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Showing posts with label Property market. Show all posts
Showing posts with label Property market. Show all posts

Thursday 2 February 2023

MNC spending a boon for Penang developers

 

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 Demand for residential, commercial properties to grow

KUALA LUMPUR: Property developers in Penang are set to benefit from the opening of new factories by both local and multinational corporations (MNC) as well as state government projects and population growth.

In a sector report, Maybank Investment Bank Research (Maybank IB) identified S P Setia Bhd, Tambun Indah Land Bhd, IJM Corp Bhd and Eco World Development Group Bhd (EcoWorld) to be among the main beneficiaries from the growing Penang property market.

“More job opportunities have been created with the opening of more local and MNC factories and this has drawn demand for new residential and commercial properties, the former due to housing needs of the rising population base.”

The research house also pointed out that the Baru Kawan area could benefit from the Penang state government’s intention to develop a medical hub there as well as 1,156 acres within the Batu Kawan Industrial Park (BKIP) 2 in Byram, Nibong Tebal.

“These projects augur well for population growth and should continue to boost the demand for properties,” the research house noted in the report.

It added that Penang’s residential property sales rebounded strongly by 50% year-on-year in the third quarter of 2022, due to the economic recovery and despite the three overnight policy rate hikes since May 2022.

Maybank IB said S P Setia’s Setia Fontaines project in Bertam, on the Penang mainland, offers a similar eco theme as Setia Eco Park, but is more affordably priced like Setia Alam (both of which are in Shah Alam, Selangor).

“The project, which mostly offers landed properties, is expected to have a remaining development period of at least 25 to 30 years.”

Since the launch of Setia Fontaines in 2018, Maybank IB said the project has generated stable and growing sales for S P Setia.

“In 2021, Setia Fontaines contributed RM157mil sales or 4% of S P Setia’s Malaysian property sales.

“Catalysts to the project include an industrial park (850 acres) nearby, which could offer employment opportunities and attract new population to the area over the longer term.”

Separately, the research house said EcoWorld’s Eco Horizon project is strategically located in the heart of the Batu Kawan commercial area and is riding on booming job opportunities and commercial activities there.

“The property development projects in Batu Kawan have become more mature.”

Maybank IB noted that the completion of Penang’s second bridge in 2014 and the new BKIP are the game changers for the Batu Kawan area.

“Apart from its prime location, we attribute the success of Eco Horizon to right product offerings, namely landed properties versus its peers that are mostly involved in high-rise.”

“In its financial year 2022 (FY22), Eco Horizon contributed 12% to EcoWorld’s total sales,” Maybank IB noted.

Meanwhile, Maybank IB said IJM’s The Light City project in Gelugor, Penang, will be a mega integrated waterfront project comprising two towers of premium condominium units, a retail mall, offices, a convention centre and a hotel.

“The retail mall, offices, hotel rooms and convention centre are slated for completion by 2025.

“By then, we believe The Light City would reshape the commercial market of Penang island as the major commercial spaces are currently located at the north of Penang island,” it said.

It added that IJM is in advanced stages of negotiations with a hotel operator from China but is making no changes to its earnings forecasts for the group, at the moment.

Separately, Maybank IB said Tambun Indah’s Pearl City project in Simpang Ampat is a good proxy to the booming Batu Kawan area.

“Tambun Indah has been careful in launching new projects and has focused on clearing unsold stocks over the last few years.

“Its average take-up rate continued to improve to 81% as at September 2022 (from 79% as at June 2022).”

Maybank IB noted that Tambun Indah’s main products are generally affordable, landed properties. In the third quarter of this year, the company will be launching Dahlia Garden in Pearl City.

“Dahlia Garden, which has an estimated gross development value of RM107mil, will comprise residential terraces (185 units) and semi-detached houses (24 units) priced between RM470,000 to RM650,000 per unit.”

