Malaysia’s Prime Minister recently revealed government plans to develop the country’s northern region. Dubbed the Northern Corridor Economic Region (NCER), the plan will introduce a slew of projects to spur growth and boost income levels in the states of Perlis, Kedah and northern Perak. Penang property market is also set to benefit with spillover from the NCER structural growth, according to a recent report released by Deutsche Bank. Property players like E&O Property Development, Mah Sing Group and SP Setia, with a strong line-up of projects in Penang, are expected to enjoy higher earnings.
Penang is also included in the masterplan and is expected to play a major role as a logistics and transportation hub and a gateway to the region.
The government hopes to attract up to RM177 billion (about US$50 billion) in investment over 18 years, with two-thirds to come from the private sector. Sectors like agriculture, manufacturing, tourism and logistics will be the major beneficiaries of the NCER project.
Penang is set to play a starring role in the NCER and over a dozen high-profile projects have already been earmarked for the state. Penang Sentral, a transportation and logistics hub costing RM2 billion, will be built at Butterworth to replace the current ferry terminal and railway station. The current Penang Turf Club will make way for an exhibition and conference centre, shopping complexes and hotels stretching across a 12-hectare site. Penang Global City Centre (PGCC), an RM18 billion project, will be built over 15 years.
To ease traffic congestion on the current bridge linking Penang to the mainland, a second bridge costing RM2.7 billion is expected to be operational. Touted as Southeast Asia’s longest bridge, the 23km Penang Second Link will be built with technical assistance from a Chinese company and with funding from a Chinese government loan. A fast-ferry service for pedestrians and motorcycles will also be introduced next year to alleviate current congestion.
The 362-hectare Pulau Jerejak, an island off Penang and once a penal colony, will be turned into a medical tourism centre. Teng Chang Yeow, Chairman of the State Tourism Development Committee, said the health tourism sector in Penang has an estimated annual turnover of RM100 million and that last year about 200,000 foreigners visited Penang seeking medical services. Other projects include the expansion of the Penang Port and Bayan Lepas Airport, and the introduction of a monorail service on the island.
While there is a wide range of property available for both rental and for purchase in Penang, there are still some government restrictions on foreign-ownership. Up until recently all property acquisitions by foreigners regardless of its value require Foreign Investment Committee (FIC) approval and each state may impose additional requirements to those listed by the FIC. However, FIC approval was recently dropped for properties of RM250,000 (US$68,194) and over. Another bonus is that as Malaysia was formerly under British jurisdiction, the country’s legal system is based on English common law and property transactions are processed in a comparatively similar way to how they are done in the UK.
Developers have been following the government’s initiatives closely and a number have embarked on their own projects in the region. IJM Corporation recently launched The Light, a RM5 billion waterfront development south of Georgetown on Penang Island, the second such shoreline project on Penang following the ongoing Seri Tanjung Pinang, north of the city. The Light will include 152 acres of development on 300 acres of reclaimed land, and will be built in three phases over a 15-year period. Transforming an unremarkable stretch of the island’s east coast, the complex will feature residential property, a business and retail park, and high-rise office blocks. The 42-acre first phase, due to be completed, consists entirely of residential property, featuring 1,186 units in a range of projects including Light Linear, Light Point and Light Collection. Its developers envision Penang competing for foreign investment under the Malaysia My Second Home programme.