Penang Hill is a popular tourist destination for nature lovers and for those who want a feel of the bygone British colonial era, evident through the intricate architecture of the old bungalows there.
Penang Hill is a good repository of century-old bungalows that come with individual names, unique historical value as well as exclusive British colonial architecture, says Henry Butcher Malaysia (Penang) Sdn Bhd asset valuation senior vice-president Shawn Ong.
According to the real estate consultancy, a few of the 36-odd bungalows on Penang Hill are being put up for sale currently and some of them boast land sizes of almost 1 acre, a luxury in land-scarce Penang Island.
“These properties have their own attractiveness, it could be a nice unparalleled view or a unique house design. Every bungalow is special, hence they are not put up on the market very often,” PPC International Penang Sdn Bhd executive director Mark Saw notes.
“Demand is high but most of the properties belong to families who have held them for many years and we are aware many have extended their [land tenure]leases in recent years,” he adds.
What buyers need to know
However, property consultants advise interested buyers, especially those who are not familiar with the Penang market, to do some research before making any purchase as buying a bungalow in the scenic Penang Hill is not the same as in other places.
“Most of the undeveloped land, including the land attached to the bungalows, is preserved as water retention areas and gazetted as conservation land, which means no development is allowed there. Not even a tree can be chopped down,” says Ong.
Current and new owners, he adds, can only do minimal or limited renovation work to maintain the building façade and condition but are not allowed to extend or rebuild the houses.
On development restrictions, according to PA International Property Consultants (Penang) Sdn Bhd executive director Michael Loo, any development on Penang Hill must ensure that its unique historical, cultural and biological heritage is protected in order for Penang Hill to continue being a unique destination in years to come.
Loo explains that any land above the sea level of 250ft is restricted for development except for “special projects”.
“Slope control and hill slopes with a gradient of more than 25 degrees have restricted development on Penang Hill, except for special projects which allow limited development that requires stringent compliance to development guidelines, EIA (environmental impact assessment) approval and approval from the State Planning Committee,” he offers.
Besides this, PPC’s Saw says the maintenance of the bungalows also needs to be considered as some of them are dilapidated due to the lack of maintenance. Besides that, some are located on steep slopes, or may not have scenic flat gardens as desired by most buyers.
“Do bear in mind, there will be a high cost to restore and refurbish the buildings,” cautions Loo.
Loo notes that all these restrictions are to help preserve the hill’s natural environment, thus making the properties there even more valuable due to their limited supply.
He says the Penang Hill bungalows may be old but they are still well-kept and in fairly good condition except for a few which have been left abandoned with deteriorating structures and façades.
“Buyers who are looking for bigger houses and a quiet living environment may prefer bungalows with large land areas like these as their retirement or leisure homes,” he adds.
Despite their appeal, the number of property transactions in Penang Hill recorded by the Valuation and Property Services Department has been relatively low with transaction prices averaging under RM3 million.
A recent transaction in July 2015 showed that a 2-storey bungalow called The Nook on Summit Road was sold for RM2.8 million. TheEdgeProperty.com data showed that in 2013, two bungalows transacted at RM2.8 million and RM2 million. These two bungalows have a land area of 49,604 sq ft and 21,577 sq ft, respectively.
Ong notes that transacted prices for the past five years have been below RM3 million each while asking prices range between RM3 million to RM4 million depending on the condition or tenure status.
High premium for tenure renewal
Ong says the expensive tenure extension premium is another reason hindering sales.
“Almost all of the bungalows on Penang Hill have leasehold titles and some have less than 20 years tenure remaining. Some bungalows put up for sale come with a tenure extension approval while some do not,” he explains.
Bungalows that have a tenure extension approval of up to 99 years could fetch a higher selling price but those whose owners have yet to apply for an extension will have a lower price tag.
“The lower price may seem attractive but the renewal premium will cost around RM3 million or more. Hence, the cost to own such a bungalow in Penang Hill is high and the buyer may not be able to finance the premium through bank loans. They would have to fork out cash from their own pockets,” Ong explains.
Besides the high premium, the process of tenure renewal will take about 1 to 1.5 years.
However, there are still buyers looking for heritage bungalows on Penang Hill.
Ong says buyers who are keen on bungalows in Penang Hill are looking at the prestige that comes with owning one as most of the bungalows are owned by an elite group — who uses these bungalows as vacation homes.
“From an investment perspective, demand is considered good as supply is limited,” he adds.
Loo from PA International says the growing tourism industry in Penang could be a growth catalyst, creating more opportunities and encouraging owners to convert their bungalows into homestays and guest houses.
Saw concurs that there is a huge untapped potential for smaller boutique hotels in George Town to link up with owners on Penang Hill for brand expansion.
“Boutique hoteliers could tie up with bungalow owners to offer tourism packages to tourists who want to experience a stay on the hill. A bungalow could offer six small rooms for homestay purposes,” he says.
News Source:(Tan Ai Leng)