Five major Penang developers plan to build homes priced at RM0.5m-RM3.3m


When the Penang government allowed the maximum density of 30 homes per acre for residential properties to be raised to 87 homes per acre in 2010, the argument was that the higher density would allow developers to build more affordable homes. Yeah, right. (Did you really believe that at the time?)

Take a look at this report below, now. Five major developers are now focusing on homes with prices ranging from RM480,000 to RM3.3m. The question is, just whom are they building for? The ordinary people of Penang? I think not.

This is what happens when you have a free-for-all in the housing sector with little state intervention to control the kind of houses that can be built and at what prices.

This report was published in the pro-developer newspaper, The Star, which rarely publishes any negative news about the property development sector. (It knows which side of its bread is buttered):

GEORGE TOWN: Five developers will undertake RM4.33bil in property projects in Penang next year despite a challenging year for the property market.

The developers planned to price their mostly residential properties from between RM480,000 and RM3.3m.

The price range came on the heels of this year’s launches of between RM200,000 and RM400,000 in strategic locations.

The developers would be shifting their focus to higher-priced residential properties.The condominium units in Bayan Lepas will be from 1,000 sq ft and priced from RM480,000 while three-storey houses with built-up of 5,300 sq ft will be priced at RM3.3mil in Seri Tanjung Pinang.

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The developers are IJM Land Bhd with gross development value (GDV) of RM415mil, Ideal Property Group (RM1.46bil GDV), Hunza Properties Bhd (RM600mil GDV), Eastern & Oriental Bhd (RM650mil GDV) and Mah Sing Group Bhd (RM1.2bil GDV).

Real Estate & Housing Developers’ Association (Penang) chairman Datuk Jerry Chan told StarBiz that developers could be shifting their focus to properties priced from RM400,000 as there was a large supply of housing priced between RM200,000 and RM400,000 targeting first-time buyers.

What? “Large supply” of housing priced between RM200,000 and RM400,000? Remember, the state government’s affordable housing price range is anything up to RM400,000. If anything, I would have thought that affordable homes would be in short supply.

But then, you remember in a previous blog entry, I had argued homes priced from RM200,000 to RM400,000 are hardly affordable to many ordinary Penangites.

And now, instead of building more homes below RM300,000, developers plan to build homes from RM480,000 upwards to RM3.3m! Bungalows on hill-slopes are going for up to RM6m!

People may say that land in Penang is expensive. But it is a chicken-and-egg situation. One of the major contributory factors for skyrocketing land prices is the free-for-all policy that allows developers to build high-end condos and houses that run into millions of ringgit. This drives up land prices not only across the island but also on the mainland, as landowners try to cash in by selling their land to high-end property developers while other landowners benchmark their selling prices to what they think these high-end developers would pay.

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Once again, let’s ask whom are developers building homes for? I don’t believe that there are that many millionaire buyers in Penang. If anything, the high-end homes are targeted at the upper-middle class, the top 10% perhaps, Penangites working abroad and wealthy foreigners.

In the absence of controls, developers will try and maximise profits by building expensive homes for those who can afford them even if it means selling to wealthy foreign buyers rather than local residents. This is what is happening.

What about the ordinary residents of Penang, including factory workers, waiters, security guards, clerks? Will most of them now have to live in Batu Kawan and commute to the island, adding to the congestion on the first Penang Bridge?

Meanwhile, where is the Penang Island Local Plan, which was approved by MBPP in 2008 but never gazetted? (This Local Plan would have told us what densities are allowed and where.) Oh, I forgot, they are still waiting for this special area plan-lah and that Malay translation-lah to be completed first. (The excuses are getting embarrassing.) And all the time, the high-end developers are making hay while the sun shines.

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  1. Penang has received its first two Perumahan Rakyat 1Malaysia (PR1MA) applications to undertake affordable housing projects involving 2,600 units at Batu Ferringhi (1,520 units) and Kampung Kastam, Bukit Gelugor (1,124 units).

    State Housing, Town and Country Planning Committee chairman Jagdeep Singh said Penang had also seen an adjustment in the property market with an increase in the number of affordable houses.From 2012 up to the first half of 2015, 79% of 67,119 transactions for residential property are for affordable housing. He added that about 4,500 units of affordable housing were expected to be delivered from this year and 2018.

