This article first appeared in City & Country, The Edge Malaysia Weekly on June 13, 2022 - June 19, 2022

The Sabah residential property market ended 2021 on a better note compared with the start of that year and this upward trend is likely to continue in 2022, according to Rahim & Co regional manager (Sabah) Max Sylver Sintia in presenting The Edge | Rahim & Co Kota Kinabalu Housing Property Monitor 1Q2022.

The houses monitored have shown resilience during these challenging times, with good activity on the secondary market, he says.

“The positive growth recorded by our samples indicates that the secondary market is active, especially for properties in good locations that are well maintained. The demand for these properties is quite strong as their value is sustainable, with room for appreciation,” says Max.

“Moving forward, landed residential properties, high-rise apartments in the affordable price range as well as high-end niche developments will continue to be the main focus on the secondary market.”

According to Max, the Sabah residential property market rebounded strongly in 2021, “as the economy and market gradually adjusted to a pandemic environment”. A total of 4,805 transactions worth RM1.941 billion were recorded — a growth of 20.61% and 37.71% year on year respectively.

Residential properties with the highest number of transactions were those priced below RM300,000, with 2,351 transactions (or 48.93% of total transactions) worth RM464.03 million. “This was followed by those in the price range of RM300,001 to RM500,000, with 1,480 transactions (30.80%) worth RM586.53 million; RM500,001 to RM1 million, with 785 transactions (16.34%) worth RM536.68 million; and above RM1 million, with 189 transactions (3.93%) worth RM355.54 million,” he says.

“The types of residential properties most transacted in Sabah in 2021 were 1- to 3-storey terraced houses, with 1,828 transactions worth RM691.13 million. This was followed by condominiums and apartments, with 1,286 transactions worth RM434.03 million.

“Kota Kinabalu, Penampang and Putatan made up the bulk of the volume of residential property transactions in Sabah, with 2,635 — accounting for 54.84% of the total number of such transactions — worth RM1.307 billion, or 43.89% of the total value of such transactions in the state. Compared with 2020, the collective number and value of residential property transactions in Kota Kinabalu, Penampang and Putatan increased by 54.84% and 43.89% respectively.

“The types of residential properties most transacted in Kota Kinabalu, Penampang and Putatan in 2021 were condominiums and apartments, with 1,047 transactions worth RM390.84 million. This was followed by 1- to 3-storey terraced houses, with 808 transactions worth RM378.68 million.

“Overall, the positive growth in real estate performance indicates an optimistic [sentiment] for the Sabah property market. This is thanks to the various market recovery efforts such as the exemption of Real Property Gains Tax and the initiatives provided under Budget 2022 as well as holistic support from the government through the introduction of economic stimulus aimed at restoring the livelihoods of Malaysians and reviving the business sectors, which have notably improved financials and job confidence.”

According to Max, the market will continue to recover but at a “moderate growth” rate, owing to Covid-19 infection rates slowing after a large number of the adult population in the country were vaccinated. He says high-rise developments in Kota Kinabalu, whose prices were indirectly affected by the pandemic, should see a price correction.

Also, the reopening of Malaysia’s borders in April will benefit Sabah’s tourism sector, which should lead to growth for all economic sectors, including the property sub-sector, he adds.

Max highlights several developments in the hospitality industry. First is the proposed “ultra-luxury, five-star eco-tourism resort” by Taiwan real estate firm Sinyi Realty Inc on Mengalum Island, some 58km northwest of Kota Kinabalu, which is expected to cost more than RM1 billion.

Second, the design-driven Luma Hotel opened in Sutera Avenue, Kota Kinabalu, in January. Located about 4km from the city’s international airport, the 10-storey hotel has 115 rooms and is within walking distance of Imago Shopping Mall.

“Mega projects such as the continuation of the Pan-Borneo Highway, the redevelopment of Tanjung Aru Eco Development (TAED) and the Sepanggar Bay Container Port Expansion will be among the catalysts to move the property market forward,” says Max.

Additionally, the launch of Sabah Maju Jaya Renewable Energy Industrial Complex (SMJREIC) took place on Feb 12 with the signing of a memorandum of understanding between landowner Suria Capital Holding Bhd and Vandelay Ventures Sdn Bhd as well as its partners such as Sawit Kinabalu, Sabah Land Development Board (SLDB), Sulzer GTC Technology and Thinkat Advisory Sdn Bhd.

