Foreigners ‘invading’ pre-war properties in Penang
GEORGE TOWN: The pre-war property market in the heritage enclave could be overheating with foreign corporations “snapping them up by the rows” and causing the rentals to sky-rocket.
After evicting the old tenants and sprucing up the shophouses, the foreigners are leasing them out at more than 500% above the previous rent.
A row of 12 shops near the Komtar-end of Jalan Pintal Tali (Rope Walk previously) has been dubbed “Little Singapore” because of the similarities with how restored pre-war houses in the republic look like.
The rental used to be not more than RM1,300 before 2010. After the spruce-up, it is learnt the Singaporean owners are enjoying rentals of between RM7,000 and RM10,000.
In Penang’s colloquially named Seven-Street Precinct (Chit Tiau Lor in Hokkien), it is learnt that Singaporeans have recently bought a row of 11 shophouses along Noordin Street (Jee Tiau Lor or Second Street), where Penang’s earliest Chinese settlers had settled.
In prime locations like Chulia Street, it is learnt that they are renting out the properties at about RM7,000 a month each.
In stark contrast, shophouses in Queen Street and China Street, owned by Hokkien clan associations, are rented for between RM1,500 and RM2,700 a month.
The upsurge of rentals is driving an NGO – George Town Heritage Action – to lobby for the return of rent control to prevent the city’s residents and old businesses from being driven away.
It is learnt that at least one such public-listed company in Singapore has acquired an estimated RM100mil in pre-war properties or about 150 units.
In October, the corporation announced that it had spent RM43.4mil to acquire 90% of the shares of a private limited company in the republic that wholly owned another four companies registered in Penang.
A source said the four companies had been buying pre-war shophouses here since December 2013.
“They look for landlords who own rows of five to 10 shop houses,” he said.
According to documents from the Companies Commission of Malaysia, four Singaporeans are directors of these companies.
A Penangite who runs the local scene also sits on their boards.
A local real estate agent, when contacted, said the Singaporeans’ taste for pre-war shophouses was an open secret in property circles.
“We all know their Penang director. When pre-war property owners want to sell, we call him.
“They don’t want single units. Their favourite type of deal is 10 shophouses in a row and they want to deal with a single seller only,” said the agent, adding that the Singaporeans drove a hard bargain.
“But occasionally, they buy above market value to beat their rivals. They see something in our pre-war properties that local investors don’t,” the agent added.
Cheah Kongsi, which owns about 100 pre-war shophouses, keeps the rent at between RM1,500 and RM2,700 each.
“We know the market rental rates, but our policy is to support the living heritage by keeping rentals low.
“Private property owners have the right to benefit from their assets. But for the kongsi, we believe in keeping the city’s Unesco World Heritage Site status sustainable,” said chairman Peter Cheah.
Meanwhile, George Town Heritage Action co-founder Mark Lay said his group was lobbying for state laws to prevent heritage property owners from raising rentals by a huge percentage.
Admitting that this was similar to the Rent Control Act 1966, which was repealed in 1997, Lay said such a law was now vital to prevent the inflation of heritage property rentals.
“The unique living heritage that George Town acquired as a British Straits Settlement is leaving the city because it has become too expensive to live in,” he said.
Lay said old cities in Europe limited rental increases to 10% per year and such a move would preserve George Town’s characteristics.
“We know it is legal and on a willing-buyer, willing-seller basis, but this economic growth can erode George Town’s heritage. We want public discussion on this and get Penangites to think about what is happening,” he said.