RMAF base relocation to benefit Butterworth

THE EDGE WEEKLY ISSUE#1004

THE WEEK OF MARCH 3 – MARCH 9, 2014

By: KAMARUL AZHAR

Owners of property and land in Butterworth can expect an annual appreciation of 10% in the value of their real estate over the next 10 years as the area is set to be the next centre of development in Penang, say real estate consultants.

By the end of this decade, the price of property and land in Butterworth may have doubled from their present rates, they add.  Currently, land in Butterworth costs between RM50 and RM150 psf while property is priced at RM200 to RM500 psf.

It is worth noting that Butterworth will soon see several major infrastructural and amenity development projects, which will boost its property market and narrow the gap in the prices of properties on the mainland and the island across the straits.

The projects include the relocation of the (RMAF) base and the redevelopment of its site in Teluk Air Tawar and the revival of Penang Sentral, the state’s integrated public transport hub project, which is expected to start by the fourth quarter of the year.

The state government has also commissioned the construction of an undersea tunnel connecting Butterworth to George Town on the island.  However, the undersea tunnel is a long term project that will only kick off in 2020.

Apart from Penang Sentral, the redevelopment of the 407.5ha RMAF base site will be among the immediate catalysts for property developers with land or projects in the vicinity.

The Fong Yun, head of sales and marketing at Henry Butcher Malaysia (Butterworth) Sdn Bhd, says due to the presence of the air force base in Butterworth, the height of buildings there is capped at 15 storeys.

“The relocation of the ….base and redevelopment of the site will enhance property development in Butterworth and the surrounding areas as there will no longer be any height control,” The tells The Edge.

“Currently, due to the air force conducting training and fly-bys around the area, there is a height control of 15 storeys within a 20km radius of the airbase.  This has restricted plot ration to only four.”

In the Raja Uda area, which is Butterworth’s central business district (CBD), land is priced at the high end of the RM50 to RM150 psf price spectrum.  In Teluk Air Tawar, where the air force base is located, prices are at the low end.

To recap, TSR Capital Bhd announced on Feb 5 that it had received the government’s approval to set up a (JV) company to enter into negotiations with the latter to relocate the RMAF base that was built as the Royal Air Force base for the then British Malaya in 1941.

The JV company will include Lembaga Tabung Angkatan Tentera with a 30% stake, Pembinaan Bukit Timah Sdn Bhd with 19% and TSR holding the rest.  It will relocate the air base to a new site, which has yet to be identified, and in exchange get to redevelop the 407.5ha.

“The exercise will open up a vast area of sea-fronting land in Butterworth, which will be among the last tracts in a strategic location on the mainland,” says an official with a Penang-based property developer.

“Butterworth has a better view than Gurney Drive because it faces the island, which is already bursting with high-rises that form a beautiful view from across the straits, especially at night.”

Besides TSR, which will benefit directly as the main developer of the 407.5ha, other property developers in Butterworth and the surrounding areas will also gain, thanks to improved connectivity with the island as well as such attractions as Malaysia’s second IKEA store.

One of them is PJ Development Bhd (PJD), which has 6.56ha of land in Jalan Chain Ferry that is about a five-minute drive from the Penang Sentral project and the proposed undersea tunnel.

The parcel is part of PJD’s 12.14ha projects called the Harbour Place, which the group calls the first “metrocity” in Butterworth that offers various amenities, such as a hypermarket, shopping centre, office towers, hotels, serviced suites and an educational institution.

Developments to shift inland

Due to the central location of Harbour Place in Butterworth, its future easy accessibility to the island through the undersea tunnel and to Penang Sentral, its condos have been going for RM500 psf compared with the average of RM200 psf for properties in the area.

Congestion on the Penang island and the prospect of greater economic activity have prompted property developers, including public-listed PJD, Eco World Development Group Bhd, Sunway Bhd, Mah Sing Group Bhd and Tambun Indah Land Bhd, to scout for prime land in Seberang Perai.

“The infrastructure developments there will create an economic corridor stretching from Butterworth to Batu Kawan where land prices will appreciate by about 30% as developers rush to grab a piece of it,” says Henry Butcher’s Teh.

Hunza Properties Bhd, the developer of the Gurney Paragon project in Gurney Drive, has 284.7ha in Bertam, which is being developed into an integrated township called Bandar Putra Bertam.  Bertam is a 25-minute drive towards the northeast of Butterworth.

Tambun Indah, a leading property developer on the mainland, has a 242.8ha township development in Simpang Ampat, Seberang Perai Selatan.  Simpang Ampat is also a 25-minute drive from Butterworth and closer to the Second Penang Bridge in Batu Kawan.

Eco World, meanwhile, is rumoured to be bidding for a 190ha tract for a golf course and property developments in Batu Kawan.  Another listed property developer is looking at 113.3ha of land in Valdor, which is about 4km from Batu Kawan, say the property consultants.

The economic potential of Butterworth and the surrounding areas, coupled with improved connectivity between the island and the mainland, will eventually shift the heart of Penang’s property development further inland, they add. E