Penang Island's residential sector retained the lion's share of transactions in the property market in terms of total value and volume in 2011 and real estate consultancy Henry Butcher Malaysia (Penang) Sdn Bhd expects a more "cautiously optimistic" outlook for the sector this year.
In its Penang Island Real Estate Market 2012 Research and Forecast report, the consultancy said the Penang residential sector outperformed last year in terms of total value and volume of transactions due to the strong consumer confidence in Penang's residential market.
The report also noted that demand for residential property is strong even in non-traditionally preferred locations.
"Sentiments are anticipated to remain cautiosly optimistic whilst the general propensity for property investments is still strong for residential homes not only in the traditionally preferred locations but also for well-conceptualised homes of high quality specification, finishes, good security features and facilities," the report stated.
Penang island's current supply of residential property comprises mostly stratified properties with landed properties constituting approximately 16% in the North East and 56% in the South West. Future supply of residential properties see a similar trend.
Terraced houses are the highest performing residential property as prices have appreciated significantly. The report cited two terraced houses located in Greenlane which have seen prices appreciating by 785% over a span of 33 years.
The strong demand for Penang housing is partly due to the belief that property investing is a good hedge against inflation. Besides, Penang is also seeing a fair share of Klang Valley -based property developers looking towards the island for new opportunities.
S P Setia Bhd plans to launch four new projects on the island including Setia Greens in Sg Ara, Brooks Residences in Jesselton, Setia V Residences in Gurney Drive and Setia Villas in the Setia Pearl Island scheme. Others include Nadayu 290 by Nadayu Properties and The Wave by Ivory Properties at Penang Times Square.
According to the report, as office space supply has exceeded demand, the office market is expected to be challenging in 2012. Currently, older office space in George Town dominates supply as there are no new developments on the island while offices with Multimedia Super Corridor (MSC) status and Green Building Index certifications are expected to be in better position to secure tenants.
The report stated that the Office Tower at Island Plaza is undergoing a facelift which will convert the entire component into 106 units of commercial suites and will be renamed 118@Island Plaza. So far, more than 70% of the units have been taken up. Northam Tower office suites are also being refurbished into hotel rooms and suites in the 31-storey building.
Meanwhile, the retail sector should see steady growth. According to the report, the retail sector is the second highest performing sector in Penang real estate as yields of retail properties in premium locations are hovering around 5% to 7%.
"Most of the shopping complexes are located in the North East district and generally, the take-up rates in prime malls are high," stated the report.
Growth in tourism has also contributed to rising demand and interest in the island's hotels and pre-war/heritage houses. Media reports have suggested that the development of six hotels in George Town with a gross development value (GDV) of over RM860 million and the demand for pre-war properties with heritage characteristics in the inner city of George Town has outstripped supply.
The industrial and warehouse market however, is expected to hold steady in 2012 with existing supply mostly found in the South West District of Penang Island.
Overall, despite the adverse impact of the US/eurozone problems, Asia is expected to be on a robust growth path with Malaysia expected to achieve a gross domestic product (GDP) of between 5% and 6% in 2012 hence its property sector will remain positive.