Kota Kinabalu Housing Property Monitor (1Q2012)

City&Country: The Edge/Rahim&Co Kota Kinabalu Housing Property Monitor (1Q2012)

ByWong Mei Kay of TheEdge Malaysia Sunday, 24 June 2012 00:00

Residential prices continue to grow

The robust housing market in Sabah in 1Q2012 has been attributed to private sector investments that continue to pour in, rising palm oil prices and increased tourism arrivals. Other factors, which have helped boost price growth in residential properties in Kota Kinabalu, include the ongoing oil and gas projects and the government transformation programme.

Prices of double-storey terraced houses on the secondary market rose an average of 4% in 1Q, with values increasing by RM5,000 to RM20,000, says Max Sylver Syntia, assistant manager of Rahim & Co Sabah, in presenting the The Edge/ Rahim & Co Kota Kinabalu Housing Property Monitor 1Q2012.

Y-o-y, double-storey units charted an average capital appreciation of 12%.

At least three residential development schemes — Millenium Heights, Taman Sri Borneo and Ujana Kingfisher -registered a price increase of more than 15% y-o-y.

One-storey terraced homes and condominiums showed a similar upward trend, with prices rising an average of 9% compared with the previous year.

In the elite residential areas of Damai, Likas Hill and Signal Hill, the prices of units in Alam Damai, Bayshore Condominium and Radiant Tower rose 13% on the secondary market.

However, the highest growth of 7% q-o-q was registered by Jesselton Condominium, followed by Bayshore Condominium with 6% growth.

Trending Syntia foresees a rosy market for condominiums as well as for landed homes in gated and guarded developments in the state, especially in Kota Kinabalu. In the past year, the majority of new launches comprised 2- and 3-storey terraced houses.

“The gated and guarded development concept has significant potential in Kota Kinabalu given the success stories of Golden Hill Garden and Luyang Perdana,” he says. Many developers are keen to bring in more supply, with some expecting prices for prime gated housing schemes to set new benchmarks.

Prices in Ujana Kingfisher, in the maturing Sepangar area, are expected to continue rising as there is strong demand on the secondary market.

“Asking prices for newly completed 2-storey houses are hovering from RM380,000 to a whopping RM850,000,” says Syntia. For example, units with a land area of 1,900 sq ft, in the newly completed Taman Manikar within the prime area of Signal Hill, are going for RM850,000.

Spillover effect The continuous growth in prices is attributed to the spillover effect of higher asking prices for newly completed developments in Sepangar, Penampang and Kepayan.

“With limited new supply on the primary market, we have observed that most single-storey houses are being bought by local buyers for own stay,” says Syntia. Condominiums too are becoming increasingly popular among professionals, foreigners and younger buyers youngsters who are seeking a new lifestyle.

“We anticipate further growth 0n the secondary market as prices for newly launched projects in the primary market are currently hovering at between RM500psf and RM600psf. Some are even reaching RM900 psf, like in the case of Jesselton Residence in Kota Kinabalu, next to Suria Sabah Shopping Complex,” says Max.

The high-end residential market, which has seen encouraging trends in the past few quarters, is poised to expand further as local and new foreign buying interest is expected to remain strong. Meanwhile, the state government is expected to strengthen its promotion of affordable housing schemes for lower-to middle-income groups. The People’s Housing Programme (PPR) at Kiansom, Inanam, scheduled to be completed in 2Q2012, will add 1,000 homes to the market.

Economic drivers There was a slight dip of 3.3% in the number of residential transactions last year. According to the Property Market Report for 2011 released by the Valuation & Property Services Department, there were 5,413 transactions in 2011 compared with 5,592 in 2010.

In terms of total value however, transactions increased to RM1.291 billion in 2011 from RM1.245 billion in 2010.

The report noted that although only 1,004 units were launched in the primary residential market in 2011 compared with 2,398 units in 2010, sales performance was stronger, with an uptake of 48% compared with 45% in the previous year.

There are many factors driving the state’s new-found wealth which will continue to have spillover effect on the property market going forward.