For the nine-month period of Tambun Indah’s FY22, Maybank IB estimated the developer’s locked-in property sales stood at RM133.2mil, which is 2.3% above its FY22 sales target of RM130mil.

“Tambun Indah usually has relatively lower unbilled sales (RM90mil as at end-September 2022) than its peers, as it only launches a new project when the project is 20% to 30% completed, hence it will hasten revenue recognition.” 

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Sunday 6 March 2022

On the recovery path

 

Penang property market to rebound amid lingering challenges

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THE Penang property market, which had actually started seeing a rebound in transactions since last year, is expected to resume its recovery path into 2022.
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CBRE|WTW director Peh Seng Yee says the Penang property market can expect a “rebound amid lingering challenges” this year.
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“We do expect a recovery in market activity for 2022. Prices of landed properties will continue to remain resilient.
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“For the high-rise sub-sector, it will continue to be a buyers market,” he says at the launch of CBRE|WTW’s 2022 Market Outlook Report, recently.
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Peh adds that future launches will generally comprise self-sustained developments that will be on a smaller scale, while at the same time fulfilling the demand for affordable units.
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Knight Frank Penang executive director Mark Saw also says the residential sub-sector in Penang has improved, posting higher volume and value of property transactions as of the third quarter of 2021.

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“The Penang state government’s commitment to increase home ownership with plans for a range of affordable homes in various strategic locations, extension of the Penang Home Ownership Campaign until June 2022 and enforcement of mandatory installation of fibre optic telecommunication infrastructure for all new developments, will spur the state’s residential property market.”
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In terms of challenges, Peh says scarcity of sizeable land in Penang will still continue to pose development constraints.
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“Additionally, the prolonging effects of the pandemic, especially with the new Omicron variant, could result in cautious spending and a wait-and-see approach.
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“Stringent lending guidelines and concerns over job security could also potentially derail the market,” says Peh.
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On the outlook of the Penang office market, Peh says the segment is expected to remain healthy this year, with stable rentals and occupancy rates.
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“The prospects of co-working spaces still remain encouraging,” he says.
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As for Penang’s retail sub-sector, Peh says the removal of movement restrictions since last year has been a boost to this sector.
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“We see normalisation amid ‘freedom euphoria’. However, we expect rentals to be flattish and a widening gap between the newer and older shopper complexes.”
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As for Penang’s hotel sub-sector, Peh says this segment is set for a steady recovery if the pandemic is significantly contained.
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“The segment can be spurred further by travel bubbles and other government initiatives.
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“We also see pent-up demand for medical tourism and intensifying market competition for the hotel sub-sector.”
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Meanwhile, Knight Frank Malaysia in its real Estate Highlights for the second half of 2021, says the Penang residential market is expected to pick up this year, supported by a series of measures announced under various stimulus packages and Budget 2022.
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“This will encourage people from various income levels to purchase their dream homes. The overhang of high-rise residential properties, especially in the category of condominiums and apartments, has also been growing.”
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With limited new supply of purpose-built offices in the state (existing and future), Knight Frank says the occupancies and rental rates for better grade purpose-built office buildings are expected to hold steady.
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“Meanwhile, with the growing work-from-home trend, some business premises have been converted into co-working space.”
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Knight Frank noted that the country’s vaccination rate has continued to improve and with further easing of restrictions, the retail segment is expected to slowly recover.
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“Selected retailers are expected to embrace the rise of eCommerce as they head down the path of recovery.”
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It adds that Penang’s industrial segment has continued to remain strong and steady throughout the pandemic.
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“This is especially with the Penang state government’s commitment to expand another two industrial parks in Batu Kawan, with focus on the logistics industry and the remaining phases for mixed industries.
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“This industrial park is set to continue its history of the successful Bayan Lepas Industrial Park.”
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Meanwhile, CBRE|WTW in its 2022 Market Outlook Report says property transaction activities in Penang increased for the period of January to September 2021.

