The cost of buying a pre-World War II shophouse in George Town, Penang, has reached RM2,000 per square foot equivalent to the price of the poshest Kuala Lumpur City Centre (KLCC) condominium units.
An entrepreneur, who declined to be identified, has just paid RM4mil for a 2,000sq ft shophouse along Lebuh Pantai (Beach Street) in order to continue an existing business located on the premises which she had been renting.
Before 2008 – the year, George Town was jointly listed with Malacca as Unesco World Heritage Sites - pre-war shophouses in Penang were generally going for about RM200,000-RM800,000 depending on size and location. Previously, an unrestored shophouse of 10ft by 36ft at Lorong Chulia only cost RM150,000 in 2009 but the asking price has since jumped to over RM300,000 of late.
Now, even the asking price of even the smallest shophouse that spans only 11ft by 30ft at Lorong Toh Aka is already RM600,000. Nearby, at Lorong Carnarvon, one unit of 17ft by 100ft has been sold for RM1.2mil while Lebuh Amernian shophouses can fetch RM3mil each.
Heritage value
Contrary to popular notion that foreigners and investors from Kuala Lumpur are pushing up prices of Penang heritage property, recent transactions show that Penang investors are the ones who are buying in a substantial way. This is particularly true among those who have lived abroad and recognise the heritage value.
According to informed sources, one businessman from Bukit Mertajam recently snapped up RM20mil worth of pre-war property including shophouses in one day.
Even derelict property such as the defunct Nam Wah Hotel & Bar, located at a prime location on Lebuh Chulia, was sold for RM7mil last year. The property comprises double-shophouse units with a land area of 14,000sq ft.
Such shophouse properties are often turned into “heritage” hotels, charging an average of RM300-RM400 per room per night.
According to local entrepreneur Seah Kok Heng, 42, he spent RM3mil in 2008 to acquire three derelict, triple-storey shophouses located at Rope Walk or Jalan Pintal Tali. Then, he spent another RM10mil to restore and transform the adjoining units into the Chinese-themed 1881 Chong Tian Hotel where certain suites sell for over RM2,000 a night.
Probably, the best-known heritage projects are by Penang-born businessman Christopher Ong who has lived in Australia as well as in Sri Lanka, where he once operated an award-winning hotel.
Together with business partners, he now owns and operates Muntri Mews, a nine-room hotel which was formerly a stable on Lebuh Muntri. This street has some of the finest Straits Eclectic shophouse facades in George Town.
Ong who is in his late 40s, is currently working on similar projects on Lorong Stewart and Lebuh Noordin, among other sites in George Town. He also used to own a double-storey, detached house built in the Colonial era located at Jalan Clove Hall. It was recently sold for close to RM8mil to Penang-born Jim Lim Teik Wah. Having lived in the UK for 40 years, Lim has returned to re-settle in George Town together with his English wife, Jo.
Another row of nine shophouses at Jalan Ariffin, just off Jalan Transfer, has been bought a local lawyer for an undisclosed sum. The units are being restored for another hotel project by the owner.
The Penaga Hotel project - which occupies Jalan Transfer, Jalan Hutton, and Lebuh Clarke – is another well-known development owned by veteran architect Hijjas Kasturi and his wife Angela, who reportedly spent RM50mil on it.
Bought for RM2mil in 2008, Campbell House at Jalan Campbell is a 10-room hotel owned by Malaysian-born Nadya Wray and her Italian husband, Roberto Dreon. Nardya`s mother's great, grand uncle was Tunku Abdul Rahman, Malaysia’s first Prime Minister.
No. 23 Love Lane is another multi-million ringgit restoration project owned and funded by the art-loving wife of a former Malay Cabinet Minister from KL, who declined to be named.
Nibong Tebal
While such buyers are tight-lipped, especially over the total costs of their acquisitions, lumber yard entrepreneur Gooi Kok Wah, 43, has no qualms about revealing the reasons for acquiring such properties.
