While the Sarawak property market sizzles in anticipation of robust future activity and greater demand from converging investors, Sabah’s property scene is equally abuzz with optimism and full fledged development activities that are set to propel the state to the next level of growth.
According to Sheda secretary general, Sim Kiang Chiok, Sabah was different from Sarawak in the sense that it was more upbeat.
“Sabah is quite different with a huge migrant population and vibrant foreign investment climate due to the stronger connectivity. There is an abundance of Japanese, Hong Kong, Korean and Taiwanese companies that have factories operating in the state,” he said.
Sabah’s property market as pointed out by director of Sabah Housing and Real Estate Developers Association (Shareda), Datuk Susan Wong was active and resilient in the second half of this year.
The steady uptake of properties by cash rich oil palm planters and support from government servants who had higher loan entitlements had resulted in a flourishing property market.
“Attractive palm oil prices have made oil palm planters keen on investing in property assets and this bodes well for Sabah’s property sector,” she said in an email response to BizHive Weekly.
Similar to Wong’s view, Oxford Business Group (OBG) in its Sabah Report 2011 indicated that growth in Sabah’s real estate market had through the years been influenced by the rise in the price of palm oil.
“From 2002 to 2010, palm oil production in the state remained steady, but due to rising global demand, average prices per tonne surged over 300 per cent from RM893 to RM3,776. In the past, palm oil planters used their earnings to buy more plantations, but given the scarcity of suitable land in Sabah for major industrial development, they are now investing in residential and commercial units.
“In addition, property has increasingly become more appealing to palm oil players due to the unappealing interest rates offered by local banks. However, these same low interest rates have enabled more people to get on the property ladder,” it said in its report.
Wong pointed out that interest rates were also a crucial factor to Sabah’s booming real estate industry.
“Bank Negara’s continuous support of the industry, with its 90 per cent loan margin for first and second time home-buyers and 70 per cent loan margin for a third time house purchase have encouraged the buying interest and boosted the purchasing power of home buyers,” she indicated.
Additionally, in an effort to assist the needs for those low to middle income earners to own a home, the government’s role in the real estate field had been significant. In 2011, the ‘My First Home Scheme’ was initiated in Sabah to help first time buyers earning less than RM3,000 to obtain a 100 per cent housing loan to purchase properties below RM220,000.
The government’s initiatives in supporting those lower income earners was further made public in its Budget 2012 announcement whereby the maximum price of houses under the ‘My First Home Scheme’ would be increased to RM400,000 from the initial RM220,000. Eligibility for this would be through joint loans between both husband and wife by January next year.
This along with the newly-launched ‘1Malaysia People’s Housing Programme (Pr1ma)’ paved the way for further affordability amongst middle-income earners. The Pr1ma programme stated that first time home buyers could own homes between 800 square feet (sq ft) to 1,400sq ft for all Malaysians including those self employed and those earning not more than RM6,000 a month.
For houses that were priced below RM300,000 buyers could also enjoy a 105 per cent housing loan under this scheme.
“For the past couple of years, the state’s gross domestic product has been steady and this encouraged an inflow of investors as positive sentiments are expected to be driven further,” she said.
Amongst the property developers that have set foot in Sabah included Hap Seng Consolidated Bhd. The robust commodity prices and increasing rural to urban migration as pointed out by its managing director, Datuk Edward Lee Ming Foo had been the key to a buoyant property scene here.
“The property sector has been expanding over the past five years. Growth in the state’s economic sectors, namely agriculture, oil and gas and tourism has prompted new developments across the entire state, not just around Kota Kinabalu (KK).
“In tandem with the growth of the property sector, property values have also appreciated due to strong purchasing power and low interest rates. As Sabahans grow more affluent, they have also been drawn to other parts of the property market like commercial shop offices, condominiums and premium landed properties as investment platforms,” Lee told BizHive Weekly.
He anticipated the growth trend in Sabah to be sustained within the next five years as it had benefited from the enhanced infrastructure and facilities. This included the Kota Kinabalu Industrial Park, Integrated Timber Complexes and Palm Oil Industrial Clusters – just to name a few.
‘Hot’ areas as indicated by him were usually located in the state’s busiest cities and towns and prices had been trending upwards. According to Lee, KK’s central business had been taking the lead with a condominium fetching up to RM1,000 per square feet (psf).
“Just outside KK, in areas like Likas, Penampang, Luyang and Sulaman, a condo can fetch up to RM550psf while a high-end terrace house can cost up to RM600,000 and a semi-detached can reach up to RM900,000.
“In Sandakan, a terrace house can go up to RM500,000 and a semi-detached up to RM700,000. At the same time, in Tawau (Jalan Tawau-Sin Onn/ Jalan Utara/ Bandar Sri Indah), a terrace house can fetch up to RM400,000 and a semi-detached breaking the RM1 million mark,” he observed.
Additionally, other areas in Lahad Datu like Bandar Sri Perdana and Jalan Dam was also ‘hot’ locations with a terrace house soaring as high as RM465,000 and semi-detached breaching the RM1.1 million mark.
This could evidently be seen in Table 2.2 whereby statistics garnered from Shareda indicated that price appreciation in general had been stark and had increased multi-fold over the past 20 years in all areas of Sabah.
Lee concurred by noting that property prices had certainly appreciated in all segments with prices of residential, commercial and industrial units rising by 20 per cent to 30 per cent when compared with just two years ago.
As high as the appreciation goes in the property market, IJM Land Bhd marketing manager of the Sarawak division, Josephine Chong said that this was normal in the case of Sabah. When it came to high-end pricing in Malaysia, the state according to her took the cake.
“Property prices in Sabah have always been more vibrant than in Kuching. When Malaysia started selling RM1,000psf condominiums within the KLCC area in West Malaysia, everybody’s eyes popped out. But what they didn’t realise was that niche pricing had already started in Sabah, ahead of Kuala Lumpur. It started with the Sutera Harbour project here, but the trend did not continue,” she underlined.
Moving ahead, prime land shortages in the state capital as OBG discovered had inhibited home construction with developers favouring high-density apartment buildings to conserve space and keep prices low for middle-class consumers.
This was affirmed by Datuk Edward Lee who noticed that as land in primary areas were becoming scarcer, particularly in KK, Lahad Datu, Sandakan and Tawau, developers had been trending towards developing high-density apartments and condominiums to meet market demand.
However, he felt that despite the increasing demand for high-rise residential units, preference for landed properties would always be there.
“Home-buyers in Sabah are discerning and prefer landed properties. They also value good location, high quality, innovative designs and ample amenities. As such, for developers with land banks in prime locations in Sabah, it is best to develop landed property that meet the needs and expectations of the market.
“That said, we foresee competition in Sabah’s property sector to intensify and incorporating high value added elements will definitely be one of the key areas that developers are looking at,” concluded Lee.
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