GEORGE TOWN (Oct 8): No bidders turned up at an auction for a six-acre land that the Penang state government intends to sell to raise funds for the long-delayed Ayer Itam road bypass project.
Representatives of the appointed auction agent, One Asia Property Consultants (PG) Sdn Bhd, waited for an hour for bidders to show up before closing the auction on Wednesday, people familiar with the matter told The Edge.
There's still no decision from the state on whether to host another auction, the people said.
Proceeds from the sale were meant to complete the project linking Ayer Itam and Tun Dr Lim Chong Eu Highway. Construction progress reached over 90% at the end of August. However, the project has faced delays linked to financing and site logistics.
The bypass project is funded through a land-swap method, where land plots are transferred based on completed work claims, rather than through cash payments to the builder. The contractor, Consortium Zenith Construction Sdn Bhd, sought the state government’s aid to monetise the land to generate cash flow and ensure the project’s completion by April 2027.
Apart from the soft property market, The Edge learnt that uncertainty over the plot ratio — the total floor area of a development as a proportion of land size — for a mixed-development project was another reason for the zero turnout.
The plot ratio for a commercial project in Gurney Drive is five times while a mixed-development scheme on the site would have a different plot ratio as residential projects have a plot ratio of 2.8 times, one of the people noted.
On the island, development densities and plot ratios are tightly controlled by the state government due to the limited flat land, fragile hills, and heritage status of Penang.
The land has a reserve price of RM313.632 million or RM1,200 per square feet. Vacant land in the surrounding area is currently fetching more than RM1,000 per square feet in the open market.
The land, known as Plot 7A in Tanjung Pinang Town, is located along Jalan Peter Paul Dason, which connects Gurney Drive with Andaman Island.