  2. The Penang Property Summit 2016 is now on (8-11 Jan at the Subterranean Penang International Convention and Exhibition Centre. Over 30 exhibitors at the three-day event will showcase all types of property from affordable to high-end. Can check up the property talk there to get the latest update.

    The summit, which is open to the public only on Saturday and Sunday, will also feature new highlights including the ‘premier lecture series’ on Saturday from 11am onwards by senior state executive councillor Chow Kon Yeow, Seberang Prai Municipal Council president Datuk Maimunah Mohd Sharif and Penang Institute CEO Dr Lim Kim Hwa.

    The lectures will include challen-ges and opportunities facing Penang island and mainland, and an insight into the state’s strategic plans to be a ‘high-income’ state.

    Event director Ong Ban Seang said one of the highlighted key topics would be the Implications of Strata Management Act 2015 by prominent panellists at 5pm on Saturday.

    On Sunday, a talk on ‘How to Grab Monkey Year Properties’ will be conducted in both English and Mandarin at 1pm, followed by a public talk, charity auction and public speaking championship.

    • ‘How to Grab Monkey Year Properties’ talk is a desperate attempt by the developers for fire sale admist the poor economy and likely burst of property bubble in 2016?

      Developers are smart to engage Feng Shui consultants in such events to influence the ‘heart’ of the potential buyers into buying mood despite the ‘head’ will tell you otherwise.

    • Thanks for the update, I will attend the Sunday session. Can always count on Anil’s readers like you to provide supplementary information that is useful.

  3. Land rates or value in urban areas are rising.
    Maybe have to consider living in a Nano Apartment / Mini apartment.
    In and around Tokyo city, people lives in small “Apatmento”
    It is not a slum or ghetto housing for the poor.
    It is quite upscale for single and small families.
    BBC did an article on this.

    Another main issue when it comes to land availability on a small island is.
    Land occupied by the dead. Do we need cemetery?
    But a certain race from a certain religion will object to this instead of coming with a solution to the problem.
    it’s okay if living in a village just bury the corpse in the backyard.
    But in a densely populated city?
    Sorry for bringing up this issue but eventually somebody must really look into it.

  4. Many appreciate MrT-lang to raise awareness of lifestyle situations in Penang. Many also hope he has a back up plan for him and his 3 children to move to mainland for affordable and old Penang charm lifestyles.

    Too busy commenting, forgetting to check out good deals (may be Azmi Yang Properties And Bus can help) then by the time decide to relocate I can be too late!

    The 2 SP, BM, Jury, Bukit Kawan already under speculative attack raising the ceilings beyond our sanity, so kindly be aware as well with extra doses of kaukaukaukopi…….

    • This is my 8-cents life advice (for those young & setting out on the road of career building):
      1) Invest in yourself – education, skills, EQ, self improvements (make it a lifelong quest) & social networking
      2) Yearly targets to improve salary (if you are employed), increase incomes (for the self employed)
      3) Save up at least 20% of income & invest in profitable assets. If you dare to fail, invest in own business
      4) Defer buying if you don’t truly need anything (soon you may forget it & thus save up from deferring)
      5) Don’t force buy a home that is unaffordable. RENT.
      Why? – You actually save a bundle in interest charges, legal fees, commissions, which you can opportunity cost to grow your savings & other investments
      Save up for a future home purchase. And pay cash. There will always be a property bubble on your way. Adopt a stalker instinct. Why be a knee-jerk wildebeest at a slight earth quake of property price rise humming or rumours or even lies by property gurus & so-called desktop property experts / advisers
      – You sleep better knowing there is no high monthly loan payment to choke you. Similar to credit card dilemma
      – You can treat yourself better as & when you feel like it manageably – annual holiday trips, family dinners, gifts
      – You have more cash reserves for other needs like career booster courses & tertiary education
      – You don’t have to beg in times of need for cash. Ah longs are always happy “cash saviour” at your doorsteps
      – Your life opens up to more possibilities (to grow) & even dare to fail when you are debtless – no home loans, car loans, credit card payments, personal loans. (Education loan is exceptional since you are empowering yourself – see #1 – for increased income in the near future). Otherwise, when you are bridled by a home loan, your life is stuck in a self-hate trench of commitments & a life long of sacrifices which snatch away possibilities for a better you & a better life & a happy family. While you are still young, why be kia-su?
      6) Find yourself a partner who (truly) shares your dream. Life will be greater & fulfilling

      • Never rent as you lose out in the long run. Do not buy a car.
        Take reasonable housing loan by purchasing a small size house/condo if you are young, upgrade later when you have better career and salary.

