Kota Kinabalu Housing Property Monitor: Volume and value of transactions increase

This article first appeared in City & Country, The Edge Malaysia Weekly, on March 16, 2020 - March 22, 2020.

The Kota Kinabalu high-rise condo market is said to have matured over the past five to seven years

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The Kota Kinabalu residential property market has bucked the trend of slowing or stagnant growth by ending the last quarter of 2019 on a high, recording increases in volume and value of transactions.

“The year-on-year price growth seen by the landed properties we sampled was between 3.41% and 10.26% while that of the condominiums we sampled was from 0.8% to 5.1%, with no price growth recorded by Jesselton Condominium and 1 Borneo Condominium,” says Rahim & Co branch manager (Kota Kinabalu) Max Sylver Sintia in presenting the 4Q2019 Kota Kinabalu Housing Property Monitor.

He reveals that Sabah will establish a new body to implement the state’s property development plans.

“The approval of the Sabah Town and Country Planning (Amendment) Enactment 2019 means that the Town and Country Planning Central Board will be replaced with a new entity — the State Planning Council (SPC). It is anticipated that the SPC, which will formulate high-level policy for the state’s physical development planning, will improve the efficacy of the development plan (DP) approval process,” says Max.

“One of the main objectives of the abolishment of the Central Board is to expedite the property development project process. The DP approval will allow developers to plan and manage cash flow and resources as well as materials allocation more effectively and efficiently.”

According to Max, there were not many new launches during the quarter under review as a number of developers focused on clearing their stock.

Meanwhile, the rental market saw no significant increase across product types. “However, mature medium-cost apartments in areas that are well served by public transport, such as Beverly Hills Apartment in Jalan Bundusan, are able to fetch good rental with gross yields of 4% to as high as 7%,” he says.

While most locals prefer landed properties, this is slowly changing, Max points out. He has seen the high-rise condo market maturing over the past five to seven years.

“Some of the older developments have enjoyed good capital appreciation over the years. For example, units in Lido Four Seasons Residence, which is in Jalan Lintas, were sold at RM320 psf on the primary market in 2013. In 2019, some of the units were sold on the secondary market for as high as RM500 to RM550 psf. However, with the mushrooming of new condo units in the market, most of the older condos are experiencing slower price growth, as evidenced by our samples.”

Max observes that apartments and condos below RM400,000 per unit are “seen to be more attractive”. He believes that developers will likely continue with their rebate schemes while sellers on the secondary market will be giving discounts.

Even though the Home Ownership Campaign ended last December, he expects the government to continue encouraging homeownership, especially through the reduction of the foreign buyers’ threshold to RM600,000 from RM1 million and with the introduction of the rent-to-own financing scheme.

Projects to keep an eye on

Max sees the property development landscape for Kota Kinabalu remaining stable, with upcoming projects to benefit potential investors.

“Most of the upcoming projects within the Kota Kinabalu city centre involve smaller high-rise units, perhaps because the quantum selling price could be more affordable. Most of the new projects offer units with commercial titles, possibly to allow potential buyers to capitalise on the Airbnb business,” he says.

The upcoming projects include Sutera Bay by VTS Property Collection Sdn Bhd, 313 Suites by B International Holdings and Vetro 11 Designer Suites @ KK by Q Avenue Sdn Bhd.

Sutera Bay will have retail units and 283 serviced apartments. The 15-storey development is sited on the southwest axis of the Kota Kinabalu central business district and within the Sadong Jaya area. The serviced apartments will have built-ups of 407 sq ft or 686 sq ft, with the larger units having a dual-key design. Estimated selling prices range from RM1,082 to RM1,189 psf.

Located in Jalan Pintas, 313 Suites will offer 226 serviced apartments. There will be two types of units — standard units with built-ups of 360 to 564 sq ft and duplex units from 800 to 1,381 sq ft. The estimated selling prices start at RM880 psf.

Vetro 11 Designer Suites @ KK will have 260 serviced apartments. It is located in Jalan Penampang and is in the immediate vicinity of Queen Elizabeth Hospital Kota Kinabalu. The 18-storey project will have retail units on the ground floor, carpark from levels 1 to 6, serviced apartments from levels 7 to 16 and hotel rooms on the highest two floors that will be managed by a third party. The built-ups of the serviced apartments will range from 308 to 536 sq ft, with estimated selling prices starting from RM910 psf.

Max forecasts that the overall Kota Kinabalu property market in the first half of the year will most likely remain the same as 2019, although improved sentiment should give the market a slight boost.

“The affordable market is expected to remain active while the high-end market, especially those with units priced from RM1 million, might be seen as rather unattractive save for those who enjoy the benefits of location, size, pricing and branding,” he says.

Performance of terraced houses and condos

During the quarter under review, the average growth achieved by the 2-storey terraced houses sampled was 5.38%. The highest year-on-year growth was seen in houses in Luyang Perdana (up 7.14% to RM750,000), followed by Taman Jindo (6.56%), Millenium Height (6.09%), Taman Sri Borneo (5.74%), Golden Hill Garden (5.13%), Ujana Kingfisher (3.6%) and Taman Indah Permai (3.41%).

On a quarter-on-quarter basis, units at Millenium Height led with a 1.67% growth, followed by Luyang Perdana (1.35%), Golden Hill Garden (0.88%) and Taman Sri Borneo (0.78%). There was no q-o-q price movement for houses in Taman Indah Permai and Taman Jindo.

All rented properties recorded an average rental growth of 2.99% y-o-y. The three highest performers were Taman Jindo (5% to RM2,100 per month), Taman Indah Permai (3.45% to RM1,500 per month) and Ujana Kingfisher (2.94% to RM1,750 per month). On a q-o-q basis, no rental growth was seen for all areas covered.

For 1-storey terraced houses, the average price growth was 8.75% y-o-y. The highest increase was recorded by those in Taman Tuan Huat (10.26% to RM430,000), followed by Taman Nelly Ph 9 (8.05% to RM470,000) and Taman Sri Kepayan (7.95% to RM475,000). On a q-o-q basis, Taman Tuan Huat also saw the highest increase of 2.38%, followed by Taman Nelly Ph 9 (2.17%) and Taman Sri Kepayan (1.06%).

Rental growth was recorded in all three areas — houses in Taman Tuan Huat saw an increase of 3.45% to RM1,500 per month, followed by Taman Nelly Ph 9 (3.23% to RM1,600 per month) and Taman Sri Kepayan (2.94% to RM1,750 per month). No rental growth was recorded q-o-q.

Meanwhile, the average price growth of condos was 2.08% in the last quarter of 2019. The highest y-o-y growth was achieved by units in Likas Square (up 5.1% to RM415 psf), followed by Bayshore Condominium (3.9% to RM530 psf), The Peak Condominium (3.1% to RM670 psf), Radiant Tower (2.1% to RM490 psf), Alam Damai (1.7% to RM590 psf) and Marina Court (0.8% to RM625 psf). No price growth was recorded for units in Jesselton Condominium and 1 Borneo Condominium.

Only three condos saw price growth q-o-q, namely Likas Square (1.2%), Bayshore Condominium (1%) and Marina Court (0.8%).

Rents for all condos remained unchanged on a q-o-q and y-o-y basis.