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.
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.
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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320 unit KSR Jln SP Chelliah dpt subsidi silang RM140K demi Bumiputera – Jagdeep
https://youtube.com/watch?v=gdN1GuBH-cE
Al Jazeera: Affordable homes difficult to find in Malaysia
https://www.youtube.com/watch?v=zv8Ky9BYImg
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.
http://www.penangpropertytalk.com/2016/01/penang-accepts-pr1ma-applications/
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… Read more »
‘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.
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. http://www.bbc.com/capital/story/20150420-why-small-is-the-new-big-thing 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… Read more »
Agree Johan, land occupied by the dead, i, too, think of that !!!
Excellent write up
Where is 1pm’s affordable housing in penang, janji ditepati, 1donation mesti ditunaikan !!!
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…….
Yes, property prices in some places on mainland have doubled in the last few years.
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… Read more »
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… Read more »
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… Read more »
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 !!!
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… Read more »
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 ???
The Chew Jetty folks made lots of noise lately because they are instigated by MCA.
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… Read more »
Clearly the Chew Jetty folks are MCA supporters.
http://www.thestar.com.my/news/nation/2016/01/09/chew-jetty-residents-take-on-the-tokong-cms-war-of-words-gets-on-tshirts/
CHEW Mei Fun is the penghulu of the Chew Jetty Clan?
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… Read more »
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.
Is this list of affordable housing projects in Penang still relevant?
http://www.penangpropertytalk.com/affordable-housing/project-information-location/
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… Read more »
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!
https://www.youtube.com/watch?v=QVscRc834VA
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… Read more »
Very true Benny.
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… Read more »
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… Read more »
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
Squeezed the poor 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.
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… Read more »
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?
Affordable for whom? What percentage of homes is below RM200,000?
And err, what planning? Remember, the Penang Island Local Plan has been in cold storage since 2008.
Anil, does the Penang Island Local Plan need the verification & rubber stamp of Dewan Bahasa & Pustaka?
Affordable housing is classified as houses which were initially purchased below RM400,000 on the island and RM 250,000 on the mainland.
https://www.penang.gov.my/index.php/en/2013-04-01-05-24-50/kenyataan-akhbar-yab-km/2787-penang-state-government-new-housing-rule-2013
No ordinary folks can afford a RM400K home with a home loan to pay (for life?).
Let alone a Rm200K home sweet home for sleepless nights.
Such is the promises of Cosmopolitan Penang ill conceived for the wrong purposes one of which is to enrich the greedy-not-enough developers of kam cheng.
Penangites should improve their skill sets and productivity to get higher paying jobs.
Another way is to work in Singapore to earn more. RM400K is just S$120K.
Do not complain to the government if you cannot afford.