The RM337 million Bayan Lepas Expressway comprising an elevated structure of 3.2 kilometres and a street-level route of 4.2 kilometres linked to Sultan Abdul Halim Muadzam Shah Bridge (2nd Penang Bridge), was opened to traffic in early April 2016.
The highway, capable of accommodating a traffic volume of 70,000 vehicles daily, is part of the traffic dispersal initiative in the area and is expected to ease traffic congestion between Batu Maung and Sungai Nibong.
The Penang State Government is hoping to secure a conditional approval for the first line of the RM27 billion Penang Transport Master Plan (PTMP) where plans for the Bayan Lepas Light Rail Transit (LRT) to the Land Public Transport Commission (SPAD) was submitted for approval on March 29, 2016.
The 30km Bayan Lepas LRT, expected to provide a speedy route to the airport, will start from Komtar and traverse through densely populated residential, commercial and industrial areas of Jelutong, Gelugor, Bayan Baru / Bayan Lepas and Penang International Airport before ending at the proposed Penang South Reclamation Project development.
According to the latest Property Market Report, the total volume of transactions for all sectors in the State of Penang for Year 2015 registered a drop of 15.6% against 2014. Similarly, in terms of value of transactions, the drop is recorded at 15%. Residential transactions which made up 70.9% [was 72% in 2014] of the total volume, recorded a drop of 16.9% and 18.5% in terms of the volume and value of transactions done respectively for the period compared – Year 2015 vs Year 2014.
Whilst only the “industrial” and “others” subsectors registered growth of 25.4% and 215.4% respectively over 2014 in terms of number of transactions done, the “commercial”, “industrial” and “others” subsectors registered positive growth showing increases of 19%, 5% and 1,034.5% respectively in the value of deals done for the same period compared. Penang International Airport, which has reached its capacity of accommodating 6.5 million passengers per annum, has been earmarked for an expansion programme to cater for increased capacity of serving 10 million passengers a year.
Malaysia Airports Holdings Bhd will construct a multistorey car park that will house 3,000 lots of parking space to be done in two phases. The first phase that will include the completion of 1,500 lots will be operational in the first-quarter of 2017 (1Q2017), while the second phase will be opened in 1Q2018.
New investments and reinvestments into Penang’s industrial sector include Boston Scientific’s new facility in Batu Kawan Industrial Park where construction wil start in 1H2016 and to be operational by 2H2017; SAM’s reinvestment of RM100 million between 2016 and 2018 – RM70 million to build a new 120,000 sq ft facility in Bukit Minyak and RM30 million on its Penang plant for aerospace work; Robert Bosch’s RM66 million expansion of its Penang plant; and Tek Seng Holdings Bhd, a solar cell maker, will spend RM237 million to expand its production capacity to triple its existing size this year.
HIGH END CONDOMINIUMS
Hunza Group, a well-established and reputable property developer in Penang, has launched ALILA2 as a sequel to their successful Alila Horizons and Alila Homes in Tanjung Bungah. ALILA2 is sited away from the hustle and bustle of George Town and yet is close enough to the city, Batu Ferringhi, international schools, medical facilities, retail outlets and the varied dining choices Penang is known for. ALILA2 is a low density modern resort-inspired condominium development comprising 2 towers sitting atop a 6-storey podium over 9.8 acres of lush landscapes; the 2 towers have been designed to comply with Malaysia’s Green Building Index (GBI) Certification.
The comprehensive range of recreational facilities includes infinity pool with jacuzzi beds, seats and aqua gym equipment; two-storey lounge area with BBQ pit, dining table and seating, and entertainment deck; tennis court and half-size basketball court and themed pocket spaces with feature shelters, giant swings and cocoon seating to enjoy the beauty of nature.
Expected to complete by 4Q2017, ALILA2 offers 270 large semi-furnished apartment units at prices ranging from RM790 to RM1,066 per sq ft for the typical units sized from 1,905 sq ft to 3,235 sq ft and from RM993 to RM1,000 per sq ft for penthouse and duplex units sized from 3,900 sq ft to 5,789 sq ft. Optional furniture packages are available and a minimum of 2 car parking bays are provided for each unit.
Buyers of the high-end condominium sector have higher expectations; thus, developers of many newer launches offer units which are fitted out with built-in cabinets to bedrooms, kitchen cabinets c / w hood / hob / electrical items as well as light fittings, air-conditioning units and quality sanitary fittings. There are very few recorded transactions of larger sized condominiums with built-up areas from 3,500 sq ft to 6,000 sq ft in the secondary market in 1H2016. Transactions in 1H2016 of such sized units in Tanjong Bungah range from RM446 / RM626 per sq ft (both at The Cove) to RM793 per sq ft. Smaller sized units at Gurney Paragon were resold at RM808 per sq ft to RM1,150 per sq ft whilst at Quayside, Seri Tanjong Pinang, units were resold at prices varying from RM768 per sq ft to RM1,138 per sq ft in 1H2016. Asking rents are noted to be slightly lower when compared to last year.
For larger sized units in Tanjong Bungah, asking rents generally range from RM1.10 to RM2.30 per sq ft per month whilst some landlords are still holding onto high asking rents of RM2.80 to RM2.95 per sq ft per month. For similar sized units in Gurney Drive, asking rents vary from RM1.80 to RM2.60 per sq ft per month. For smaller sized units in Tanjong Tokong and Gurney Drive, asking rents are in the range of RM2.20 to RM2.90 per sq ft per month whilst some landlords have higher asking rents of RM3.50 to RM4.40 per sq ft per month.
The existing supply of office space (buildings of 10-storey and above) on Penang Island remains at 2H2015’s level of 5.59 million sq ft. The occupancy rates for the 4 prime office buildings monitored in Georgetown generally remain at 2H2015’s level, ranging from 80% to 100%. Current asking rentals for the older buildings generally range from RM2.80 to RM3.00 per sq ft per month, the same level as 2H2015.
Rents secured at Hunza Tower is about RM3.50 per sq ft per month where the occupancy rate is 100%. Average occupancy rates at Suntech and Menara IJM Land, both newer office buildings located outside the city, currently stands at 95%, a slight 1% increase compared to 2H2015. Asking rents at these two buildings range from RM2.60 to RM3.30 per sq ft per month, with one building recording slightly lower rents.
The existing supply of purpose-built shopping space on Penang Island remains unchanged at 2H2015’s level of 6.69 million sq ft. No new purpose-built shopping malls were completed on the island in 1H2016. M Mall 020, Phase 2 of Penang Times Square which opened for business in late December 2015 had its official opening on May 28, 2016.
There are several proposed shopping malls coming up over the next five years on the island, please refer to Table 7. Occupancy rates for the prime shopping malls on the island range from 80% to 98.5% whilst for the secondary shopping malls, the range is generally from 70% to 90%.
In prime shopping malls, rental rates for ground floor retail lots generally range from RM13 to above RM35 per sq ft per month, depending on the mall, location and size of the units.
With the continuing challenging global and national economic environment, the negative property market sentiments have remained and the scenario is not expected to improve in the immediate future. Further softening and consolidation of the residential sector is expected with increasing supply and poorer take up rates. Despite the fact that there is no new incoming supply, the office market has plateaued with occupancies generally stable.
Landlords of secondary buildings are expecting pressures from tenants to suppress rental rates. In the retail sub-sector, the prime malls are still performing well but are not totally spared the effects of the weak economy. Occupancies and rental rates will also come under downward pressure. Secondary malls will face even greater challenges.
This article was first published in the iProperty.com Malaysia October 2016 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine. Better yet, order a discounted subscription by putting in your details in the form below!