to Penang Sentral in Butterworth.

The LRT route will connect Penang Silicon Island to Penang Island before ending at Penang Sentral, through an elevated railway across the sea. Construction will begin in 4Q2024, Minister of Transport Anthony Loke was recently reported as saying.

The PTMP sets the framework for an integrated transport system. Covering both land and sea, it comprises various transport systems and services, such as light rail transit, bus rapid transit, trams, taxis, e-hailing rides, ferries and water taxis.

Currently, its priority components are the Mutiara LRT Line, the Pan Island Link 1 highway and the Bandar Baru Ayer Itam-Tun Dr Lim Chong Eu Expressway bypass (Package 2), which was 50% completed in March.

Penang is known for its strong electrical and electronics (E&E) ecosystem. The industrial property segment’s growth will create more employment opportunities and hence, more demand for housing. Saleha notes that interest in industrial property and land in the state remained strong in 1Q2024 even though lower transaction volume and value were recorded.

According to Napic data, the number of industrial property transactions in Penang stood at 112 and were valued at RM510 million in 1Q2024, compared with 142 units worth RM400 million in the previous year and 186 units valued at RM720 million in the previous quarter.

Several companies announced investments in Penang during the quarter in review. QES Mechatronic Sdn Bhd, a subsidiary of QES Group Bhd, had a groundbreaking ceremony in Batu Kawan Industrial Park in January for its state-of-the-art facility, QES 2@BKIP.

With a land size of 87,120 sq ft and an estimated built-up of 83,488 sq ft, QES 2@BKIP is anticipated to commence operations in 4Q2024. The RM40 million investment covers land acquisition, construction, state-of-the-art facilities and a skilled workforce.

Also in January, Nihon Handa Co Ltd, a Japanese manufacturer of soldering and sintering materials, announced the opening of a new factory and office for its local subsidiary, Nihon Handa Manufacturing (Malaysia) Sdn Bhd, in Batu Maung, Penang.

The new factory is aimed at expanding Nihon Handa’s solder supply capacity to meet the growing demand for power device semiconductors in the future while also improving employees’ working environment.

Equalbase, which specialises in sustainable commercial and industrial logistics developments in Asia, announced in January that it was investing RM300 million for its first carbon-neutral logistics complex in Valdor, Penang. Valdor I, spanning 4.6ha with a gross floor area of more than 600,000 sq ft, will achieve above 50% energy efficiency by using Equalbase’s carbon-cured concrete, reducing its carbon dioxide emissions by 30% compared with the average Malaysian warehouse.

With Valdor I’s capacity to produce 4,620 megawatt hours (MWh) of solar energy yearly, Equalbase said the objective would be to offset embodied carbon emissions over a 40-year period. The logistics complex is slated for completion in 2Q2025. The company has invested US$400 million (RM1.8 billion) and completed more than four million sq ft of warehouse space in Malaysia to date.

In February, NationGate Holdings Bhd (KL:NATGATE) said it was acquiring warehousing and logistics service provider Hesechan Industries in Prai, Penang, for RM25 million in cash, as it was looking to acquire additional manufacturing space to facilitate its business expansion.

In March, Ancubic Group unveiled the sales gallery for and started the construction of its latest industrial development, A-Park Batu Kawan in Penang. At 20.5 acres, the park will offer a total of 50 units of 1½- and 2-storey semi-detached and detached factories. These factories, with selling prices from RM4 million, will have built-ups of 6,800 to 16,700 sq ft.

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