“Worth RM1 billion, SMJREIC will be built on a 10ha (24.7-acre) site at the Teluk Sepanggar Container Port. Upon completion, it will house an edible oil bulking terminal with a capacity of 30,000 tonnes and a palm oil refining complex with a capacity of 100,000 tonnes per annum,” says Max.

“It will also house a hydrogenated vegetable oil plant, with a capacity of 250,000 tonnes per annum, to produce materials for sustainable aviation fuel. The projects are targeted to be completed by 2025 and are expected to create 10,000 job opportunities through the various ancillary industries to be developed.”

He opines that there will be fewer residential launches in 2022 as developers are clearing their stock and had held back units from previous launches. Of the new projects that will come to market, he believes developers will focus on affordable apartments and niche high-end, high-rise developments due to land scarcity and high land costs in Kota Kinabalu.

“The younger generation prefers new properties with facilities and lifestyle concepts as well as better security features, with less hassle and lower cost for the upkeep and maintenance of the units. Freebies, discounts and incentives are anticipated to be continuously extended by developers as these marketing strategies have proved to be effective,” remarks Max.

Both the 2- and 1-storey terraced houses sampled performed well, with only two in the former category showing no price growth. The 2-storey terraced houses recorded an average growth of 1.92% y-o-y in 1Q2022 compared with 1.78% in 1Q2021 — an increase of 0.15 percentage points.

“The highest y-o-y price growth was recorded at Ujana Kingfisher, with an increase of 3.36% to RM615,000,” says Max.

This was followed by Taman Jindo (3.01% to RM685,000), Millenium Height (2.44% to RM630,000), Golden Hill Garden (2.37% to RM865,000) and Taman Sri Borneo (2.27% to RM675,000). Taman Indah Permai and Luyang Perdana house prices were unchanged during the period in review.

Quarter on quarter, marginal growth was recorded for houses in Ujana Kingfisher, up 0.82%, followed by Taman Sri Borneo (0.75%), Taman Jindo (0.74%) and Golden Hill Garden (0.58%). There was no price growth q-o-q in Taman Indah Permai, Luyang Perdana and Millenium Height.

Meanwhile, 1-storey terraced houses saw a y-o-y price growth of 4.2%, from 2.93% in 1Q2021 — an increase of 1.27 percentage points.

“The highest y-o-y price growth was seen at Taman Tuan Huat, with an increase of 4.4% to RM475,000, followed by Taman Sri Kepayan (up 4.12% to RM505,000) and Taman Nelly Phase 9 (up 4.08% to RM510,000),” says Max.

Q-o-q results show Taman Tuan Huat registering a growth of 1.06%, followed by Taman Sri Kepayan (1%) and Taman Nelly Phase 9 (0.99%).

As for rents, Max highlights that with the exception of Luyang Perdana, which registered a 4.55% increase y-o-y and q-o-q, no rental growth was reported for the other landed properties.

Condominiums recorded an average price growth of 1.04% in 1Q2022, an increase of 4.86 percentage points compared with 1Q2021.

“Only four of the samples registered an increase in price y-o-y — Likas Square, up 3.8% to RM405 psf; Alam Damai, 1.8% higher to RM580 psf; Jesselton Condominium, up 1.7% to RM590 psf; and Radiant Tower, a 1% increase to RM495 psf.

“The average price was RM600 psf at Marina Court, RM535 psf at Bayshore Condominium, RM380 psf at 1 Borneo Condominium and RM650 psf at The Peak Condominium. Overall, the average price of our condominium samples stood at RM529 psf,” says Max.

Q-o-q, 1 Borneo Condominium registered a price growth of 2.7%, followed by Likas Square (2.5%), Radiant Tower (1.0%) and Jesselton Condominium (0.9%).

Rents at Alam Damai improved 11.11% y-o-y to RM1.82 psf per month while those at Jesselton Condominium increased 3.45% y-o-y to RM2 psf per month. However, the other condos saw rent psf per month unchanged at RM2 at Marina Court and The Peak Condominium, RM1.77 at Radiant Tower, RM1.62 at 1 Borneo Condominium, RM1.61 at Bayshore Condominium and RM1.48 at Likas Square.

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