Slowdown in Penang property deals likely following recent flooding

Posted on: 2017-11-13

GEORGE TOWN: The demand for property near hill slopes and flood-prone areas in Penang is likely to experience a decline, following the recent flooding which destroyed millions of ringgit of property and assets.

Raine & Horne Malaysia senior partner Michael Geh told StarBiz that house buyers would surely exercise caution when buying either landed or high-rise properties near hill slopes or in flood-prone areas.

“This could slow down property transactions in the state over the next 12 months.

“We could even see sales of properties near hill slopes and in flood-prone areas below market price.

In the longer term, however, Geh said if the Government, both at the state and federal levels, were to execute flood-mitigation projects promptly in these areas, then the impact of the floods would not be long-lasting.

“Also if the state government is to implement stringent controls on projects near hill slopes, the demand for properties on flat grounds will rise, pushing the pricing of such properties upwards,” Geh added.

The sub-sale price of high-rise properties on the island has either stayed stagnant or contracted slightly since 2014.

In Tanjung Bungah, the present selling price is between RM720,000 and about RM1mil, depending on the size and location of the properties.

In Batu Ferringhi, the selling price is between RM620,000 and RM820,000 for a high-rise unit, while the selling price of a detached landed property ranged from RM2mil to RM2.7mil, depending on the size and location of the properties.

In Paya Terubong, a high-rise unit is transacted between RM230,000 and RM435,000. In Jalan P. Ramlee, the selling price of a high-rise unit ranges between RM125,000 and RM405,000.

Real Estate and Housing Developers’ Association (Rehda, Penang) immediate past chairman Datuk Jerry Chan said there would be an immediate knee-jerk effect on demand for hill-slope units.

“Until a more stable scenario arises, it is not unusual. Over time, confidence will return to the credible and trusted developments.

“The demand will shift to projects in non-flood-prone areas. There will be some research done by buyers.

“Any slowdown in property transactions will affect asking prices,” he said.

Rehda Penang chairman Datuk Toh Chin Leong said he agreed on the impact of the recent flooding on the demand for properties near hill slopes and flood-prone areas.

“Furthermore, the state government may make the guidelines for developments near hill sides more stringent.

“With the scarcity of land, this will make it more challenging and costly for developers in the future,” he said.

Toh said it is possible to build near or on hill slopes, but the cost of implementation and maintaining the project after completion would be high.

“People may also consider staying in a high-rise property instead of a landed property. Prices may plateau for a while,” he added.

Henry Butcher Malaysia (Seberang Prai) Sdn Bhd associate director Fook Tone Huat said the flood affected some of the popular addresses.

“The demand for properties in these areas is likely to be impacted within this transitional period.

“However, after a period of time, coupled with remedial action taken against the floods, property demand and buying interest would return and go back to normal again,” Fook said.

These include locations in central Seberang Prai such as Sungai Rambai and Padang Lallang, Juru and part of the Alma areas. In North Seberang Prai, the popular area of Sungai Dua is also affected.

Landed terraces in Taman Pauh, Taman Sejahtera and Taman Bayu Mutiara have risen by between 26% and 29% since 2014, when the property slowdown started.
In North Seberang Prai, the pricing of landed terraces has risen by 11% to 33% since 2014.

Land prices in central and north Seberang Prai are now priced between RM50 and RM130 per sq ft, about 5% to 10% higher than in 2014. The increase in land costs has translated into higher property prices.

“New landed properties such as double-storey terraced units in south Seberang Prai are now priced between RM400,000 and RM500,000, which is 5% to 10% higher than in 2014.

“Double-storey terrace houses in prime locations of central and northern Seberang Prai have also increased by 5% to 10% to RM450,000 to RM650,000,” he added.


Source From: The Star

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