Sunday September 2, 2012
Drawing in tourists and investors
ARE foreigners snapping up properties in George Town’s World Heritage Site?
According to state Local Government and Traffic Management Committee chairman Chow Kon Yeow, this is a wrong perception.
He points to statistics from the Valuation Department which indicate that only 34 of 882 properties transacted in the last four years are owned by foreigners.
Nevertheless, he says, the state has imposed a new policy since July, which allows foreigners to only buy landed properties costing over RM2mil each and condominiums of over RM1mil each. The limit was raised from RM500,000 previously.
According to Dr Teoh Poh Huat, director of Henry Butcher Malaysia (Penang) Sdn Bhd, Malaysians and the Malaysian diaspora still make up the bulk of the buyers.
Citing as example the Rice Miller Conservation and Development Project in George Town’s historic Weld Quay seafront, Dr Teoh says that nearly 80% of its buyers are Malaysians. When the RM250mil project was launched last year, the upscale city residences were tagged at around RM1,200 psf.
In the case of existing heritage buildings, Dr Teoh describes the supply available for sale as “quite small and inelastic”.
Inner city properties which are in demand include the early shophouse (1800s to 1850s), early traditional shophouse (1850s to 1890s), Straits eclectic shophouse (1890s to 1940s), art decor shophouse (1930s to 1960s) and the early modern shophouse (1950s to 1970s).
Investors, he notes, are generally divided into two groups and a huge expectation gap between sellers and buyers prevail.
Some investors, he says, actually prefer heritage properties in their original deteriorating condition where the plumbing, sanitary and electrical supply system are archaic and preservation and restoration cost is high. Within this group, occasional restrictions on renovation and building usage affect its property value and marketability.
On the other hand, some restored properties which enjoy a unique architectural style, good location and have the potential to make a profit have been attracting some discerning market segments.
“Apart from cultural pride and historical significance, investment returns are ultimately the primary motivating reasons for a viable heritage real estate market.”
Dr Teoh says gentrification has become an inevitable process in parts of the inner city.
“Boutique heritage hotels, specialty shops, cultural oasis, and new F&B and entertainment outlets are making their debut. Some of these places have done well and have made Penang better known among tourists and returning Penangites.
“Our research has the following conclusion. George Town today is exciting and has become increasingly a playground of choice for many.”
Heritage at crossroads