It looks as if the high-end housing glut has churned out some natural brilliance among certain quarters. (There, I said the g-word: glut, glut, glut…)
What do you do when you are faced with a glut in high-end housing? Why, build even more luxury sea-view and waterfront properties of course – or at least that’s what our planners would like us to believe is the wisest move (see cartoon above)!
How else do you explain the draft Penang Structure Plan 2030 planning for an additional 7,700 acres of land reclamation until 2030 when the population of Penang is barely increasing (from 1.7 million now to 1.9 million) during that period. Build, baby, build! … and they will come?
Take note that only 20% of the homes on the three artificial islands spanning 4,500 acres off the southern coast of Penang Island will be affordable. (That’s what I was told during a Penang Transport Council meeting, a couple of years ago.)
Never mind that the property overhang in Penang (3,261 homes in 2018) is bigger than that of London’s (2,374 homes as at 30 September 2018) – and London’s population is almost five times larger! Fuyoh, Penang leads!
So what’s the solution for all these empty condos – make more babies of course!
That’s the gem of a solution from a property research consultant, no doubt a thought leader in his field: “I have mentioned this a few years ago – Malaysians, maybe we need to make more babies. Our population is not enough to sustain the supply of residential units in the market.”
I kid you not – it is in the Edge, of all places. Go on, check it out – you know you want to.
Now if that is not an explicit admission that developers have overbuilt high-end housing without taking into consideration the real needs of the people and the population growth rate, I don’t know what is.
Perhaps the developers, blindsided by the prospect of making massive profits, were caught off-guard by the tapering off of population growth due to the falling total fertility rate (TFR). (The TFR to keep the population stable is 2.1 children per woman. Penang’s TFR is just 1.5 children now. Hardly surprising; I mean, who can afford to raise more than two children now?)
Perhaps developers were banking on selling most of their high-end properties to foreigners. After all, they are planning for 300,000 people to reside on those three artificial islands in the south within a couple of decades. Good luck with that. It took two centuries for Penang Island to reach a population of over 700,000 – and now with a falling fertility rate, they are hoping for 300,000 on those three islands?
Well, maybe they really do want to sell to foreigners – after all, 20% of property transactions in Penang involved foreigners, most of which probably involve high-end homes.
Maybe the developers are targeting buyers from China. But then China has restricted the outflow of funds by its nationals to buy property overseas. And something else is happening over there as well. Check out this fascinating documentary on the real estate sector there.
Over in Hong Kong, folks are already bracing for a 20% slump in property prices.
The problem in Penang is that property development on reclaimed land in recent years has been intertwined with extravagant transport infrastructure of the wrong kind – which reaps huge profits for big players in both sectors. But for how long, given the growing glut? Who will actually live in all that property on reclaimed land?
Now that there is a high-end property glut, which they refused to anticipate, it looks as if they have come up with two ‘brainwaves’ (which don’t make sense):
- build even more waterfront homes on reclaimed land (and sell to whom?)
- and of course, make more babies (but will they ever be able to afford all those expensive homes when they grow up?)
Instead of asking people to make more babies, planners in Hong Kong, which has thousands of empty flats, are mulling a new proposal: a vacancy tax on empty homes to curb unsold units in completed projects. Now, there’s a thought.
What we are all being sold is the illusion of an “international city” (whatever that means) ringed by expensive waterfront property. In the obsession to achieve greater wealth, the highest FDI, whatever, we have sacrificed our culture, our heritage, our environment – and yes, our very soul.