PETALING JAYA: The Penang state government is looking to invite proposals for the development of five parcels of land on the island and on the mainland, according to a CIMB Research report on Nov 5.

Of the five parcels of land, four are on the island. They are: Bayan Mutiara -- a 30-acre commercial and residential development; Gurney Drive Offshore -- proposed reclamation of land along Gurney Drive; Komtar Phase 5 where the former Prangin Market and 46 units of pre-war houses on a five-acre site have been allocated for rehabilitation and redevelopment; and Relau/Paya Terubong Hill on a 400-acre plot with an elevation of 250ft to 1,700ft with a good view of Georgetown.

Another proposed development is on a 6,000-acre land in Batu Kawan on the mainland where the Second Penang Bridge will link up with Batu Maung on the island.

The research house said major developers such as S P Setia Bhd and Mah Sing Group Bhd are showing keen interest in these projects, particularly the Bayan Mutiara and Gurney Drive Offshore projects. The participation of these big developers will help accelerate the development in the state.

The research house believes that the outlook for residential properties in Penang is promising as the residential stock overhang in the state is the lowest of the big three markets (Klang Valley, Johor and Penang).

“In fact, the number of unsold residential properties in Penang has been almost halved from five years ago whereas for Malaysia as a whole, it was largely unchanged. Unsold stock in the Klang Valley has also fallen by about a third but has risen in Johor.

“We are more optimistic about the prospects for landed residential property on the island or even seafront condominiums. Residential property prices have gone up significantly in recent years due to supply constraints and the influx of Klang Valley developers. The high-quality and exciting property products offered by these aggressive developers will not only attract upgraders from Penang, but also buyers of holiday homes from Kuala Lumpur, Singapore and Hong Kong,” it said.

CIMB Research added that Eastern & Oriental Bhd (E&O) and IJM Land Bhd would be the prime beneficiaries of robust demand as they have significant future supply of seafront condos on reclaimed land. S P Setia and Mah Sing are also aggressively scouting for more landbank on the island to increase their exposure there.

It, however, is cautious about the outlook for commercial-type properties in Penang given its smallish population and low occupancy rates for office and retail space. Office space occupancy in Penang stands at only 76%, the lowest in Malaysia, the research house said.

“Retail occupancy in Penang is even worse, at below 70%, the second lowest in Malaysia. There appears to be a significant glut in Penang, which would worsen if more office and retail space were built.

“Even for hotels, we understand that rooms are only full during peak periods and occupancy is relatively low at other times. If three new hotels are built in The Light and two in Southbay, they need to satisfy the requirements for commercial activities there and should not be just for holidaymakers. If commercial buildings in Penang already have one of the lowest occupancy rates in Malaysia, hotels built around them are likely to suffer the same fate,” it added.

CIMB Research said the number of hotel rooms in Penang has stayed relatively constant for the past five to six years but it will be increasing significantly as new hotels are being built following Penang’s listing as a Unesco World Heritage Site in July last year.

“The opening of new hotels could exert more pressure on occupancy rates in Penang unless commercial activities pick up sufficiently to bring in more travellers. According to Jones Lang Wootton, in 3Q2009, the occupancy rate was 63% for beach hotels in Penang and 68% for hotels in Georgetown. Hotels outside the city had occupancy rates of only 37%,” it noted.