      • I agree with Royston, never rent as you lose out in the long run. If you must, then, buy a 2nd hand car. Buy a small flat, then, when u have enough means, upgrade. Cook your own meals. Comes the next GE, throw out the 1donation pm n his party entirely, because of him we are paralysed n suffered unnecessary…

        About the affordable homes, i heard we can rent first, and buy later ???

        When it was opened to the public @ tesco, tg tokong, some ppl queued up as early as 5am plus, i would say those are the winners !!!

      • Be realistic. For the young workers starting to enter workforce, do you think they can start buying a home?
        With salary scale so low, expenses so high (food, transport, etc) & not a penny to save, how to buy even a small flat? With employment so volatile, what is there to hedge career in a small flat?
        And as a rat in a race, you think they ever bother to carry a home loan, let alone a car loan & other things deemed more for their career development priorities?
        Unless one is born in a rich family, survival & climbing the corporate ladder at the fastest pace is more important than to be burdened by a home loan, that btw is hard to come by. For most rat racers, earning a higher income is more a priority than coming home &staring at 4 small walls of a flat no knowing what to do next (as most cash is strapped to a home loan). No money, no help to a career empowerment.
        As a narrative, look at 2 young careerists as forest hunters:
        One is a focused hunter who over time is now a multi-skilled & proficient hunter who brings to the village abundance of daily catch. He may or may not have a cave to call home yet. But with his skills already honed (over time) to guarantee his ample catch, he now can afford to exchange his ‘earnings’ for a big cave with some female companions thrown in!
        Another young hunter is not so highly skilled yet. But he chose to own a small basic cave (fear syndrome?) exchanged with some small catch gathered oven time. But he prioritised his scarce resources for a cave which btw does not enhance his survival & hunting skills for the longer run. And he continues to catch small animals & gather peanuts.
        Which of the 2 hunters will survive better & thrive in the longer run? Let alone owning a bigger cave with some willing + eager female companions walk in?

      • Tunglang, parents “should” help children with the down payment. Again, not all parents can afford that. I hold my breadth seeing the shrinkage of our r1ngg1t, foodstuff, property skyrocketing and everything else.

        I saw on the facebook this malay young mom said instead of giving 5 sudu of milk powder to her baby she gives 3 and a half instead so that the milk powder can last a bit longer… sad !!!

        Thanks to 1donation, black heart indeed !!!

  5. Do you think the nite affluent@ Singaporeans or Spore PRs (still holding kerakyatan Bolehland) or Penangites earning S$ prefer to buy relatively cheaper alternate homes or retreat homes or retiring homes?

    Personally I don’t think so. These people already have option living in Iskandar Johor with closer proximity driving to RedDot island as and when. Secondly the reason they may opt 2nd home outside RedDot island is to have more SPACE n less hectic lifestyles which Penang Island not able to provide with it reclaimed concrete n amazingly carbonized air thanks to car-crazed population.

    Thirdly, Johor Sultan is a major draw.

    Need to add more, dato Sri WCW?

    • May be the Clan Jetty festival during CNY can be a major draw to those overseas folks who want to reside in Penang, provided the clans there can pray in peace and dont create troubles otherwise money gods may … move over the mainland ???

      • This is Absolute Karma for a devil-may-care person speaking in Ah Too Ah Kow mannerism of “Not Your Dad’s Land” remark against jetty leaders. From Grandmother sarcasm to this, who would in the right minds respect such a leader?
        It speaks volume of an outsider who has no inking nor respect for local mannerism, more so for being ego-boosted in a Merc S300 Lansi.
        If you go to Sia Boey & talk like this, be prepared to be dumped …!!!
        Note: Sia Boey, Clan Jetty, Perak Road, Perak Lane, Paya Terubong, Mt Erskine are still the enclaves of Chinese phai kia. So, don’t simply shoot with derogatory words.

        Cheers Kopi-O kau kau to the Tai Kors of Clan Jetty.