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“A total of 11,981 properties valued at RM7.23bil were transacted, reflecting 13.9% and 33.9% increase in volume and value, respectively, year-on-year.
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“As more businesses are allowed to operate, the Penang property market has generally rebounded.”
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CBRE|WTW is optimistic that the rebound will extend into this year.
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“However, the rebound would be gradual as the pandemic lingers on, along with a sluggish economy and higher cost of living.”
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CBRE|WTW also expects to see more bargain hunting for residential units this year.
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“The overhang remains a concern. Prospective purchasers can negotiate for more discounts in addition to the incentives offered,” it says.
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According to the National Property Information Centre (Napic), there were 30,290 unsold completed residential units (overhang) worth RM19.75bil as at September 2021, compared with 30,926 units worth RM19.99bil in the previous corresponding period.
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Of the 30,290 overhang units, 18,829 units (or 62.2%) comprised high-rise units, while 6,803 units (22.5%) consisted of terrace houses.
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The bulk of the overhang units were focused mainly in Johor (6,441 units), Penang (4,638 units), Kuala Lumpur (3,863 units) and Selangor (3,376 units).
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Napic says 33.7% of the overhang properties consisted of units ranging between RM500,000 and RM1mil, while 28.4% comprised units ranging between RM300,000 and RM500,000.
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Units below RM300,000 comprised 25.5% of the total overhang, while units above RM1mil (12.4%) consisted of the remaining unsold units during the period under review.
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Knight Frank concurs that the overall property overhang status continues to remain elevated, especially in the high-rise residential segment.
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“The performance of the residential sub-sector is improving gradually, registering higher volume and value of property transactions as of the third quarter of 2021,” it says.

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Friday 7 August 2020

Young buyers flock to property market

Why millennials are flocking to real estate

Interest rate cuts, govt incentives spur buying interests


“We believe the strong growth in our young buyers is both a natural evolution and as a result of a conscious strategic effort we have made to appeal to this important customer group,"-
Datuk Chang Khim Wah
 
Eco World Development Group Bhd president and chief executive officer Datuk Chang Khim Wah told StarBiz the increase in younger buyers was due to a conscious strategic effort made by the group to appeal to this target market.


Property developers are seeing a pick up in sales, especially from younger buyers, as the numerous interest rate cuts and government incentives have spurred buying interest.

Eco World Development Group Bhd president and chief executive officer Datuk Chang Khim Wah said the increase in younger buyers was due to a conscious strategic effort made by the group to appeal to this target market.

“During our initial years of operations (circa 2015) the percentage of young buyers (below 40 years old) was around 43% and today it is more than 70%.

“We believe the strong growth in our young buyers is both a natural evolution and as a result of a conscious strategic effort we have made to appeal to this important customer group, both through the products we are offering as well as the way in which we engage them via social media and digital channels, ” he told StarBiz.

Of the 70%, Chang said around 50% are in their 30s and the remaining 20% are in their 20s. “We are particularly happy that a good number of these buyers include children of our own customers and residents in the vicinity of our development. This validates our efforts over the last few years to make a strong pivot to serve the needs of this market segment and the wider M40 group.

“Our upcoming launch of the new Duduk series of vertical townships offering semi-furnished apartments priced below RM400,000 at Eco Ardence and Eco Sanctuary, as well landed homes starting from RM500,000 at Eco Botanic 2, will enable us to further capture the hearts and minds of this very important market segment.”

Chang said the prolonged movement control order (MCO) period has really made many young people realise that the quality of home and living environment matters greatly.

Mah Sing Group Bhd chief executive officer Datuk Ho Hon Sang (pic below) said as the bulk of its projects comprised units within the affordable range segment, the majority of its buyers comprised those below 35 years of age.


“For Mah Sing, 84% of our target sales for 2020 are for residential properties priced below RM700,000 with key focus in the affordable segment. We typically see about 65% of buyers who are 35 years and below, for most of the affordable projects were launched in recent years. Hence, the majority of our buyers are first time homeowners.”

