A leading property expert said he does not expect property prices in Penang to see a major correction if there is a global downturn.

A leading property expert said he does not expect property prices in Penang to see a major correction if there is a global downturn because the prices have not escalated as much as in other markets.

Another reason is that demand far outstrips supply, said CB Richard Ellis (CBRE) managing director Allan Soo.

"In 2008 when the property prices in Hong Kong, Singapore and Kuala Lumpur took a stiff correction due to the global financial crisis, Penang was largely unaffected because the property market was relatively slow compared with the other cities.

"But in the past two years, although property prices have picked up sharply in Penang, there is insufficient supply. This is due to developers focusing on niche and high-end properties," he said during a seminar on InvestPenang organised by ECM Libra Financial Group Bhd.

Property prices in Penang have shot up in the past two years with numerous high-end condominium projects and integrated developments undertaken by big players such as Eastern & Oriental Bhd (E&O), IJM Corp Bhd and S P Setia Bhd.

Soo said prior to E&O's Seri Tanjung Pinang project, the developments in Penang were largely confined to parcels involving two or three acres and were not planned schemes.

The developers were also local players who did not pay much attention to infrastructure such as access roads and amenities like security.

Soo suggests that investors keen on acquiring properties in Penang for the longer term look at high rise integrated and comprehensive schemes that include amenities and infrastructure covering a few hundred acres of development.

He also said that as far as pricing is concerned, the levels seen in Penang are still relatively cheap.

"It is relatively cheaper to invest in Penang and Malaysia as even the most expensive condominium project here is relatively cheaper than a similar project in Hong Kong or Singapore," he said.

Another speaker at the seminar, Datuk Seri Dr Kelvin Kiew said the biggest weakness of the small and medium enterprises (SMEs) in Penang is that the owners are easily satisfied and do not look to grow their companies beyond the local borders.

"The owners prefer to pass on the company or wealth accumulated to their children. This is unlike in Taiwan where the founders of large SMEs install a professional management to see that the business grows.

"The children are not allowed anywhere near the company," he said. Another setback for the SMEs is that they do not do enough to promote themselves.

Kiew said the SMEs in Penang should look towards positioning themselves globally because they have some good factors going for them such as operational excellence and are proven good manufacturers of equipment and precision tooling.