High property value may have stalled Gurney Bay land sale
GEORGE TOWN: The RM313.6mil price tag may have deterred buyers from bidding for a prime 2.43ha plot beside Gurney Bay, despite its strategic waterfront location.
Several real estate industry players said the reserve price of RM1,200 per sq ft and uncertainty over the permissible plot ratio could complicate the land’s financial viability.
A value of between RM900 and RM1,000 per sq ft would be more “attractive”, given the land’s development potential and connectivity between Gurney Drive and Andaman Island, said senior real estate negotiator Paul Lim.
He said the land holds considerable development potential.
“However, the financial feasibility will depend on factors such as the permissible plot ratio and overall development costs,” he said.
The parcel of land was part of a land swap agreement to fund the Ayer Itam-Tun Dr Lim Chong Eu Expressway bypass.
Consortium Zenith Construction Sdn Bhd (CZC), the contractor for the bypass, had wanted to monetise the land and generate cash flow for the remaining construction work.
An auction was held on Oct 7, with proceeds exceeding a specified amount to be shared between the state and CZC.
However, it attracted no bidders.
Lim attributed the lack of interest to developers becoming more cautious about land acquisitions, weighing factors such as land prices, permissible plot ratios, construction costs, market demand and potential returns.
“It is more likely a reflection of a gap between the sellers’ pricing expectations and buyers’ investment considerations.
“Developers are still willing to invest, but they are becoming more selective, placing greater emphasis on reasonable acquisition costs and sustainable profit margins,” he said.
Penang infrastructure and transport committee chairman Zairil Khir Johari said the next course of action rests with CZC, as the land had been allocated to the contractor.
“They can choose to do a private sale or ask the state to help them auction again,” he said.
Zairil said the failed auction would not affect the bypass project, as all major works had been completed and CZC had assured the state it had sufficient resources to finish the project on time.
As of Aug 31, the bypass had achieved 92.46% physical progress, while financial progress stood at 81.69%.
The approximately 6km toll-free dual-carriageway bypass is intended to provide an alternative route between Ayer Itam and the Tun Dr Lim Chong Eu Expressway, easing congestion on existing roads.
Construction began in February 2021, with completion targeted by April next year.
Under the land-swap arrangement, the land in Bandar Tanjung Pinang was allocated to CZC against claims for completed construction work.
CZC had claimed RM695.977mil worth of land for completed works, of which RM427.657mil had been transferred to the company. Land worth a further RM225.768mil remained untransferred.