“Private sector confidence was reflected through the RM107 billion in cumulative investments in the Sabah Development Corridor (SDC) as at 1Q2012. This was an increase of RM44 billion from the previous mark of RM63 billion in November 2011,” Syntia says.

The momentum of Sabah’s positive economic performance in 2011 was sustained through the first quarter.

That was reflected during the SDC Open Day: Corridor and Regional Cities Programme in February. “At the opening day, it was reported that some RM459.2 million in facilitation funds from the federal government will be allocated to facilitate six projects in the state,” says Syntia. The federal government’s Economic Transformation Programme, through the Public-Private Partnership Unit, was a key driver for the investments.

The six projects are Sipadan Mangrove Resort in Tawau (RM49 million), Geothermal Power Plant in Tawau (RM35 million), International Technology & Convention Centre in Penampang (RM19.9 million), Integrated Jesselton,Waterfront & Sabah International Convention Centre (RM250 million), a mixed-use development and Gleneagles Medical Centre in Kota Kinabalu (RM47.7 million) and Dalit Bay Integrated Tourism Resort in Tuaran (RM57.6 million)

Prime Minister Datuk Seri Najib Razak had announced that 31 Entry Point Projects had been identified by the Corridors and Regional Cities Lab ,with a target investment of RM77.5 billion by the year 2020. These are expected to generate RM35.5 billion in incremental gross national income (GNI) and create 143,770 new jobs in 2020.

The main export for Sabah remains palm oil, which accounted for RM703.18 million in revenue in 1Q2012, followed by sawn timber and woods products with RM149.48 million and seafood products at RM49.03 million.

This has fuelled the purchasing power of oil palm planters, which in turn gave a boost to the property industry and the state’s economy.

“We anticipate this segment of the economy to play an influential role in driving the demand in the state’s property market for 2012,” says Syntia.

Meanwhile, tourist arrivals in Sabah rose by 13.6% to 2.84 million in 2011 from the previous year. For 1Q2012, tourist arrivals recorded an impressive increase of 9% compared with last year.

“In line with this rise, we foresee efforts to preserve and enhance the beautiful natural environment of the state to steadily attract more foreign buyers through the Malaysia My Second Home programme and in turn, demand more supply in the market for such needs,” says Max.

The ongoing oil and gas projects, including the Sabah-Sarawak Gas Pipeline and the Sabah Oil and Gas Terminal, will not only contribute positively to the state’s economy but are also set to stimulate Sabah’s growth within the Brunei-Indonesia-Malaysia-Philippines-East Asean Growth Area (BIMB-EAGA) as well as the North Asia market due to their strategic location between the two major economic regions, according to the housing monitor.

“On their impact on the property market, we foresee the influx of foreign specialists and workforces to expand the demand base for better quality accommodation in both landed as well as strata type residential developments,” Syntia explains.

Notable developments The state’s healthy economy has drawn major property players, among them, Mah Sing Group and S P Setia Bhd, that are set to change the landscape of Kota Kinabalu with their projects.

Mah Sing’s maiden venture in Sabah is the mixed-use development Sutera Avenue, along the coastal highway in the city’s business district. Comprising serviced apartments, street mall retail lots and multi-storey shop offices, the project — announced in 1Q2012 — has an initial gross development value of RM830 million.

S P Setia is developing the first phase of a mixed development known as AEROPOD in Tanjung Aru, Kota Kinabalu. Spanning approximately 60 acres, AEROPOD will feature a mix of retail shops, offices, F&B outlets, serviced apartments, Soho, corporate shop offices, boutique and five star hotels.

Another developer, SCP Inanam Sdn Bhd, launched an industrial showroom shopoffice project, Inanam Capital, in the Inanam area. Some 70% of the units were taken up within two months of the launch.

With a GDV of RM270 million and a gross floor area of 800,000 sq ft, the development comprises eight blocks of 3-storey industrial shopoffices suitable for a variety of business.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 912, May 28-June 3, 2012

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