This article first appeared in City & Country, The Edge Malaysia Weekly on March 18, 2024 - March 24, 2024

The market is still in the recovery stage post pandemic, albeit remaining active, Nawawi Tie Leung (NTL) Property Consultants Sdn Bhd executive director and regional head of research and consulting Saleha Yusoff says in The Edge Malaysia | Nawawi Tie Leung Property Consultants Penang Housing Property Monitor 4Q2023, adding that bankers saw a lower number of loan applications in the quarter under review compared with the previous quarters due to the year-end holiday plans.

“The mid-market segment was active, especially for affordable homes, with strong demand for units priced between RM300,000 and RM500,000. The improvement in economic activities resulted in higher household income, allowing more aspiring buyers, especially first-time homebuyers, to own houses. M40 household income in Penang ranges from RM4,160 to RM7,799 [per month], eligible to buy houses priced from RM328,000 to RM518,000,” she says.

“There was significant interest from the high-end market segment, especially for niche products, such as luxury terraced homes and semi-detached houses offering extraordinary living spaces and waterfront/sea views.”

Overall, the residential market in Penang was active in 2023, she adds. In the first nine months of 2023, transaction volumes and values in the state grew by 4% and 39% respectively compared with 2022.

The 25- to 39-year-old age group recorded the highest share (27.4%) of Penang’s total population of 1.77 million people, and this age group represents the highest demand for mid-market products. Hence, many developers focused on offering mid-range products priced between RM300,000 and RM500,000.

Commenting on the performance of the Penang residential market in 2023, the first quarter saw the labour market improve further, with unemployment easing to 2.3%, followed by 2.1% in both the second and third quarters. This improvement further strengthened demand for products in other market segments, such as affordable and niche products.

The 4Q2023 Penang Housing property monitor showed a mixed quarterly performance. Perai, Bukit Mertajam and Simpang Ampat high-rise (primary market) experienced slightly higher prices, having increased 3.9%, 3.4% and 3.4% respectively to RM439,000, RM367,000 and RM393,000. Tanjung Bungah and Perai high-rise (secondary market) grew 8.3% and 8% respectively to RM906,000 and RM420,000.

Meanwhile, Butterworth high-rise (primary market) dropped 4.7% to RM407,000, and George Town high-rise (secondary market) dipped 6.7% to RM1.168 million.

Based on NTL’s data, annual transaction volume on the Penang mainland is an average of 7,500 units per year. As of 1H2023, the transactions recorded were 4,336 units. Terraced homes are the most popular type of residential property purchased for own use there as prices are still affordable for the mid-market segment. A 1-storey home is priced from RM100,000 to RM400,000, while a 2-storey home is about RM200,000 to RM700,000.

“For investment purposes, condominiums/apartments and serviced apartments are the preferred types, especially fully furnished units, as these units could fetch a higher rental income,” Saleha says.

“In Bandar Cassia/Batu Kawan, for example, the presence of MNCs’ industrial plants attracted expatriates and industrial workers to reside there. Demand for rental properties from expatriates and industrial workers has attracted investors buying serviced apartments for rental purposes.”

She adds that strategic locations with job opportunities and convenient access to commercial and social amenities, such as educational institutions, healthcare, wellness facilities, retail outlets and F&B, would attract investors due to the potential demand for rental properties.

Meanwhile, the transaction volume on Penang island averages 6,400 units per year. As of 1H2023, some 4,041 units were transacted. Low-cost flats and flats accounted for the highest transactions in the market, representing 56% of the total supply, primarily for own use. Flats priced from RM100,000 to RM400,000 are popular for own use.

“Similar to the trend on the mainland, for investment purposes, condominiums/apartments and serviced apartments are the preferred types, especially fully furnished units, as these units could fetch a higher rental income. The Meg and Arica by E&O Bhd are two good examples of such properties, with sizes ranging from 950 to 1,300 sq ft, suitable for investment as well as own use,” Saleha notes.

She reckons that the Penang property market should remain on a positive path, backed by various ongoing and proposed infrastructure developments. Major infrastructure projects, such as Penang International Airport expansion, Bayan Lepas LRT and Silicon Island, could be a boost for the Penang property market as these projects create new jobs.

Commenting on the ongoing Penang Transport Master Plan, she expects the Ayer Itam–Lebuhraya Tun Dr Lim Chong Eu Bypass Road (Package 2) to be completed in 2025, but there has not been an official update since May.