  6. LOL!!When Penang govt said raising density would make the houses more “affordable”, you thought it meant RM200,000-RM300,000?? Seriously??? Its all relative..RM480,000 is more affordable than RM600,000, RM3.3m is more affordable than RM4million…That is all it means..

    There is no point complaining about the high prices of houses in Penang. Its done. The real danger is IF PRICES COLLAPSE – then houses will cheaper but no one has the job or income to pay for anything much less a house.. If you force the issue, directly interfere with the market in massive way, assuming they have the money, all that will happen is more problems it does not do what interventionist think.

    Inflation is like that, there is no point doing after the fact. All that happens is that more problems comes up later. Its why Putrajaya “committee to tackle rising cost” is the most stupid idea even compared to mass subsidized housing on Penang Island.

    The answer is to build new communities ANYWHERE (meaning – Off the island) for those that can’t afford it – empower those who cannot afford to be able to build what they want. Its not giving them things they wish or squeezed out having..

    • Actually high density housing is happening in all new projects in major towns and cities in Malaysia.
      Each household is given only 1 parking lot, so we can see haphazard parking in the surrounding area as each family would have more than 1 vehicle.

    • I urge those who do not like congested urban life to migrate to mainland town like Alor Setar or Taiping where cost of living is also lower.

  7. Malaysia’s property sector is expected to go through a “flat” year next year while market prices will benefit those looking to buy or rent houses, industry experts predicted.

    Siva Shanker, CEO of property agency PPC International, said there was no need to “panic” or worry as the property market would typically go through a cycle of a few “bad” years before recovering.

    “If I were to draw a pattern, I believe 2016 will be a flat line again, it will neither go worse than it was and chances of it improving is also not there.

    “And I think we will start to see a little bit of activity coming back into the market in 2017 and 2018 very slowly, hesitantly, because of the elections.

    “And then when the elections are done and dusted and that’s out of the way, barring unfortunate set of circumstances, I believe in 2019 we will see the market surging forward again and the psychological year of 2020 will probably be the next high,” he said at PropertyGuru’s Property Outlook Forum 2016.

  8. Back in 2010 most ordinary folks already could not afford the private property unless taking 2-generation home loan. Now we are in 2016 (4 years away from the high income nation dream) with GDT burden, devalued Ringgit, and possible hike in interest rate, are the average folks now earning more to own a home on the Penang island? Better lower our expectation and think SP – Seberang Prai or Sungai Petani.

    • Di bawah pimpinan Najib 1Malaysia:
      – cuma 1.7% Rakyat Miskin
      – Purata Pendapatan Rakyat Malaysia RM5900
      Jom High Income Nation!

    • Wage stagnation in Penang – as reported on Aliran:

      Fifteen years ago, an MNC would pay a fresh graduate with an engineering degree around RM2,500 per month. Local small and medium-sized enterprises tend to pay less, in the range of RM1,600-2,000/moth.

      Fifteen years ago, a roti canai costs RM0.80; today, the same roti canai costs RM1.50, a 100% jump in price. With the recent implementation of the GST, businesses have taken advantage to increase prices beyond the 6% GST.

      So how much are MNCs in Penang paying fresh engineering graduates these days? The MNC where I worked in is paying RM2,600-2,800 per month. This is less than US$650/month at the current exchange rate. In the United States and Europe, one makes that in a week.

  9. Penang island developers may go overseas to sell their premium condos, and may attract the rich ones with added feature that they care cheap cheap cheap locals to be their housekeepers, gatekeepers, dishwashers, ou
    OriMaestro personal chefs etc. And they can venture The Star WCW to be their advisor on property matter. Ha ha ha.

    • Ill conceived, ill intended land development is one of the main causes of economic-social engineering – the exodus of locals to make way for the rich & famous. The power that be is the impetus of such mother of all forced emigration of local talents & ordinary folks. (Yet, when the time comes for voting, these ordinary folks are enticed day & night to come to “Vote For Me”. Such is an unashamed antic of thick face + black heart governments caring solely for power & portfolio of development showcase).
      To call it free laissez economic of the strongest is a shamed ultra vires excuses of inhumane governments that in the first place enticed the innocent people to vote for them to power with all sorts of promises. Without such votes, there would not have been such exodus in the first instance.

