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Monday, June 2, 2008

Penang projects to gain from conversion

A NUMBER of property projects in Penang, especially those on reclaimed land of the island and township developments by state agencies, can look forward to higher property value if the land tenure of these projects is converted to freehold from their current leasehold status.

According to Real Estate and Housing Developers Association Penang chairman Datuk Jerry Chan, while most privately owned pieces of land are on freehold status, projects on state reclaimed land are mostly on leasehold land.

Townships undertaken by state agencies in Bayan Baru and Seberang Jaya and commercial projects such as Komtar are also on leasehold basis.

“The initiative to allow the conversion of leasehold residential land to freehold status is certainly welcomed as it will add value to leasehold property and development projects in the state.

“It is a timely exercise to raise Penang's profile and attraction as a real estate destination,” Chan said.

The projects that stand to benefit include IJM Properties Sdn Bhd's 350 acres of reclaimed coastal land along the Jelutong Expressway, which has a potential gross development value of RM6.5bil.

Under a privatisation exercise in 1997 to build the Jelutong Expressway, IJM was granted the right to reclaim the land for property development.

Development plans for an integrated waterfront township called The Light will comprise residential, entertainment, business, education and commercial components.

Under phase one, six parcels of high-end residences will be developed over 17ha comprising 1,186 units. It is scheduled for completion in three to five years.

Phase two will comprise a commercial and retail centre on 41.68ha while phase three would be developed into a 2.8ha seafront park.

Previously, there were also other sizeable leasehold property developments in the state that have been converted to freehold status.

In October 2005, the former Penang state government allowed the 73-acre Queensbay land to be converted from leasehold to freehold. The Queensbay project, which was located on reclaimed land, was jointly developed by the state and a private developer.

When the original developer was unable to continue with the project, the state government in a kind gesture granted the conversion of the freehold titles to the buyers as “compensation in kind”, as the developer (the state is also a partner) was unable to pay the liquidated damages.

The CP group was invited by Bayan Bay Development Bhd to be the “white knight” to revive the project. Work started in 2005 and the project is scheduled for completion in 2013.

The entire integrated seafront township in the southwestern seaboard of Penang island will have a gross development value of RM1.5bil.

In 2006, E&O Property Development Bhd also managed to convert its Seri Tanjung Pinang reclaimed land in Tanjong Tokong to freehold status.

A filepic showing the development of Seri Tanjung Pinang

Seri Tanjung Pinang, with an estimated gross development value of RM2bil, is a key earnings driver for E&O. With the 605 acres and rights to reclaim a further 740 acres, the company is one of the largest developers in Penang now.

By The Star

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