I have always ‘debated’ with people on the state of demand for properties in Penang. Many of my Penangite friends said that so there are way too many new condos. Surely the demand is not there. I showed them the demographics, I showed them the stats, basically they just refuse to accept that demand is huge and demand is alive. Just two days ago, at around 1030pm, just one hour plus away from midnight, I published an article about ‘RM299,000 condo in Tanjung Tokong Penang’. Guess what, that one article received 14,000 views within 3 hours. So many people wrote in to my email and the clicks to the developers’ website was over 5,000! I think i should charge the developer a bit. Haha.
This brings us back to the question of demand and this has proven beyond doubt that demand for condos in Penang remain to be extremely strong, especially when the price is right. My personal belief is this. The new condo need not be RM300,000. Even a well designed 850-950 sf condo at RM400,000 with majority of the typical facilities in an area which is less than 20 minutes from the industrial area or Georgetown would sell well. The problem is this, all new launches are at RM500,000 or higher. The reason was due to land price increasing, cost of materials etc. Then again perhaps the main reason is because of compliance costs and thus developers wanted to ensure they have a good gross margin or else they would not build.
If only these developers can think about lowering their gross profit target by 10-15%? The state government can help by making the decision process of either to reject or approve much faster, I think maybe just maybe the price is achievable. Think about it, selling all the units faster at lower price meant you can start building faster and get the profits faster, even if lower than if you had sold higher. Anyway, this is the main reason why ASPEN is able to sell their units at just a starting price of RM299,000. I seriously think their gross profits are much lower than what other typical developers try to achieve. Note, just personal opinion based on some knowledge from friends in the industry on the actual cost of building a condo.
written on 30 May 2014
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