    • The return of land feudalism of the past? And eternal slavery of the ordinary folks by the richie?
      The clock is already ticking for a massive social worldwide revolution to be chosen at the appropriate time of discontentment at the edge of economic breakdown.
      Such is the contrary to a great promise of the 21st century of people empowerment & equal status & socio-economic advancement of societies.
      Where there are people, there will be lies, promises that cannot be fulfilled & animal instincts of competition & slavery of the weak.
      No wonder the Aliens are staying away watching our impending demise as a human race.

  10. Now you should all know why the Cat need to control house prices up to 400,000/=..With 400,000/= under control, it will be much easier for the developers to market their 400 something houses.

    Earlier he lied to the people that with the control of houses up to 400,000/= it will bring down the prices of houses. Now we know its all a lie. In fact prices of houses has gone up and his policies is to help the developers and squeeze the people hard

      • Who is squeezing (b…)?
        The greedy developers by proxy or the CAT or Deity?
        Now, wonder why God created the NGOs for a social purpose.
        To ‘deal’ with swap deals is one of the purpose.

  11. This Latuk Kong serenaded that developers could be shifting their focus to properties priced from RM400,000 as there was a large supply of housing priced between RM200,000 and RM400,000 targeting first-time buyers.
    He must be babbling from his under!
    What a blink less … misleading spokesperson for REHDA.
    As if the the price of land has been dormant cheap all these years for building large supply of affordable housing till the sudden demand for it to build super-expensive & unaffordable homes, so to speak the right to build expensive.
    Anything can be blamed for the pricey homes beyond the reach of ordinary people. Just the blame the land owners. Or blame the agents. Better still blame the limited island. Or else blame your genes from your parents.
    Let me tell you this:
    Developers love for the price of land to increase > by collectively building unaffordable homes almost everywhere to test the market & to create false demand from speculators (in the frenzy for while good times roll) & thus create a knee jerk market reaction of the wildebeest (panic stricken home buyers) > this causes land owners to up land prices further > developers now have the eager excuses to call for more higher prices > yet still employing cheapo foreign laborers (both legal & illegal) > in a conducive climate of no Pg Local Plan, anything goes as long as housing supply is being fulfilled on ad hoc basis according to the greed sentiments of developers > also in the insidious game are the swap deals that give an edge to the financiers or Gods of Money from the developers’ Temple of Fine Art of Swap Deals (which the CAT gomen has no claws to carve any winning negotiation) > so used to this dizzy-frenzies to build expensive homes* there is no turning back despite all the impending signs of sub-prime mortgage sickness hovering at the peripheral vision of bankers like shadow entities > who cares to build affordable housing when the sun is still shining on the yellow hay which can turn to gold tomorrow?
    The profitable equations of building expensive homes are:
    1) reaping higher profits with less labor time & less dividing walls. Glass walls are cheaper & faster to install.
    2) building less units (per sum of sq feet calculation) means building faster to sell sooner. Less walls mah.
    3) expensive homes translate to expensive maintenance fees which are after-sales streams of continuous incomes.
    4) add-ons like remote controls, in-home lifts, security cameras+scanners, home theatres, etc are profitable frills of super-expensive condos that TV Make-Over Shows cannot match to inflate the feel good egos of home buyers. So many add-ons mah!
    5) Perception, perception, perception. A profitable strategy to play the expensive home sweet home ‘reality’.
    In the minds, expensive must be good. Notwithstanding the above realities of building homes at higher end. Consumers are & fond of being taken for a ride to boost bin-chui egos which the marketing gurus know too well their sweet spots. Joining in the frays are the property gurus churning out their “if you don’t buy now” predictions faster & more believable than Nostradamus predicting Penetrable Great Wall of China to the Kublai Mongolians.
    6) No Local Plan means a free hand. Let the CAT do the Ko Tai singing while “making hay while the sun shines”
    7) If Penangites cannot buy, no problem. Sell to foreigners & Penang Kia in Singland. And let CAT do the Ko Tai singing.

  12. 5 major developers. There are others who may not be focusing on that range. Affordable housing priced at 200k, 300k and 400k are mandatory for developers who use 87u/a.
    Your comments are interesting. However, bias. Try to put down your hate on developers and Penang government. Try think at a higher level of town planning. Who are we planning for? Who should responsible on what they ask for? Are all rich persons evil? Should all developers only build low density yet quality and low cost houses?


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