On 7 October, Penang put six acres of freehold land beside Gurney Bay up for auction with a reserve of RM313.6 million. The auctioneer waited an hour. No one bid.
The plot is Plot 7A in Bandar Tanjung Pinang, on Jalan Peter Paul Dason, the road that links Gurney Drive to Andaman Island. Its reserve worked out at about RM1,200 per sq ft of land. According to The Edge, which first reported the result, the state hasn't decided whether to try again.
For anyone buying a condo between Gurney Drive and Andaman Island, the empty room says more about the next five years of supply here than any launch brochure does.
Key takeaways:
- The land: six acres, freehold, reserve RM313.632 million (about RM1,200 psf), next to Gurney Bay and Andaman Island.
- The result: no bidders on 7 October 2026; no decision yet on a second auction.
- Why: a soft market, and uncertainty over the plot ratio for a mixed development. Nearby vacant land was reported at just over RM1,000 psf.
- The purpose: cash flow for the Ayer Itam bypass, which was 92.46% built at the end of August 2026.
- For buyers: new supply on this plot isn't close, and land at this price implies new launches here won't be cheap.
Why the state was selling
The land is part of how Penang pays for the Ayer Itam bypass, a six-kilometre toll-free dual carriageway linking Ayer Itam to the Tun Dr Lim Chong Eu Expressway. Instead of paying the contractor, Consortium Zenith Construction, in cash, the state transfers land in exchange for completed work.
By the end of August 2026, according to EdgeProp's report of the state's figures, the contractor had claimed RM696 million in completed work. Twelve acres worth RM427.657 million had already been transferred, with another RM225.768 million still owed in land value. The road was 92.46% complete physically and 81.69% financially. The state said the contractor needed help turning land into cash so the road could be finished by April 2027.
So this wasn't a developer testing the market. It was the state trying to convert land into money for a road.
Why nobody turned up
Two reasons were reported, and the second matters more.
The first is the market. Penang's property transactions fell 9.9% in the first half of 2026, and developers are managing their own unsold stock. Committing more than RM300 million to land is a hard sell to a board right now.
The second is the plot ratio, meaning how much floor area you're allowed to build on the land. The plot is zoned commercial, which allows five times the land area. A mixed development with homes would be different, and residential use in Penang is capped at 2.8. That's the difference between building about 1.3 million sq ft and about 730,000 sq ft on the same six acres, and a developer can't price the land until they know which.
Here's what that does to the land cost per sq ft of building. At RM1,200 psf of land and a plot ratio of five, the land costs about RM240 for every sq ft you can build. At 2.8, it's about RM430. That's before construction, financing, and the floor area lost to lobbies, corridors and car parks. Add those, and a residential project on this plot would need to sell well above what most Gurney subsales fetch today.
These are my calculations from the reported reserve and plot ratios. A developer's own feasibility would differ in the detail, but not in the direction.
What it means for Gurney and Andaman buyers
New supply on this plot isn't coming soon. Even if a second auction succeeds, approvals and construction mean it's years away. If you're worried about a wave of new launches next to your Gurney Bay unit, this site isn't one of them yet.
Land prices put a floor under new launches, not under subsales. Whoever builds here will need high prices to make the land work. That doesn't push up the price of existing condos nearby, but it does widen the gap between new and completed homes in the corridor.
Here's how that gap looks today:
| Project | Status | Price per sq ft |
|---|---|---|
| W Residence Gurney Bay | New launch, due 2028 | up to about RM1,700 |
| Arica @ Andaman Island | Under construction, due 2027 | from about RM845 (launch) |
| Andaman @ Quayside | Complete by 2017 | about RM1,086 – 1,955 |
| 18 East at Andaman | Completed 2017 | about RM1,198 – 1,523 |
| Setia V Residences | Completed 2017 | about RM911 – 1,593 |
Prices are from my tracked project data in October 2026: developer prices for the new launches, asking prices on portals for the completed ones. They vary a lot by floor, view and unit size, so check the specific unit.
The pattern is the one I see with clients: subsales at Andaman @ Quayside and Setia V often cost less per sq ft than the branded new launches next door, and you can see what you're buying. The failed auction doesn't change that, but it does remind you that land in this corridor isn't getting cheaper.
And for the bypass, the state needs another way to raise the cash. The road is over 90% built, and I'd expect it to be completed. It matters for Ayer Itam, Paya Terubong and Farlim, where it should cut the trip to the expressway. Watch whether the April 2027 date holds.
Zac’s Take
Zac Ong
An empty auction room isn't a crash signal. It's developers refusing to pay RM1,200 psf for land when they don't know how much they can build and the market is slow. For buyers, the useful conclusion is the opposite of panic: new supply right beside Gurney Bay isn't imminent, and land at this price means whatever gets built will be expensive. If you want the Gurney or Andaman address, completed condos like Andaman @ Quayside and Setia V give you the location at a lower price per sq ft than the new branded towers.
If you're weighing a Gurney or Andaman condo, tell me your budget and how you'll use it, and I'll shortlist units with recent transaction prices. Related reading: Andaman @ Quayside vs W Residence Gurney Bay and the Gurney Drive property guide.
Sources: Auction result and plot ratio details from The Edge Malaysia (October 2026) and Penang Property Talk; plot details, bypass progress and land-swap figures from EdgeProp (September 2026), from the state's announcement; Penang H1 2026 transaction figures from NAPIC. Land cost per buildable sq ft is my own calculation.
Disclaimer: This is general information, not investment advice. Prices change; check current transactions before you buy.