Penang heritage buildings in demand

Focus MALAYSIA WEEKLY ISSUE 065

THE WEEK OF MARCH 1, 2014 – MARCH 7, 2014

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Yearning for more graceful existence coupled with hard-nosed business acumen contributes to soaring appeal

GIVEN pre-war properties’ potential for immense capital appreciation, they are in great demand in Penang, especially after the repeal of the Rent Control Act and in the wake of George Town’s having received Unesco World Heritage Site status in 2008.

Prices of such properties have more than doubled from those recorded 10 to 15 years ago, says Henry Butcher Malaysia (Penang) Sdn Bhd senior vice-president of asset valuation Shawn Ong Kah Boo.

“Our research shows such properties in the conservation or heritage area, whether they are in the core or buffer zones, fetch higher prices than they did 10-15 years ago.”

Referring to Armenian Street in Penang’s Unesco heritage area, he says the price per sq ft (psf) had been RM300 to RM400 in 1999 and 2000.

The current average prices for such properties are between RM1,200 and RM1,400 psf.

Looking at the price index for pre-war properties between 1980 and 2000, Ong says the prices did not move much.

The average price psf of pre-war heritage properties in George Town started to soar only after 1999 due to the repeal of the Rent Control Act.  Its compound annual growth rate from 1999 to 2013 was 12.7%.

Before the Act’s repeal, there had been very few transactions; but over the last three years, Ong says the number of deals has grown, with the average transactions volume increasing at about 12%.

Statistics from the National Property Information Centre (Napic) reveal the volume of transactions for the first nine months of 2013 has been active compared to that of the past few years.

According to the Penang Real Estate Market Research Report on pre-war properties for the first quarter of 2014 by Henry Butcher Malaysia (Penang), the market has more buyers than it has sellers due to a limited supply of good listings.

The demand for pre-war properties, said to be quite resilient despite economic uncertainties, is coming from both local and foreign investors.

Ong says people are willing to pay more for something they value as their cultural heritage.

Potential buyers are no longer discouraged from investing in old, neglected shophouses, especially those with heritage elements.  Many of these buildings have been transformed into boutique hotels or unique commercial premises.

Elaborating on why investment in heritage properties is gaining traction, Ong attributes the phenomenon to growing numbers of those with real love for heritage.  There is much sentiment involved on the part of those who have invested in such properties.

He adds that some have bought pre-war properties for business reasons, with the intention of turning them into residences or holiday homes, especially in the case of foreigners and applicants in the Malaysia My Second Home scheme.

Infill development makes up 585 (10.76%) of the buildings and sites, while the remaining 713 fall into the replacement category, according to updated preliminary figures of the conservation management and draft special area plan for George Town, Part 2.

Ong remarks: “Of the figure, the majority of the designs of the pre-war shophouses are the Southern Chinese ecletic style (32.1%) of the 1840s to about 1900, followed by the Straits ecletic style (19.19%).”

The early Straits ecletic style is circa 1890 to 1910, while the late Straits ecletic style is circa 1910-1940.

Other styles include wooden structures (11.07%), Art Deco (10.79%) – which dominates the 1930 to 1960 period – and other non-architectural designs (8.44%).  Modernism (7.48%) emerged during 1950s and continued into the 1970s.

Quoting from Architectural Heritage Singapore, Ong says: “The hallmarks of any quality restoration, irrespective of scale and complexity, are maximum retention, sensitive restoration and careful repair.

“Selective replacement should be considered only when absolutely necessary.  Total reconstruction goes against accepted international conservation practices.”

Ong says among pre-war buildings to have been refurbished is the Penaga Hotel, transformed into a 45-room boutique hotel, with its standard room size starting at 431(sf).  Occupying an area of 17,139 (sf), this five-storey heritage building at Jalan Hutton is within heritage buffer zone.

Another interesting pre-war building is Logan Heritage, spread over 31,150 (sf).  Built in the 1880s, it is named after James Richardson Logan, a well-known lawyer.

Now owned by the OCBC Bank, this commercial building, which has a number of (F&B) outlets inside it, underwent a massive refurbishment at a cost of RM6.8 mil about five years ago.  It sits along the famous banking street of George Town;s Lehub Pantai (Beach Street) area.

Citing another example of a pre-war building, Ong says the 1881 Chong Tian Hotel, comprising three pre-war shophouses at the buffer zone, was a thriving hotel in the late 1880s.  This building has been transformed into a three-storey Chinese boutique hotel, which claims to be the first and only Chinese heritage hotel in Malaysia.

Muntri Mews is another interesting example of a dilapidated building that had once been a stable, which has been converted into a boutique hotel.  Located on Muntri Street, the area occupied by this cosy hotel amounts to 5,516 (sf).  Noordin Mews, another former stable, is today also a lovely luxury boutique hotel, adds Ong.

“Seven Terraces, winner of the 2007 Unesco award of distinction for heritage conservation, is next to the Goddess of Mercy Temple that was built in 1810.  Covering land area of 14,800 (sf), this row of 19^th-century Anglo-Chinese terraces is just at the back of the Penang Chinese Town Hall.”

He says Campbell House, a three-storey corner hotel built in 1903, had been acquired by an Italian couple, Nardya Wray and Roberto Dreon, before the declaration of Penang’s Unesco status in 2008.  This heritage building is opposite the Woo Hing Rolex shop.

The latest addition to the list is the Armenian Street Heritage Hotel at Lebuh Carnarvon, which had its grand opening on Jan 13 as the country celebrates Visit Malaysia Year 2014.

Aside from joining the over 1,700 buildings at the core of the George-town World Heritage Site, it acts as an extension of the George Town World Heritage Incorporated office, which will have a large model of the heritage area displayed in an area covering 1,500 (sf) on the second floor of the hotel.

Room for a family at the Armenian Street Heritage Hotel

Ong’s advice to investors considering pre-war heritage properties is to think of some factors before making a decision.  They include taking into account the location of the property; its unique architectural style and value including its historical and social value; historical ambience; and its potential for profit.  FocusM