Kota Kinabalu Housing Property Monitor (1Q2020): Affordable homes still in demand as market adjusts to new normal

This article first appeared in City & Country, The Edge Malaysia Weekly, on June 29, 2020 - July 05, 2020.

According to Napic’s preliminary figures, overall transactions and values of properties in Sabah fell in the first quarter of the year. (Photo by Mohd Shahrin Yahya/The Edge)

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While the Covid-19 pandemic has affected the property market in Kota Kinabalu, demand for affordable housing continues to grow, says Rahim & Co branch manager (Kota Kinabalu) Max Sylver Sintia in presenting the 1Q2020 Kota Kinabalu Housing Property Monitor.

“As the Covid-19 pandemic sweeps across the globe, the outlook for the Kota Kinabalu residential property market is ever more complex. What lies ahead for the property market therefore remains uncertain.

“Prevailing market conditions notwithstanding, demand for affordable houses within established and well-connected suburban areas such as Kepayan, Putatan, Kinarut, Penampang, Inanam and Menggatal will remain strong,” says Max.

According to the National Property Information Centre’s (Napic) preliminary figures, overall transactions and values of properties in Sabah fell in the first quarter of the year.

“The number of residential properties transacted in Sabah declined 31.49% from 1,591 transactions in 1Q2019 to 1,090 transactions in 1Q2020. The value of transactions stood at RM379.88 million, a drop of 26.51% year on year (y-o-y) against RM516.91 million registered in 1Q2019,” he says.

Owing to the pandemic, Max sees the property market taking some time before things settle down. 

“The pandemic added further pressure to the already-shaken consumer sentiment and market confidence amid the prevailing challenging economic environment. Although it is too early to tell how the Kota Kinabalu residential property market is affected by the current situation, the preliminary figures published by Napic indicate that the residential property market in Sabah has slowed down in 1Q2020,” he says.

He notes that, in the primary market, property developers are focusing on pushing existing projects while pulling back on new launches. He adds that house buyers are taking a wait-and-see stance because of changes in their spending habits, owing to the pandemic.

In the secondary market, data on properties in areas under this monitor shows that their performance y-o-y has shown growth. Landed properties grew from 2.25% to 8.75% while condos rose from 0.9% to 5%. Max highlights, however, that the pace of growth continues to decline compared with the growth recorded in previous years.

“The asking prices of some of the residential properties in the secondary market in Kota Kinabalu are expected to be 10% to 20% lower, which will be a good bargain for investors who have been waiting for the right opportunity and have available funds,” says Max.

2-storey terraced houses

“Our sampling of 2-storey terraced houses recorded an average growth of 4.06% y-o-y in 1Q2020 versus 5.93% y-o-y growth in 1Q2019. This indicates that the y-o-y growth pace recorded in 1Q2020 was slower by 1.87%,” he says.

Quarter-on-quarter results show a price growth of only 0.43%, down 1.27% from the 1.71% q-o-q growth in 1Q2019, he adds.

For individual y-o-y performance, Luyang Perdana houses recorded the highest price growth in 1Q2020 of 4.9% to RM750,000. This is followed by Taman Sri Borneo (4.84% to RM650,000), Taman Jindo (4.8% to RM655,000), Millenium Height (4.27% from RM610,000), Golden Hill Garden (3.77% from RM825,000), Ujana Kingfisher (3.57% to RM580,000) and Taman Indah Permai (2.25% to RM455,000).

As for q-o-q performance, there was moderate growth in some areas, while others remained unchanged. The highest q-o-q growth was recorded by Ujana Kingfisher with 0.87%, followed by Taman Sri Borneo (0.78%), Taman Jindo (0.77%) and Golden Hill Garden (0.61%). No q-o-q growth was recorded in Taman Indah Permai, Luyang Perdana and Millenium Height.

Average rental performance showed no growth y-o-y and q-o-q except for Taman Jindo, which saw rental increment of 5% y-o-y to RM2,100.

Meanwhile, the average gross yield was down 0.12% y-o-y to 3.74%, from 3.86%, and down 0.02% q-o-q to 3.73%, from 3.75%.

The highest gross yield was recorded by Taman Indah Permai at 3.96%. This is followed by Millenium Height (3.93%), Taman Jindo (3.85%), Golden Hill Garden (3.78%), Ujana Kingfisher (3.62%), Taman Sri Borneo (3.51%) and Luyang Perdana (3.52%).

 1-storey terraced houses

“Our sampling of 1-storey terraced houses recorded an average growth of 7.39% y-o-y in 1Q2020, 1.22% higher than 1Q2019’s y-o-y growth of 6.17%,” says Max.

The highest y-o-y price growth was recorded by Taman Tuan Huat, which was up 8.75% to RM435,000. This is followed by Taman Nelly Ph 9 (6.74% to RM475,000) and Taman Sri Kepayan (6.67% to RM480,000).

The average q-o-q growth is 1.09%, with the highest q-o-q growth recorded in Taman Tuan Huat with 1.16%, followed by Taman Nelly Ph 9 (1.06%) and Taman Sri Kepayan (1.05%).

No rental growth was recorded in both y-o-y and q-o-q. 

The average gross yield registered for 1-storey terraced houses during the quarter under review was 4.19%, down 0.31% y-o-y from 4.49%.

The q-o-q average gross yield fell 0.05% to 4.18%, from 4.23%. The highest gross yield for 1-storey terraced houses was recorded by Taman Sri Kepayan with 4.38%, followed by Taman Tuan Huat (4.14%) and Taman Nelly Ph 9 (4.04%).

Condominiums

“The average price for our condominium samples rose from RM534 psf in 1Q2019 to RM544 psf in 1Q2020, up about 1.97%,” says Max.

He adds, however, that the y-o-y price growth rate in 1Q2020 versus that of 1Q2019 has slowed by 0.91%. 

The highest y-o-y price growth for condominiums was recorded in Likas Square, with an increase of 5% to RM420 psf in 1Q2020. This is followed by Bayshore Condominium (3.9% to RM535 psf), The Peak Condominium (2.3% to RM670 psf), Radiant Tower (2.1% to RM490 psf), Marina Court (1.6% to RM630 psf) and Alam Damai (0.9% to RM590 psf). Jesselton Condominium and 1 Borneo Condominium recorded no y-o-y growth during the quarter under review.

Likas Square was the best performer q-o-q with a 1.2% increase, followed by Bayshore Condominium (0.9%) and Marina Court (0.8%). No q-o-q change was recorded in the rest of the condominium samples in 1Q2020.

In terms of rental performance, Max highlights that three of the samples registered a y-o-y decline in rental: At Jesselton Condominium, rental fell 12.33% to RM2.13 psf per month; Marina Court, 8.82% to RM2.38 psf per month; and 1Borneo Condominium, 5.26% to RM1.82 psf per month. The rest of the samples registered no change in rental rates.

Condos’ average gross yield in 1Q2020 was 4.52%, down 0.25% y-o-y from 4.77% and down 0.18% q-o-q from 4.7%.

The highest gross yield was registered by 1Borneo Condominium with 5.32%, followed by Likas Square (4.87%), The Peak Condominium (4.82%), Marina Court (4.54%), Alam Damai (4.44%), Radiant Tower (4.33%), Jesselton Condominium (4.20%) and Bayshore Condominium (3.61%).