Major projects in Penang enhance sector prospects

An artist’s impression of the Bayan Lepas LRT

PETALING JAYA: Developments in Penang, which include major infrastructure projects such as the Bayan Lepas light rail transit (LRT) and Silicon Island, are boosting the outlook of several construction companies and property development groups.

Among the potential beneficiaries are Gamuda Bhd, IJM Corp Bhd and Sunway Construction Group Bhd in the construction sector; and S P Setia Bhd as well as IJM again in the property development sector.

This projection is according to Maybank Investment Bank (Maybank IB) Research, which went on a fact-finding visit to Penang last month.

The brokerage said the visit reaffirmed its “positive” view on Penang’s potential.

“Major infrastructure projects, especially the Bayan Lepas LRT, and new catalytic projects, including Silicon Island, are set to enhance Penang’s appeal as a foreign direct investment (FDI) and tourist destination,” Maybank IB Research wrote in its report.

In the construction sector, the brokerage noted, Gamuda had a sizeable presence for its role in the Silicon Island development, partnering the Penang state government.

For the property sector, Penang’s future landscape was set to be reshaped too, Maybank IB Research said.

The research house noted that property developers with presence in Penang included S P Setia, Eco World Development Group Bhd, Tambun Indah Land Bhd, Malaysian Resources Corp Bhd (MRCB), Eastern & Oriental Bhd (E&O), Ideal Capital Bhd and IJM.

Maybank IB Research said several major infrastructure projects in Penang were already in the works or plans. This included the Penang International Airport expansion, which would almost double the airport’s handling capacity; the Bayan Lepas LRT, which could eventually link the island to the mainland; and Silicon Island, which had big potential to draw in FDI and create jobs.

The brokerage said if the LRT extended to the Penang mainland, MRCB would be among the potential beneficiaries in the construction sector; E&O too if the alignment were to be extended to Tanjung Bungah.

Meanwhile, a third island-mainland link, under the Penang Transport Master Plan, remained a possibility, Maybank IB Research said.

“We believe these projects will help Penang to sustain its longer-term growth trajectory, by drawing in targeted FDI centred around high-tech manufacturing,” it said.

It expected the Bayan Lepas LRT project to be a game changer for Penang’s property market.

“To partly fund the project, transit-oriented (property) developments may be introduced.

“We think this could receive tremendous response, making it an interesting space to watch,” Maybank IB Research said.

Elsewhere, among the catalytic projects, it said, Silicon Island, The Light Waterfront Phase 2 and Andaman Island had the potential to redefine the future dynamics of the property sector on the island.

As for new industrial parks, Penang still had Bandar Cassia Technology Park, Batu Kawan Industrial Park 2 (BKIP2) and BKIP3 to be developed.

“A new industrial park in Kerian, Perak (introduced in Budget 2024), is unlikely to impact the demand for Penang’s industrial land (for now) as the latter has advantages in terms of connectivity, infra and a ready skilled workforce,” Maybank IB Research said.

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