Developers are going ahead with their RM6.5 billion worth of commercial and residential projects in Penang this year, given the state's sound economic status, said Datuk Jerry Chan, Chairman of Real Estate and Housing Developers' Association (REHDA) Penang.
"This is the reason developers are still carrying out their plans to launch projects despite the stricter policies on housing loans and concerns over upcoming general election."
About RM6.1 billion worth of projects will be sited on Penang Island, while the remaining RM358 million from will be located in Seberang Prai (mainland).
Excluding IJM's Trehaus and Sunway Cassia, all projects planned for Penang Island comprise high-rise developments. Chan noted that this preference for high-rise developments is due to high land cost.
"A few years back, developers could still build landed properties because they could be priced attractively."
"Nowadays, with landed cost escalating by about 20 percent from last year, developers will have to price a semi-detached house from RM900 psf, onwards, in a prime area like Pulau Tikus as the cost for net land plot is RM500 to RM600 psf," explained Chan.
Taking this into account, a semi-detached home with a built-up area of 6000 sq ft will have a price of RM5.4 million, but "how many people would fork out RM5.4 million for a semi-detached home?"
Datuk Finn Choong, Executive Advisor at Penang Master Builders' and Building Materials Dealers Association, commented that developers are implementing more projects due to stable prices of raw building materials.
The price of cement has not increased over RM15 per 50kg bag since 2011 due to softer demand. This allows developers to price their units within the RM400,000 and RM500,000 range.
Image: The Light Waterfront by IJM Land
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