Worries about Oversupply in Penang Property Market
24 August 2011
Penang in Malaysia has a number of projects planned over the next 10 to 15 years which are worth around US$9 billion, but there are concerns over the ability of the market to sustain this amount of new development. The developments will take place on over 1.1 million acres of land, which includes reclaimed land.
One of the projects is Eastern and Oriental Bhd’s second phase of the Seri Tanjung project, which is in Tanjung Tokong, and it includes two islands made up of 740 acres of reclaimed land. It is predicted that this project will need two years of land reclamation before development can even begin, and it could be another 10 to 15 years before the project is fully developed.
Eastern and Oriental thinks that if Penang continues growing at its present rate there will be demand for higher end residential properties and amenities. Around 70% of the planned developments are to be residential. However property experts think that even with demand at its highest for years, it would take more than a decade for all the properties to sell, and this is an awful lot for the market to absorb.
The hope is that growth in Penang will continue, and that it will draw in people from other states, and that this migration could form the basis for future property demands by creating a higher population. The worry is that oversupply of new property could force prices downwards; especially as it estimated the majority of property bought during the last five years was for speculation, and at some stage these properties will be released back into the market by the speculators.