KUALA LUMPUR: Property developers operating on both Penang Island and the mainland are poised to experience heightened demand for properties in the near future.
Market analysts have noted a shift towards a buyer's market in Penang since early last year, particularly evident in the high-rise segment where bargain hunting is prevalent. Landed units, on the other hand, are considered favourable for capital investment.
Demand for Penang properties remains robust, particularly among Singaporeans, Hong Kongers, Indonesians, and Taiwanese. Market observers attribute this to factors such as favourable exchange rates and the perceived value for money in Penang's property market.
In the first nine months of 2023, property transactions in Penang continued to rise, with 17,953 units changing hands compared to 17,297 units in the same period the previous year, amounting to RM13.21 billion and RM9.51 billion, respectively.
Key infrastructure projects such as the Penang Silicon Island, Penang Light Rail Transit (LRT), and Penang International Airport expansion are expected to drive the island's growth trajectory.
CBRE|WTW's Real Estate Market Outlook 2024 report launched in January forecasts increased momentum in residential launches in Penang, with high-rise units primarily located on the island and landed units in Seberang Perai.
Leading developers in Penang include E&O Bhd, IJM Land Bhd, and Tambun Indah Land Bhd. However, Gamuda Bhd, Mah Sing Group Bhd, and IJM Corp are expected to benefit the most from the approval of the Penang LRT project.
The Penang LRT Mutiara Line's Segment 1, connecting Komtar to Silicon Island, is anticipated to alleviate traffic congestion and improve connectivity, benefiting projects like Gamuda's Silicon Island (2,273 acres to be reclaimed), Mah Sing's Southbay City in Batu Maung (51 acres), and IJM Corp's The Light Waterfront project (119 acres).
RHB Research suggests that although there was no mention of the potential line extension to Tanjung Bungah, Eastern & Oriental Bhd (E&O), as a major asset and landowner on Penang Island (710 acres excluding 365 acres in Gertak Sanggul), should also benefit from the wealth effect.
"E&O, on the other hand, has started to enjoy the initial wealth effect, with the recently launched projects seeing an encouraging take-up rate, which should translate to better earnings growth ahead," the firm said.
Furthermore, upcoming expansions in the semiconductor industry, coupled with relaxed requirements under the Malaysia My 2nd Home (MM2H) program, are expected to stimulate demand for properties in Penang.
RHB Research anticipates that industrial park developments will capitalise on the increasing industrial activities, particularly in the semiconductor industry, as local and international players seek to expand amid US-China trade tensions.
Apart from the three industrial parks (Bandar Cassia Technology Park, Batu Kawan Industrial Park, and Penang Science Park South) that are currently under development, AME Elite Consortium is set to launch its fully integrated industrial park in Seberang Perai Tengah (175 acres) in mid-2024.
Ideal Capital Bhd is also developing Penang Technology Park @ Bertam on the northern mainland.
E&O may continue on its upward trajectory, according to a note from Rakuten Trade, after breaking out of its one-week rectangle pattern on Monday, April 1.
"We expect the rising momentum to steer the stock higher and test the next level of resistance of RM1.15 (R1) and RM1.25 (R2) in the near term. On the downside, stop-loss is set at RM0.92, below the 20-day EMA," it said in a note today.
"Fundamentally, we like E&O as it stands to benefit from the Penang LRT project. With recent cabinet approval and slated for completion by 2030, the LRT project is poised to enhance Penang's connectivity and uplift property sentiment.