Penang puts 6 acres land beside Gurney Bay up for auction at RM1,200 psf to pay for the Air Itam bypass, and to find out what the waterfront is really worth

The Penang government will put a 6-acre piece of reclaimed freehold land beside Gurney Bay under the hammer on 7 October 2026, with a reserve price of RM313.632 million — RM1,200 per sq ft — to raise the cash its contractor needs to finish the Air Itam–Tun Dr Lim Chong Eu Expressway bypass by April 2027.

It is the most expensive piece of state land Penang has ever offered at public auction and it is waterfront land.

The land

• Title: P.T. 858 (Plot 7A), Section 2, Bandar Tanjung Pinang, North-East District
• Size: 2.42 ha — 6 acres, or 261,360 sq ft
• Tenure: freehold; a prime development parcel fronting Jalan Peter Paul Dason, next to Gurney Bay and E&O’s Andaman Island
• Reserve price: RM313.632 million (RM1,200 psf)
• Auction: 11am, 7 October 2026, District Land Office, Level 51 Komtar. Bidders lodge a bank draft for 1% of the reserve — RM3,136,320 — with the District Land Administrator before 11am
• Agent: One Asia Property Consultants (PG) Sdn Bhd, 25-F Gottlieb Road, +604-227 7222
• Terms per the Proclamation of Sale issued by the state authority

View the approximate location on Google Maps

Why the state is auctioning instead of handing it over or normal alienation

The bypass is not paid for in cash. Under the 2013 land-swap deal, Consortium Zenith Construction Sdn Bhd (CZC) builds the roads and is paid in reclaimed state land at Bandar Tanjung Pinang, transferred against certified work claims. State infrastructure, transport and digital committee chairman Zairil Khir Johari gave the running tally on 7 September:

• Work claimed to date: RM695.977 million
• Land already transferred: 4.7 ha (11.6183 acres) worth RM427.657 million
• Claimed but not yet transferred: RM225.768 million
• Physical progress at 31 August: 92.46%; financial progress 81.69%

Those two progress figures are the whole problem. CZC has built more road than it has been paid for, and — as Chief Minister Chow Kon Yeow acknowledged in May — the concessionaire’s financial difficulties are why a road due in 2025 has been extended twice, to 31 October 2026 and then to 12 April 2027. CZC asked the state to help it turn land into cash. The state agreed — but on its own terms.

“For the other parcels that they sold, we would have to alienate them to the buyer,” Zairil told The Star. “But this time, we are selling it through an auction because it is such a prime piece of land and the state can obtain a share of the profit.” The land remains in the state’s name — allocated to CZC, not alienated. A target sum has been fixed for payment to CZC; anything above it is shared between the state and the contractor. “The money can only be paid to CZC after the land is sold,” he said, adding that construction continues without stoppage.

The numbers

• The 11.6183 acres already handed to CZC were valued at RM427.657 million — about RM845 per sq ft.
• The auction reserve is RM1,200 per sq ft — a 42% premium on the valuation the state has been settling claims at.
• CZC’s outstanding RM225.768 million claim would consume about 6.1 acres at RM845 psf, but only about 4.3 acres at RM1,200 psf. Selling six acres at the reserve clears the claim and leaves roughly RM88 million on the table before costs — the “profit” Zairil says will be shared.

In other words, the state is refusing to keep paying its contractor in land at RM845 psf when the open market may pay RM1,200 or more. Every ringgit above the reserve is a ringgit the state gets back on a project that has cost it nothing but land.

Is RM1,200 psf realistic?

The best comparable is the parcel next door. In early 2026 The Edge reported a 26-acre reclaimed plot off Jalan Peter Paul Dason — also CZC land-swap land, plot ratio 5:1 — being marketed at RM1,400 psf (about RM1.6 billion), with market observers putting a realistic transaction at RM900–RM1,000 psf, and no buyer having materialised. The Westin Residences on the same waterfront retail from about RM2,000 psf of built-up.

Six acres at 5:1 plot ratio is roughly 1.3 million sq ft of gross floor area — land cost of about RM240 per sq ft of buildable floor at the reserve, which is the figure a developer will actually run.

What it means for Penang property

A public price is being set for the island’s prime land. Every previous CZC parcel changed hands by private alienation at negotiated valuations. On 7 October, for the first time, the Gurney Bay waterfront gets a transparent, competitive price in a room at Komtar.

It re-prices the rest of the land-swap. If the auction clears at or above RM1,200, the state has a strong argument that future transfers to CZC — and there is RM225 million still owed, plus whatever the remaining works cost — should be settled at a higher valuation, meaning fewer acres leave state hands for the same road.

For Air Itam, the practical point is simpler: the bypass is 92% built, the beams for the last bridge went in over July, and the money to finish it is now tied to a single date. If the room at Komtar is quiet on 7 October, April 2027 is at risk again.

*Images: site plan and aerial from the state’s Proclamation of Sale, as published by The Star. The Google Maps link is approximate.*