Foreigners eye Penang properties


  • Business
  • Monday, 13 Jan 2003

AUSTRALIANS Sally Cheah and her husband Jesse plan to retire in Penang in a few years. The couple hopes to buy a property on the island where they can stay there a few months annually. 

They are unsure whether to invest in a condominium or a house. They have a budget of about A$200,000 to A$250,000 or about RM400,000 to RM500,000. 

Should they buy a property or lease a service apartment each time they visit Malaysia? They have also thought of buying a local timeshare where they could stay in a hotel or resort for free. 

However, what are they going to do with their apartment or house when they are not staying in it for most of the year? If they were to lease it out they probably cannot stay in it. They would need someone to manage and maintain the property. 

The couple took time off during their current vacation in Malaysia to look around for some properties on the island. They are interested in the newly launched Alpine Tower condominium in Bukit Jambul, located next to the Millionaire’s Row, a road full of elegant detached houses. 

The Alpine Tower that is under construction will have 173 condominium units with built-up of 960 to 2,370 sq ft and priced between RM187,280 and RM524,410. The 23-storey Alpine Tower is also beside the Parkview Tower apartment where Sally’s niece and her husband had bought a 1,075 sq ft unit for about RM220,000 from the first owner last year. These apartments and the Lakeview Tower apartments form part of the Bukit Jambul Indah lake township being developed by the IJM Group. 

They like the “smart home” concept of the Alpine Tower, dubbed as Penang’s first e-condo, the lush greenery, its proximity to the airport, Bukit Jambul shopping complex and the Bukit Jambul Golf and Country Club. 

Since the last property boom in the mid 1990s, there had been a rush to build condominiums and apartments on the island. Today, buyers are spoilt for choice. Foreigners know that it is value for money to buy our property with their strong currency and also the rules governing foreign purchase of local property have been relaxed. 

As Bukit Kiara Properties Sdn Bhd general manager (marketing) Vincent Lim noted when the property market was up, there were more restrictions that discourage investors but when the market was down the rules were relaxed when it should be the other way. 

Over the past decade the supply of new apartments and condominiums had far outstripped that of new houses on Penang Island. Many apartments and condominiums had mushroomed in places like Paya Terubong, Relau, Jelutong/Perak Road, Kelawei Road/Gurney Drive areas and from Tanjung Tokong, Tanjung Bungah up to Batu Ferringhi where most of the upmarket properties are located. Another proposed condominium with a seaview is the Coastal Towers at Ratu Mutiara, Tanjung Bungah.  

The freehold units comes with a free kitchen cabinet and is priced from RM139,000. 

Developers know that there will always be demand for affordable apartments as those who choose to work and live on the island have no choice as the price of houses are beyond their reach.  

Moreover there had not been many new launches except for those in the Eden Ferringhi Resort in Batu Ferringhi, Sungai Ara, and Batu Maung. Those in the inner city areas and about 40 to 50 years old can easily fetch RM450,000 to RM500,000. 

A new freehold development is the Scotland Villas off Jalan Scotland where a three-storey terrace house with condo facilities is priced from RM698,000 to RM826,260 and a condominium unit with 2,098 sq ft built-up is priced from RM497,000 to RM1.26mil! 

Most of the state’s new housing launches are focused on the mainland. These include Bandar Putra Bertam (where a double-storey terrace house is priced from RM140,000), Bertam Perdana (22ft x 73ft double-storey terrace house from RM157,895) Taman Inderawasih 2 (along Chain Ferry Road where a freehold 22ft x 80ft double-storey terrace house is priced from RM298,000); Sukun Indah in Bukit Mertajam (freehold double-storey terrace house from RM173,888). 

Real estate agents agree that the condominium market generally had hit rock bottom a few years ago and now is still a good time to snap up these properties before the next boom that may come in a few years. 

For foreigners where the exchange rate is in their favour, parking some of their money in selected prime properties on the island is deemed a wise investment. 

As Raine & Horne Zaki + Partners director Michael Geh said, the Penang condominium market had generally dropped by 15% to 20% over the past year. One of the reasons for the fall in prices was the “force-selling” by financial institutions. 

His advice for people like Sally and Jesse is to buy landed property where the capital appreciation is faster but if they merely wanted to go for better rental income, then a condominium would be cheaper but the return is only 3% to 5% per annum. 

Geh said it would be difficult for developers to offer a high guaranteed rental return because of the sluggish market. However, he noted that some condominiums in prime locations like the Regency in Gurney Drive seemed to be doing well. 

Hunza Properties Bhd is currently wooing foreign retirees to buy limited units of its Marina Bay Resort condominium located at the corner of Jalan Kelawei and Jalan Bagan Jermal. The company is officially recognised by the Malaysian Immigration Department as a sponsor for the “silver hair” programme. 

Purchasers can either opt for a RM50,000 discount or furnishing worth RM50,000 with 7% guaranteed rental return (GRR) for two years. Available units are 3+1 bedrooms with 1,600 sq ft to 1,900 sq ft. Buyers can move in immediately. 

Hunza Properties Bhd general manager Ng See Kee said the GRR works out to about RM2,600 to RM2,700 rental per month but since the incentive package was launched during the third quarter of last year, rentals had risen as owners of some units were asking for RM3,500 to RM3,800 per month. The three-block project was completed in 2000. 

The company had a GRR scheme for its Greenlane Heights apartments where purchasers were given 10% rental return for the first three years and a renewal option for another two years a few years ago. Singaporeans bought 66 units in one block. 

Back in 1998 or 1999, the rental was about RM1,700 but when it dropped to RM600 to RM700 a month, it was difficult for the group to continue with the two year option. Nevertheless, Hunza honoured its GRR. 

Ng said a Japanese group had also been sourcing for suitable condominiums for short-term stays for Japanese tourists on the island. “They are quite demanding and prefer apartments that are close to shopping areas and have Astro,” he added. 

Hunza Group managing director Daisy Ooi feels it is a good time to buy properties as entry level will be low. She however advised investors to select properties that have good management, prime location and with low density. 

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