Despite the challenging market environment in view of the Covid-19 pandemic, Ho said demand continues to be resilient as property remained one of the safest forms of asset class for long-term capital protection and appreciation.

“Malaysia’s population is still very young with 66% below 40 years old and as such, household formation continues to be strong. Affordably-priced properties of good quality and at strategic locations remain highly sought after.

“This is especially for first-time home buyers, which augers well for Mah Sing’s product composition.”

Sunway Property said it is seeing increasing interest from younger buyers from 25 years to 35 years in its properties that are transit-oriented and have good facilities nearby.

“For example, our developments such as the transit-oriented Sunway Avila in Wangsa Maju, the integrated and transit-oriented Sunway Velocity TWO and the youth-focused development of Sunway Grid in Sunway Iskandar has seen enthusiastic response from younger purchasers, ” it said.

Property data, analytics and solutions provider MyProperty Data chief executive officer Thor Joe Hock said the median age for residential property transactions has gradually dropped over the years.

“When we look at the over 2.5 million residential property transactions, including serviced apartments, it appears that the median age of buyers from 2000 to 2019 has remained largely unchanged at between 34 to 35 years of age.

“However, when you break it down into landed and non-landed transactions, we start to get a clearer picture. The median age for non-landed properties has fallen from 40 years in 2000 to 28 years in 2019; while the median age for landed property purchasers marginally decreased from 40 years to 37 years over the same period.”

MyProperty Data manages a property data portal called PropertyAdvisor.

Meanwhile, Lagenda Properties Bhd managing director Datuk Jimmy Doh said more than half of its buyers are below 39 years of age.

“We believe as young people start new phases in their lives, for example getting a job or starting their own families, they prefer to stay independently and have their own space, granted that the properties are within their price range.

“Over the past few years, we have been seeing an increase in buyers. Our properties are priced below RM200,000, ” he said.

MIDF Research in a recent report said the aggressive overnight policy rate (OPR) cuts have improved home buyers’ purchasing power.

“Bank Negara cut its overnight policy rate for the fourth time this year by 25 basis points (bps) to a record low of 1.75% in July due to the severe impact of the Covid-19 pandemic on the global economy. The aggressive OPR cuts this year are positive to the sector as it improved home buyer’s purchasing power by reducing loan installments.

“We estimate monthly installments to reduce by 14%, after 125 bps cut for RM500,000 loan with a loan repayment period of 30 years, which is quite significant in our view. Hence, we think the record-low interest rate will partly help to alleviate home buyers’ issue of securing home financing, as the record low yield has boosted the affordability of home buyers.”

MIDF Research also said it expected loan demand to recover in the second half of 2020.

Citing Bank Negara’s statistics, it said total applied loan for the purchase of property improved sequentially by 52.9% month-on-month to RM13.1bil in May, after plunging by 64.8% month-on-month in April.

“Note that total applied loan recorded steep decline in April due to the disruption to business activity following the commencement of the MCO.

“Nevertheless, total applied loan in May was lower by 61.8% year-on-year while cumulative total applied loan in the first five months of 2020 was lower by 33.6% year-on-year, indicating buying interest was subdued.”

Looking ahead, the research house expected buying interest to recover in the second half of this year, spurred by incentives introduced by the government.

Under the Short-Term Economic Recovery Plan (Penjana), which was announced in June, the government reintroduced the Home Ownership Campaign (HOC). Under the HOC, stamp duty exemption will be provided on the transfer of property and loan agreement for the purchase of home priced between RM300,000 and RM2.5mil.

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Saturday 23 February 2019

Flat property market seen for Penang

https://img3.penangpropertytalk.com/wp-content/uploads/2019/02/pptrends.jpg

Resilient values: Geh believes that both landed and high-rise units in prime locations will hold their values.