As for the Bayan Lepas LRT project, Transport Minister Anthony Loke has said it is set to commence later this year. Prime Minister Datuk Seri Anwar Ibrahim has instructed the Ministry of Transport to prepare a cabinet memorandum for approval.

Saleha also points out that the extension of the Home Ownership Campaign 3.0 Plus, running from January to December 2024, is expected to help first-time homebuyers to own a home and to help developers promote affordable housing.

She also believes that the relaxation of the Malaysia My Second Home programme will help to spur the Penang residential property market, as Malaysia is one of the top retirement and medical tourism destinations.

Meanwhile, Saleha notes that the industrial sector’s growth will create more employment and new demands for housing properties. The demand for industrial property in Penang remained strong in 4Q2023, she adds, with several exciting announcements, including Sunway REIT’s acquisition of an industrial property in Perai, Penang for RM66.8 million. With a gross floor area of 307,487 sq ft, the property is located on a 4.21ha tract with leasehold tenure expiring on Oct 22, 2052, to be extended to 60 years after the completion of the proposed acquisition.

It is 100% occupied by three MNCs: Premium Sound Solutions (a Belgian sound product manufacturer), a Japanese logistics company and an American information management services company. The acquisition is projected to generate an initial net property income yield of 7.6% based on the purchase consideration.

In November, San Francisco-based Enovix announced that it would open a silicon battery plant in Penang and inject RM5.8 billion in investment over a period of 15 years. Offering high-quality job opportunities, the establishment of Enovix’s first high-volume manufacturing facility in Malaysia signified the country’s appeal as a preferred investment destination in Southeast Asia for advanced technology companies. The presence of this facility will strengthen Penang’s battery technology industry.

In the same month, INV New Material Technology (M) Sdn Bhd, a battery manufacturer, broke ground on a new plant at Penang Technology Park @ Bertam in Kepala Batas with an investment of RM6.4 billion. The investment will be injected in two phases: Phase 1, to be completed in 2026, and Phase 2 in 2028.

To be developed over 66 acres of land, the building measures 400,000 sq m and is envisioned to become the largest production base for low-carbon separators in Asean. It is also intended to become a key player in the global supply chain for the industry.

Jutze Interconnect Sdn Bhd launched a new facility in November for wire harness and cable assembly in Bayan Lepas Industrial Zone. Its maiden facility, with an investment of RM28 million, is equipped with the latest state-of-the-art facilities, advanced technology and eco-friendly features designed to meet the growing demand for precision and high-quality cable assembly and solutions in wire harnessing products.

Bayan Lepas Industrial Zone was selected as the location due to its proximity to the local multinational customers in semiconductor, medical, commercial and automation companies. It also serves customers in Asia-Pacific and the rest of the world. Over the next three to five years, the company will invest another RM65 million to expand its operation, which is expected to employ 410 workers.

Phabritek also opened a new facility in Batu Kawan in November with a RM100 million initial investment. Specialising in the manufacturing of optoelectronic multiplexers, modules and components, the new facility will primarily focus on the production of optoelectronic multiplexers, modules and components to support modern communication segments, such as optical communication.

The quarter under review also saw several notable events related to the industrial sector, including the launch of a RM50 million agritech project by the Northern Corridor Implementation Authority to create Agriculture Silicon Valley in Penang.

The project, called Sedusun Tech Valley, is located at Relau agricultural station and could also be positioned as an agritourism destination. By employing smart technology to increase production, it is expected to increase Penang’s agriculture contribution to the state’s gross domestic product.

Also, Penang recorded a significant increase in tourist arrivals in 1H2023 with a total of 1.68 million visitors. Comparatively, there were only 705,670 tourists the previous year.

“Based on arrival data through Penang International Airport, the tourists came from more than 40 countries, with the highest numbers coming from Indonesia (163,187), Singapore (74,800), Taiwan (15,602) and China (13,029). The recovery in the tourism industry in Penang has revived the hospitality industry as well as the retail sector, especially F&B outlets,” Saleha says.

In addition, Penang approved two applications to build foreign workers’ dormitories in Teluk Kumbar. It involves the construction of a 27-storey building with 512 units to partially accommodate the housing needs of an estimated 32,860 foreign workers there. This dorm will also have six shops and recreational facilities.

The second dorm will see the building of a 30-storey building in Teluk Kumbar by Zantalite Enterprise (M) Sdn Bhd. “Workers’ dormitories have become emerging assets in Malaysia, as evidenced by KWAP’s acquisition of two workers’ dormitories and leasing them back to an operator for recurring income,” she concludes.

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