KL builders upbeat on Penang property market

An artist’s impression of the IJM’s Light Point project along the Jelutong Expressway.

GEORGE TOWN: Kuala Lumpur-based developers expect Penang’s property market to further improve next year, with their projects in the state to contribute significantly to revenues.

IJM Land Bhd managing director Datuk Soam Heng Choon said although the country was technically in a recession, “the worst is over.”

“We are now in the initial stages of a recovery, as there are signs of improvement.

“The contributions from Penang will be important, forming more than a third of the group’s revenue for the 2010 fiscal year,” he said.

IJM Land’s new launches in Penang include the RM108mil mixed development maritime project, The Light (comprising The Light Linear, The Light Point and The Light Collections schemes) located on a 16.8ha freehold site off the Jelutong Expressway.

Next fiscal year, the contribution from Penang should be more than a third of the group’s revenue, Soam said, adding that the remainder should come from its projects in the Klang Valley.

For the first quarter ended June 30, IJM’s Penang projects contributed about 25% to 30% of the group’s revenue of RM284mil.

“The key drivers of property growth for 2010 should still be low interest rates, stability in employment, and demand from a younger generation who still require housing,” Soam told StarBizWeek after the Star Property Fair Roundtable discussion recently.

The other panellists were state executive councillor Chow Kon Yeow, Finance Ministry’s valuation and property services department director Lau Wai Seang, Eupe Corp Bhd managing director Beh Huck Lee, SP Setia Bhd general manager (North) S. Rajoo, Real Estate Housing and Developers’ Association Penang chairman Datuk Jerry Chan, Henry Butcher (Malaysia) Penang director Dr Teoh Poh Huat, Socio-Economic & Environmental Research Institute research fellow Dr Goh Ban Lee and Blossom Time director Kan Weng Hin.

Rajoo said SP Setia was also positive about next year’s property market.

“Our projects in Penang should bring in RM200mil next year. So far this year, the contribution from Penang’s projects is about RM170mil.

“We should be able to do about RM180mil by Oct 31, when our fiscal year closes,” he said.

In FY08, SP Setia’s projects in Penang contributed about RM130mil to its RM1.4bil revenue, with the balance coming from its Klang Valley and Johor Baru projects.

The group was now looking at introducing new financial packages for its new projects to be launched by year-end, Rajoo added.

These projects included the Reflection, a 25-storey condominium block, the Aura and Caria semi-detached schemes, both located at the 44.8ha Setia Pearl Island in Sungai Ara, and the final phase of the Setia Vista project located at a 8.4ha site in Relau.

Kan said the property market next year would greatly depend on what Budget 2010 had to offer as incentives to drive further the pick-up in momentum.

“The stimulus packages have restored confidence and its continuation would depend on Budget 2010,” he said.

He added that the high-end property market segment could not sustain without foreign buyers.

Chan said the property market should still be stable next year but he was not sure if property prices would increase as a result.

“We are looking at launching more diverse types of landed residential properties next year,” he said.

Lau, however, was more cautious.

“Let us talk about now till the end of 2009, instead of making projections for next year. I foresee a softening in market demand for higher end properties priced from RM500,000 onwards,” she said.

Lau’s outlook is based on the value of residential properties transacted in the first half of 2009, which amounted to about RM1.6bil, compared with RM1.74bil achieved for the first half of 2008. Transactions for the whole of 2008 were valued at around RM3.69bil.

“However, the volume of residential property transactions in Penang for 2009 is expected to surpass that of 2008.

“For the first half of 2009, transactions registered in the state hit 7,901, up 4.5% against the same period of 2008,” she said.

In the first half of 2009, property sales on the island totalled 4,633 units while Seberang Prai recorded 3,268 units.

By The Star (by David Tan)