Research house says it will be buyers’ market over the short term

THE Penang property market is expected to remain flat yet resilient this year and could bottom out within the next two years.

CBRE|WTW Research in its Real Estate Market Outlook 2019 says it will be a buyers’ market over the short term, particularly for residential properties.

“Under the prevailing subdued market, launches of smaller, single phase developments would reduce in the short-term but larger integrated mixed developments or townships would carry on.

“The property market is anticipated to remain generally soft and flat in 2019. This is in consideration of the challenging global and domestic economy, rising cost of living, as well as supply-demand imbalances, particularly in the high-rise residential sector.”

The property consultancy however adds that Penang’s property market still demonstrates resilience, aided further by recovery in the economy.

“Meanwhile, the current excess in supply will effectively be absorbed by the market. Benefits of reforms undertaken by the new government could also trickle down to the local property market.”

Raine & Horne Malaysia senior partner and FIABCI Malaysian chapter president Michael Geh says transactions and values will most likely remain flat, at best.

“As residential market activity, in terms of transacted units, has been falling over the last few consecutive quarters, at best the year-on-year levels will hold. In light of the overall soft market, property values are not expected to rise in 2019,” he tells StarBizweek.

Malaysian Institute of Estate Agents Penang chairman Mark Saw says the Penang residential market will see “some correction” this year.

“However, long-term planning on infrastructure improvements will go some way towards ensuring those locations currently only accessible by cars are better served with public transport.

“For those who have been holding back their launches the past few years, there may be a need to start selling, especially if land were bought on loans.”

He adds that measures taken by the state government will help to spur the Penang property market.

“With the waiver of the 3% approval fee for foreign purchasers starting from Feb 1, Penang must be seen to be investor friendly and foreign buyers should be encouraged to come.”

Meanwhile, Knight Frank Malaysia in its latest research report Real Estate Highlights for the Second Half of 2018 says the general outlook for the Penang property market “remains mixed without a dominant overall trend”.

“However, resulting from the interplay of supply and demand as well as the general economy, different sectors are performing differently. The residential sector, which is the leading sector in terms of total volume and value of transactions, has shown some improvement during the first half of 2018. “It registered a 5.4% increase in the volume of transactions year–on-year. This trend is expected to continue.”

Saw says prices of landed property in Penang are unlikely to drop.

“However, the high-rise market will remain challenging and developers will need to continue to offer incentives as well as alternate options of home ownership.

“Developers with deeper pockets or less loans may look into rent-to-buy schemes in tandem with the recently-announced National Home Ownership Campaign by the government.”

Geh believes that both landed and high-rise units in prime locations will hold their values, while speculatively-purchased condominiums will be affected.

“Government announcements on transportation plans, infrastructure and stimulus plans are among actions that can help stimulate the Penang property market tremendously,” he says.

Easing overhang

CBRE|WTW Research says the overhang within the Penang residential property market is likely to ease over the next two to three years, with developers offering special packages and postponing launches, all of which would allow demand to catch up with supply.

“The medium to long-term outlook remains positive given that various policies and efforts are being undertaken by the government,” it says.

Citing data by the National Property Information Centre, CBRE|WTW Research says there are over 2,200 high-rise overhang units worth nearly RM1.6bil as at the second quarter of 2018. “This is due to the abundant apartment and condominium units launched, constructed and completed within the past three-to-five years, coupled with the high rejection rate of end financing, unreleased bumiputra units and low demand for units in secondary locations.”

In terms of unsold residential units, CBRE|WTW Research says around 34% or 1,300 of the overhang units are in the RM500,001 to RM1mil per unit price range.

“On the other hand, units priced at RM1mil and above form the bulk (58%) of the total overhang valued at approximately RM1.75bil.

” The property consultancy adds that high-rise projects, particularly, are experiencing increased sales pressure amidst an oversupply situation.

