Land scarcity or abundant, which one is better?

This is a continuation of an article comparing Penang island versus mainland. Part 2/4. You can write article 1/4 here: Penang Island vs Mainland (Part 1/4)  It is written by the founder of, Mr. Ken Lim. I think it’s important for everyone to consider the many facets of how property continues to evolve in Penang. Never mind whether you are a supporter of the current or the potential upcoming ones. Read, digest and decide.
Scarcity of land is one of the most common explanations given by those looking to invest or having invested into a property in Penang Island. Many people seem to have convinced that since the island is running out of development land, prices of houses should increase at a much higher rate than any other places, including mainland.
Theoretically, the assumption is correct and that the land price increases are often sustainable too. But one should also be clear with their property investment objective. Are you looking to invest into an expensive property or a property with high investment value? Land scarcity will result into higher property price, but not necessary property with higher return on investment.
In reality, as the property is getting more expensive, a higher price resistance among the buyers would be seen. Especially when it goes beyond the psychological price limit of the majority, people will need more time to accept the higher limit. The chart below shows the average transacted price and average price movement, based on the combination of 3 most popular residential property types – Condominium, 2-3 storey terrace and 2-3 storey semi-detached houses.
The data from NAPIC clearly indicated that the residential property transaction in the mainland has shown a higher degree of positive price movement as compared to the properties in the island.
Under the influence of land scarcity, some people has opted with the “buy first, think later” strategy and believed that if they don’t buy a property in the island today, they might lose the opportunity later. Some went to the extent of buying property at western part of the island without having a clear objective in mind. Of course there is nothing wrong if that is planned for own stay. But for investment, bear in mind that all houses built are eventually meant for human habitation. The livability of the property and location should be the utmost priority.
One should focus on the investment objective and land scarcity ought to have the least influence here. If your objective is to own a property in Penang Island as a brand, and that you admire a busy urban lifestyles, north east district of the island is probably your best option. But if you don’t mind to spend additional 10-20 minutes traveling to your workplace, the abundance of land in mainland may be able to offer you a more relax lifestyle with myriad of outdoor activities that your whole family can enjoy in the future. Most importantly, it is likely to cost less than half the price that you will be paying in the island.
It is my firm belief that the increases in property price have very little thing to do with scarcity of land. Whether it is in the island or mainland, a general uptrend in land prices will inevitably results in more expensive houses. However, a sustainable property market price is when people are convinced and perceived that the premium they have paid is reasonable for a lifestyle the house will bring them. If the upcoming Eco Marina by EcoWorld in Batu Kawan is priced similar to the island, an admirable yet elegant living lifestyle is anticipated.
Next suggested article: Mainland Penang rising, secondary choice to island ending.


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