WHAT’S STILL SAFE TO BUY IN MALAYSIA’S FALLING RESIDENTIAL PROPERTY MARKET

SOME are indeed above the rest. The most sought-after residentials on the island with consistent price appreciation for the past three years are those priced below RM1mil.

There are at least six hot addresses on the island which have experienced strong subsale transactions with price appreciation of 5% to 10% per annum since 2014, the year the local property market started to soften.

These include One Imperial in Sungai Ara, All Seasons Park in Bandar Baru Farlim, The Spring, Palm Court in Tanjung Tokong, Sri Impian in Bandar Baru Farlim, and Permai Jaya in Tanjung Tokong, which are all priced currently around RM300,000 to RM600,000.

“Their value has risen higher than other sub-sale properties on the island,” Raine & Horne Malaysia senior partner Michael Geh says.

He says since 2014, the value of most sub-sale properties on the island has either stayed flat or has appreciated by 2% to 3% per annum.

“These six stand out as their price appreciation is between 5% and 10% per annum. Although these addresses are not in the premier category, they are most sought after because of the pricing, location, facilities and the way they are managed.

“They have benefited from the new infrastructure, malls and other amenities that have mushroomed around them,” he says.

These are owner-occupied properties and the owners will not sell unless the offer is very tempting, according to Geh, which may explain why prices have enjoyed healthy increases.

Geh says these properties are also very well managed and are in top condition.

“Word about quality maintenance will eventually get around,” Geh says.

Depending on when the projects were launched, the value of some of these luxurious high-rise properties in prime locations on the island has soared over 80%.

One of the top residential addresses on the island is Hunza Properties Bhd’s Gurney Paragon Residences, where a 4,600 sq ft condominium is now priced about RM800 per sq ft (psf), compared to RM430 psf in 2007.

IJM Land Bhd’s The Light Linear next to Penang Bridge has also seen the price for a 1,475 sq ft condominium increased to RM1.2mil from the initial price tag of RM650,000 in 2009.

Another project is the Ferringhi Residence in Batu Ferringhi, which has seen prices increase by more than a fifth since its 2012 launch.

“The 1,510 sq ft condo villa units are priced currently about RM1.2mil. They were launched at RM1mil in December 2012. That’s a 20% increase.

“These projects enjoyed better-than-usual appreciation due to their strategic locations and premier lifestyle concept,” Geh says.

For landed properties on the island, one of the top addresses is Southbay Residence in Batu Maung.

“The three-storey terraced houses (with 1,650 sq ft land area) is priced from RM1.3mil, compared to the initial price tag of RM775,000 in 2008. This translates into a more than 60% increase over a nine-year period,” he adds.

Rental market

On the rental market, there are no changes in the rental rate for condominiums with built-up areas of 900 sq ft and above in popular locations such as Tanjung Tokong, Island Park, and Island Glades since 2012.

Rental rates have been maintained at about RM1,400 per month since 2012, Geh says.

“For double-storey terraced landed properties in Green Lane and in Pulau Tikus, the rental per month presently is RM1,500 and RM1,800 respectively, compared to RM1,200 and RM1,500 in 2012.

“Rental has not increased much due to the disposable income of household as they have a certain threshold. Anything above would be deemed unaffordable. Furthermore, the demand to rent is also weak,” Geh adds.

Ideal Property general manager Nancy Teo says some of their projects like 1-World appreciated by over 40% per annum from RM360,000 in 2012 to about RM680,000 in late 2014.

“Subsequently, the appreciation was only 2% to 3% per annum from 2015 onwards. The strong increases experienced in earlier years were due to the initial low base. Furthermore, the units had built-up areas of 1,160 sq ft and 1,560 sq ft, which made them popular with small families,” she says.

According to Teo, most of the high-rise units in the rental market are those priced from RM700,000 onwards; only such units can demand monthly rentals of RM3,000 and above.

“Owners in Penang are generally reluctant to rent out their properties unless the return is attractive.

“The usual worry is that the tenants may not take good care of their units,” she adds.

IJM Land senior general manager Datuk Toh Chin Leong says a furnished unit in The Light Linear can be rented out for RM3,200 to RM3,500 per month.

“The rental for a partially furnished unit is RM2,500. Many investors are holding on to their units in The Light Linear. They are reluctant to rent out their units as they are concerned that the units will not be well taken care of by tenants,” Toh says.

On the property market in 2017, Geh is forecasting Penang’s total transactions to hit 2,527 units with a value of RM1.13bil in the first quarter of 2017 versus 3,110 units with a value of RM1.21bil achieved in the same period a year ago.

“The subsale segment is projected to be over 80% of the estimated transactions,” he says.

For 2016, Geh is forecasting the residential transaction in Penang to hit 12,180 units with a estimated value of RM5.03bil.

– ANN

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