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.