This article first appeared in The Edge Financial Daily, on November 16, 2015.

KOTA KINABALU: Property prices in Kota Kinabalu’s city centre have shot up as land becomes more scarce and expensive, said Sabah deputy chief minister and state industrial development minister Datuk Seri Panglima Raymond Tan Shu Kiah at the Malaysian Secondary Property Exhibition (Maspex) Sabah 2015, which ran from last Friday till yesterday.

“Landed properties and luxury high-rises in the city centre can fetch higher prices than those of similar properties in the suburbs,” said Tan, who officiated at the opening of the exhibition organised by the Malaysian Institute of Estate Agents (MIEA).

For instance, two-storey semi-detached houses within Kota Kinabalu’s hotspots such as Foh Sang, Damai, Luyang, Lido and Kobusak — are priced between RM1 million and RM1.6 million in the secondary market, while those located in suburbs are priced between RM500,000 and RM1 million, he noted.

Meanwhile, two-storey terraced houses within the hotspots are priced at between RM500,000 and RM1 million, while those outside the hotspots cost between RM350,000 and RM500,000.

New two-storey terraced houses launched last year in Penampang were sold between RM440,000 and almost RM1 million.

Even single-storey terraced houses in Foh Sang and Luyang can fetch a price of RM500,000 easily, he said.

Meanwhile, luxury condominiums such as The Peak Vista, Puteri Damai, The Loft, Marina Court and Puncak Layang are popular due to their close proximity to the city.

Units at The Peak Vista, with sizes ranging from 1,282 sq ft to 2,448 sq ft, are asking between RM1.2 million and RM3 million.

New condo units launched last year in Sri Gaya and Damai areas were sold at between RM1.9 million and RM2.9 million, and RM900,000 and RM1.5 million respectively, Tan noted.

According to Metro Homes Sdn Bhd senior group managaer Richard Tokuzip, property prices in the city have increased 20% to 30% over the last two to three years from RM300 per sq foot (psf) to RM798 psf.

The rising prices of homes have prompted developers to launch more affordable housing, said Smiths Gore Sabah property consultant Sunny Kelvin in his talk on “Sabah Property Market in 2015 and Beyond” during Maspex Sabah.

MIEA secretary Soo Yuen Mee said though there is demand for landed properties in Kota Kinabalu, many are looking at properties priced from RM300,000 to RM400,000.

They would eventually choose to either stay further away from the city or rent because prices in the city are too high, she added.

Similarly, K K Soo & Co negotiator Aaron Vun said many potential homebuyers are looking at properties of below RM600,000 and have opted for areas such as Penampang and Meggatal, about 30 to 40 minutes away from the city as properties in hotspots such as Luyang are more expensive.

Vun also noted the growing number of expatriates, who are looking at renting properties close to the city.

Kelvin noted that the volume and value of transactions are expected to decline to 8,926 and RM4.36 billion for 2014, from 9,116 and RM4.71 billion in 2013 respectively.

This is due to stagnation of the property market caused by no major developments and launches, stricter lending rules, the higher cost of living, steeper real property gain tax, uncertainty over the goods and services tax and the depreciation of the ringgit.

“Nonetheless, the depreciating ringgit is a double-edged sword, and while locals are looking at investing in properties abroad, an increasing number of foreigners and expatriates are considering buying a second home in Sabah,” Kelvin said.

They were all speaking at Maspex, where one-stop property portal theedgeproperty.com was the digital co-sponsor and an exhibitor.