Penang property sector set to grow for 2024

PETALING JAYA: RHB Research is optimistic about the real estate sector’s prospects in Penang as the state joins the bandwagon in pump-priming activity.

The research house noted since the Sultan Abdul Halim Muadzam Shah Bridge’s completion in 2014, Penang had not seen a major infrastructure project on the island, until now.

“Last Friday, the Cabinet approved the Penang Light Rail Transit (LRT) project.

“Segment 1 of the Penang LRT Mutiara Line project, which connects Komtar to Silicon Island, is expected to ease traffic congestion and enhance connectivity.

“Based on the alignment, a few projects are expected to benefit from the railway network” said RHB Research in a report yesterday.

These projects include Gamuda Bhd’s Silicon Island (2,273 acres to be reclaimed), Mah Sing Group Bhd’s Southbay City in Batu Maung (51 acres), and IJM Corp Bhd’s The Light Waterfront project (119 acres).

“Although there was no mention of the potential line extension to Tanjung Bungah, Eastern & Oriental Bhd (E&O) as a major asset and landowner in Penang Island, owning 710 acres excluding 365 acres in Gertak Sanggul should also benefit from the wealth effect,” the research house noted.

Other expansion plans by Penang-based and regional semiconductor players, along with the Malaysia My Second Home (MM2H) programme’s easing requirements ought to bring positive demand spillover to the property sector, RHB Research added.

The research house maintained an “overweight” rating on property stocks with its top picks including UEM Sunrise Bhd, IOI Properties Group Bhd, and Eastern & Oriental Bhd.

On the sector’s outlook, RHB Research said it anticipates developers with exposure to Penang island and mainland to see better demand for property going forward.

However, the research house said the percentage of exposure is relatively small as many other major developers have bigger presence in the Klang Valley and Iskandar Malaysia.

Tambun Indah Land Bhd and E&O are considered the major Penang players, although the latter is not a pure play,” the research house added.

The research house said Tambun Indah’s outlook for earnings growth is mediocre as it is relatively less aggressive in its launches.

“E&O, on the other hand, has started to enjoy the initial wealth effect, with its recently launched projects seeing an encouraging take-up rate, which should translate to better earnings growth ahead,” RHB Research said.

The research house noted local and regional electrical and electronic product (E&E) manufacturers are turning positive on the semiconductor industry.

Amid US-China trade tensions, many local and foreign E&E players are looking to expand in Penang.

The research house added that industrial-park developments will capture rising industrial activity and opportunities.

AME Elite Consortium Bhd will be launching its fully-integrated industrial park spanning 175 acres at Seberang Perai Tengah in mid-2024.

The Penang Development Corp is also developing three other industrial parks to support the industrial sector.

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