“Under the challenging market, developers have resorted to offering incentives such as rebates on selling prices, zero or low downpayment, easy instalment payment of up to 24 months, deferred payment of (say) 30% of the selling price over five years at 0% interest, free legal fees and one year’s maintenance fee.

“Complimentary packages include interior design package, kitchen and electrical appliance vouchers as well as referral and reward schemes.”

Office and retail markets

Knight Frank Malaysia says the office sector is still enjoying stable rents and high occupancies, pointing out however that the overall occupancy rates in some buildings have dropped marginally.

“This favourable state of affairs is expected to continue for the next few quarters as new supply is only expected to come on-stream beyond 2020.”

CBRE|WTW Research says pent-up demand for newer and prime offices persists in Penang.

“New supply of offices in Penang in the past ten years was limited. New prime purpose-built office buildings completed within the past three years such as HunzaTower and Straits Quay Commercial Suites are enjoying commendable occupancy rates, although charging new benchmark rentals.

“Newly set-up offices, as well as offices relocated from older office buildings, comprise the tenants in these new buildings. Office occupiers are seeking newer office buildings that serve their contemporary needs and enhance their corporate image.”

It adds that pent-up demand for newer and prime offices would continue in the short-term, as most of the upcoming purpose-built office buildings are scheduled for completion in year 2020 and beyond.

“Older buildings are likely to experience a slide in demand thus lower rentals and capital prices.”

CBRE|WTW Research says stable occupancy rates can be anticipated, adding that rentals will increase.

“As at mid-2018, the overall occupancy rate of purpose-built office buildings in Penang declined slightly to 77% from 82% year-on-year. Occupancy rates are anticipated to generally remain in the region of 80% in near future.

“Rentals of prime office space in Georgetown were between RM2.50 and RM3.50 per sq ft. Prime offices outside George Town, particularly newer buildings in Bayan Lepas/Bayan Baru and Tanjung Pinang (Tanjung Tokong), registered higher rentals of RM3.30 to RM4.50 per sq ft.”

Due to increasing maintenance cost, CBRE|WTW Research says rentals of office space in most buildings are expected to increase in the short term.

“The overall average rental of prime offices would also increase, pulled-up by new entrants with higher asking rentals.”

As for the retail sub-sector in Penang, Knight Frank Malaysia says the current supply remains unchanged, adding that a more challenging scenario is anticipated for this sector with new supply to come on-stream with the expected opening of IKEA in Batu Kawan in the current quarter and the extension of Penang Times Square.

“Other retail centres/expansion of retail centres will be adding on the supply in 2020 and 2022.”

CBRE|WTW Research says the retail sector in Penang is likely to be flat, buffered by cautious optimism.

“Mixed performances will be more evident between the better and under-performing retail complexes, of which the latter is likely to drag down the overall occupancy and average rental rates.

“With abundant supply in the pipeline, shoppers can look forward to exciting shopping experiences.”

It says the overall occupancy rate stood at 72% as at mid-2018, with 79% for Penang island and 63% for Seberang Prai.

“Retail lots on the ground floor of selected prime retail complexes on the island commanded higher gross rental rates of up to RM45 per sq ft.”

Meanwhile, Geh says better-managed malls in prime locations are sustainable.

“These malls have sustained rental rates but vacancy factors have certainly increased by 5% to 10%.

“There is no oversupply but a rise in vacancy factors. Going forward, the general population’s purchasing trend remains cautious and wary of big-ticket items.”

Saw is less optimistic about the Penang retail sector, saying “this sector has been saturated for a few years and there is no end in sight”.

By Wugene Mahalingam, The Star

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Property goodies with Govt and developers offering various incentives

A new challenge for the EPF

 

 
MANY international experts and organisations have expressed concern about the global economic outlook this year.

Tighter monetary policy, weaker earnings growth and political challenges are confronting major economies.

The long-running US-China trade war and uncertainty around the UK’s exit from the European Union have soured business and consumer sentiment in recent months. However, the risk of a recession remains small, say economists.