Northbound possibilities

21 Mar 2014 / 12:33 H.

THE property scene in cities like Kuala Lumpur, Selangor, Penang and Johore is for the most part robust, fuelled by demand that comes naturally with being in cosmopolitan parts of the country. For those who enjoy the daily rat race and fast-paced grind of city life, a metropolis is the place to live and make a living in. It is also in these principal cities where economic activity is buoyant, influencing a continuous buzz in the property market.
While active and analytical property investors prefer investing in urban areas to reap the best and fastest profits, we look at the real estate scene in Kedah, a more quaint, quiet and charming part of Malaysia.
Also known as Darul Aman, Kedah consists of mainland and Langkawi, along with an archipelago of around 100 smaller islands. Kedah borders the states of Perlis in the north, Perak in the south and Penang, to its southwest.
Alor Star is the capital of Kedah. The state was once known for its paddy fields and rice exports. Today the government, in its Ninth Malaysia Plan, has made preparations for Kedah to prosper increasingly as an industrial-based zone, under its Northern Corridor Economic Region blueprint.

Kedah in general

REHDA Kedah/Perlis chairman Datuk Rick Cheng (pix) said: "Property prices are surely and definitely going up although, not drastically rising. Overall, Kedah is a good place to purchase property and live in it. The market is not as vibrant as in the bigger cities, but the good point about Kedah property is that when the economy slows down, prices in Kedah are not as affected as in the bigger towns. However, likewise, when the economy is up, the prices also don't fluctuate that much. So it is a very stable, calm and reliable market."
A reasonable stance, according to Cheng, he thinks that Kedah is a peaceful place, ideal for one looking to enjoy a quiet and contented lifestyle.
Plus points:
• Lower cost of living
• Less hectic due to slower paced lifestyle
• Hardly any traffic jams
• Less pollution
• Cheaper land and real estate
• Government launched the "Rumah Mampu Milik" affordable housing programme
• Kedah is being developed under the Ninth Malaysia Plan
Property investors hoping to turn around their purchases quickly and make profit fast may not find the Kedah property market exciting enough.
"Especially those who intend to flip their purchases or make huge profits," says Cheng.
He adds that most buyers purchase homes in Kedah because they have some connection to the state.
"Many city folk are actually from smaller towns. We find that those who have Kedah 'roots' (and from other small towns) will normally want to retire in their hometowns. A lot of people purchase property in Kedah to retire in or for their aged parents, although some buy as holiday homes, second homes, and some, as very long term investments."

Up and coming

Areas in Kedah that are up and coming apart from the state capital Alor Star are Langkawi, Pokok Sena, Kuala Kedah, Jitra, Changlun, Bukit Kayu Hitam and Sintok.
"Since the new government took over, there have been a lot more investment opportunities. There are five-star resorts and luxury properties and hotels like Four Seasons, The Datai, St Regis and Shangri-La who have plans to come in. On the other hand, there are also budget and economy hotels and motels. Generally there is more activity as tourism is getting a boost from the state and tourism ministries," shares Cheng.
While Bukit Kayu Hitam, Kulim and Sungai Petani have always been favoured towns, new developments and highways that link the smaller towns in the outskirts have broadened the Kedah "developed" boundaries.
With the government widely promoting Langkawi as a tourist destination, not only are new hotels being built, there is the Langkawi Convention Centre coming up soon. New developments like this have caused reason for the construction of high-rise and serviced apartments, a new residential property trend on the island.
Other areas where residential property is in want are Sintok, Changlun and Bukit Kayu Hitam due to the establishment of UNIMAP (Universiti Malaysia Perlis) and UUM (Universiti Utara Malaysia). There is also a logistics hub which the government has in the pipeline, close to the border.
Further south in Kulim, the industrial scene is flourishing in line with the government's plan. With development of land on the rise, businesses are sprouting and economic activity is bustling. All this leave a positive effect on the property market in Kedah.