The Nibong Tebal-based businessman has been eyeing and buying such shophouses since 2008 after the Unesco World Heritage Site listing. Apparently, that declaration fuelled the interest of astute locals as well as “outsiders” including Swiss, French, Australian and Singaporean investors.
“Current prices for such properties in prime areas like Beach Street can command RM2,000 per square foot, and RM1,000 per square foot and above, for touristy areas like Chulia Street, Love Lane, Muntri Street, Stewart Lane and certain heritage core zone sections. And even in lesser known segments like Prangin Lane, the asking price is at least RM400 per square foot,” explains Gooi, a former accountant.
To date, Gooi has bought six pre-war shophouse properties. His latest RM2mil purchase was for a two-storey shophouse at Lebuh Kimberley that spans 20ft by 200ft with a built-up space of 6,000sq ft.
Heritage zone
He points out that George Town World Heritage Incorporated – an organisation under the State government – listed only 3,800 units of pre-war shophouses in the heritage core and buffer zones on the island.
The core zone covers an irregular-shaped site of 109 hectares on the north-east section of the island city. It is bounded by the sea on side and cocooned by the heritage buffer zone on the other side. The buffer zone covers 150 hectares.
The core zone is roughly hemmed by Pengkalan Weld, Jalan Tun Syed Sheh Barakbah, Lebuh Light, Lebuh Farquhar, Lorong Love, Lebuh Carnarvon, Lorong Carnarvon, Lebuh Melayu and Gat Lebuh Melayu.
And the buffer zone extends to part of the sea in front of Weld Quay and bounded by Jalan Prangin and Jalan Transfer. (Refer to http://www.penang-traveltips.com/george-town-unesco-world-heritage-site.htm)
“Such heritage property are in a classic demand and supply situation. The supply side is limited and cannot be increased in tandem with the increase in demand," says Gooi.
“Furthermore, supply can and will be reduced, due to accidents like fire and vehicle mishaps. There are also cases of misguided re-development with insensitive modification or illegal alteration destroying the heritage value of such houses as well as due to neglect and natural deterioration.
“However, demand is always increasing due to business opportunities with the increasing number of tourist arrivals as a result of more low-cost flights from other countries. Also, the rising interest of heritage buffs from outside Penang who desire to own such a property will further fuel demand.”
City residence
Born in Nibong Tebal, Gooi has lived and worked in London, Glasgow and Jakarta as well as Kuala Lumpur, Klang and George Town before deciding to re-settle in his hometown.
With his latest shophouse, the entrepreneur intends to restore the Kimberley Street property for his city residence.
As to the costs involved in restoring such shophouses, Gooi says there is no limit to "heritage building restoration" expenditure.
"It depends on how fine the quality you desire," said the father of three, "However, for ordinary or minimal cost restoration work, it would cost about RM300,000 for a shophouse unit of 1,400sq ft space."
Isn't it wiser to invest the total costs of buying and restoring a shophouse, in a newly-developed, landed property or condominium unit?
"No," advises Gooi, "I would say, heritage houses can command a much higher rate of return compared to other types of property."
High Court Case
One factor that contributed to the current high prices for pre-war shophouses in George Town can be traced to an incident at the High Court in Penang on Sept 29 in 2010.
On that day, a property auction by CIMB Bank attracted an unusually large crowd of over 70 people. The highlight of the sale was for an unrestored shophouse of 20ft by 125ft located on Armenian Street.
There were only five actual bidders including Gooi. The reserved price was RM450,000 and furious bidding pushed the price up to an astonishing RM1.1mil, setting a new benchmark in Penang. The eventual buyer was a veteran real estate consultant. And that property is now reputed to be worth at least RM2.6mil, as it is, without any restoration.
Observes Gooi, "Penang heritage houses and their stratgeic location means a unique combination. The value of pre-war shophouses still haven't been fully realised.
"One thing for sure, prices will continue to go up," predicts Gooi, who is still be on the prowl for such "heritage" property.
By Johnni Wong March 20, 2012
Source: http://www.starproperty.my/PropertyGuide/Finance/19912/0/0
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