The meat and potatoes

Cheng says there are not many speculators or investors in Kedah, thus, it is quite unlikely for a property bubble to form, let alone burst.
"Alor Star property prices are relatively the highest in the state, being the capital but Langkawi prices are shooting up, higher than any other district in Kedah."
Property prices on Langkawi island cannot be compared to those on the mainland as transportation costs to ferry the materials across need to be considered.
"Overall, Langkawi is a vibrant and tourist's market. You will need to add in at least 20% to 30% extra for transportation for Langkawi properties. Sungai Petani is still a hot favourite. Prices are reasonable with a substantial amount of freehold land available. Alor Star remains expensive due to low supply and huge demand. Generally, the property market in Kedah is very reasonable as the cost of living is still very affordable."
Though affordable, Cheng says about 90% to 95% of land in Alor Star is gazetted as Malay Reserve Land. This leaves only 5% to 10% as Freehold.
"In Langkawi, about 80% of land is gazetted as Malay Reserve Land; and the balance 20% is very expensive, selling between RM30.00 to RM60.00 psf. Land on the outskirts like in Gurun, Pokok Sena and Kuala Kedah is much cheaper. Then again, freehold land is difficult to attain throughout Kedah."
The REHDA Perlis/Kedah chairman adds that REHDA has been in dialogue with the state government to find a solution to solve this 'problem'.
Swapping - Bartering between land that holds the Malay Reserve title and Freehold title.
Transferring - Changing the status of a piece of property under Bumi quota to an Open Lot.
"'Swapping' of gazetted Malay Reserve land with Freehold land is not allowed for residential and commercial properties. For industrial and in some cases certain commercial projects like resorts (in view of boosting the tourism industry), the state government is willing to consider swapping, provided the Bumi quota is raised to 50% (terms and conditions apply).
"'Transferring' of property under Bumi quota to an Open Lot is not allowed. Then again, the swapping concept MAY be applied and accepted, depending on a case to case basis," Cheng informs.
The state government stands by the 30% quota of Bumi lots for ALL developments that do not involve swapping.
"If you look at commercial and industrial property, most of our Malay friends prefer not to invest in these property types. So, there are a lot of unsold Bumi lots which other races cannot purchase due to the status of the property. The developers have to bear the holding costs at the end of the day."
Another problem which developers face in Kedah is the length of time the state takes to approve a project. "All these affect supply and demand, and in the long run will cause property prices to increase."
Follow our column next week to learn about some real estate steals and discover elusive opportunities in Kedah.
Kedah Transformation Lab
* The Kedah state government aims to have 40,000 affordable and low-cost homes constructed throughout the 12 administrative districts in the state by the year 2018.
* The homes will come under the PR1MA project and from private developers. These will include single and double-storey terrace houses, as well as single and double-storey semi-detached homes.
* They will be tagged between RM100,000 and RM400.000. Application is open to all Malaysians with a monthly household income of between RM2,500 and RM7,500.
* The Kedah Transformation Lab was established to boost the economy of the state. It was initiated by Kedah Mentri Besar Datuk Paduka Mukhriz Mahathir.
Housing policies in discussion between REHDA Kedah/Perlis and the state government
1) To retain the 30% Bumi lot quota for all property types as the state government has imposed a 50% quota for "swapped" land.
2) The abolition of the "Release Mechanism" for unsold Bumi lots by the state government for housing project developments. Developers will be at a disadvantage having to bear holding costs if unable to sell off these lots. Primary owners intending to sell their Bumi lots will also be at a disadvantage having to sell only to Bumiputeras.
3) In terms of commercial and industrial property, due to the fact that majority of Malays prefer purchasing residential property instead of commercial or industrial; there are many unsold lots of which developers have to bear the holding costs.
4) It takes two to three years for a project to get approved. This causes a back-log in the amount of applications awaiting approval. Thus, projects are unable to be carried out, causing increased demand and insufficient supply.
This will ultimately cause property prices to increase.
Interesting places and things to do
• If history and archaeology is your cup of tea, learn about the oldest Sultanate in Southeast Asia when you visit Alor Star and the Bujang Valley.
• Quaint villages and small towns are a must to stop by: Bukit Kayu Hitam, Kuah, Kodiang, Kuala Nerang, Kuala Kedah, Tanjung Dawai, Merbok, Sungai Petani and Baling.
• Island hopping, snorkelling and scuba diving operators are aplenty and often eager to take you on a tour to show you the many islands of Langkawi and its Geopark.
• Hike up Gunung Jerai and stop for a dip at the waterfalls.
• Tourist attractions, historical landmarks and places of interests include the Paddy Museum, the Seven Wells, Mahsuri's Mausoleum and others.
• Known as the land of myths and legends, don't forget to persuade the locals to share their tales.
• Shopping for good deals and great buys is a must.

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