Positive growth in the Kota Kinabalu market

This article first appeared in City & Country, The Edge Malaysia Weekly, on December 23, 2019 - December 29, 2019.

The residential property market in Kota Kinabalu has shown further momentum in 3Q2019, with positive price growth in the secondary market

Max: We anticipate a cautious outlook due to the mismatch in product offerings and affordability

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Considering the soft market conditions, the Kota Kinabalu secondary property market is performing well, registering positive growth for 3Q2019, says Rahim & Co branch manager (Kota Kinabalu) Max

Sylver Sintia, in presenting 3Q2019 Kota Kinabalu Housing Property Monitor.

“Despite the challenging conditions in the soft market, the residential property market in Kota Kinabalu has shown further momentum in 3Q2019, with positive price growth in the secondary market, albeit at a slower pace than in the previous years,” he says.

Based on the data in the monitor, he says, on average, prices grew 9.05% year on year from 3.64% previously, while condominium values increased 5.1% from 1.2%, although Jesselton Condominium recorded no price growth.

“With the incoming supply of stratified residential properties in the primary market, the slower pace of condominium price growth indicates the continuation of price adjustments in the market,” says Max.

That being said, he believes the National Home Ownership Campaign (HOC) 2019, will help boost the market. “The HOC, which has been extended until Dec 31 this year, is expected to provide further traction to the residential property market, especially those products priced below RM500,000.”

In addition, recently completed infrastructure projects will also have a positive impact on values.

“The completion and opening of the two elevated road intersections of the Jalan Penampang Bypass and Lido have eased traffic congestion and are expected to spur the residential property market in that area. Being in a mature residential area, the

2-storey intermediate terraced houses range from RM550,000 to RM800,000,” he says.

Moreover, property values on the fringes of Kota Kinabalu’s city centre are likely to appreciate in the future, hence, now is a good time to check out properties there.

“Older apartment units, currently priced below RM300,000, outside the city centre, such as within Telipok, Menggatal, in Jalan Tuaran, Putatan and Lok Kawi, are worth checking out. Three to five years ago, some of these units were priced below RM150,000, or even below RM100,000. These units have appreciated in value and will be more expensive in the future,” says Max.

When it comes to rental properties, he says properties close to public transport are doing well. “Mature medium-cost apartments in areas that are well served with public transport, such as Beverly Hills Apartments in Jalan Bundusan, are fetching good rents with gross yields of 4% to 7%.”

Residential property sales in Sabah have been good. Based on data from the National Property Information Centre (Napic), Max highlights that the volume of residential property transactions in Sabah in the last quarter increased 6.8% to 1,366 compared with 1,279 the previous year.

“Cumulatively, the number of residential property transactions as at 3Q2019 stood at 4,047 — up 9.35% from 3Q2018,” he says. “The value of transactions of residential properties in 3Q2019 was RM508.85 million, 14.98% higher than in 3Q2018 ... The total value of transactions of residential properties as at 3Q2019 was RM1.445 billion — up 7.18% from 3Q2018.”

When looking at the property price bands that were transacted, Max observes, “Some 83.38% or 1,139 residential properties transacted in Sabah in 3Q2019 were properties priced below RM300,000, which indicates that affordable homes remain at the forefront of demand. Some 12.08%, or 165 units, were in the RM500,000 to RM1 million price bracket and 4.54%, or 62 units, were above RM1 million.”

Going forward, Max believes caution is still required when deciding on making that big-ticket purchase. “Despite the increase in figures, both in the volume and value of transactions, we anticipate a cautious outlook due to the mismatch in product offerings and affordability.”

 

2-storey landed properties

The average 3Q2019 y-o-y price growth of 2-storey terraced houses surveyed was 5.85%, a 0.34% drop from 3Q2018. Average quarter-on-quarter results saw 1.23% growth, a drop of 0.27% from 1.5% in 2Q2019.

In the individual areas, the highest y-o-y price growth was seen at Taman Jindo, at 8.33% to RM650,000. This was followed homes in Luyang Perdana (7.25% to RM740,000), Taman Sri Borneo (6.67% to RM640,000), Millenium Height (5.26% to RM600,000), Golden Hill Garden (5.19% to RM810,000), Taman Indah Permai (4.6% to RM455,000) and Ujana Kingfisher (3.64% to RM570,000).

Q-o-q, Taman Sri Borneo led the pack with 1.59% growth, followed Taman Jindo (1.56%), Luyang Perdana (1.37%) Golden Hill Garden (1.25%), Taman Indah Permai (1.11%), Ujana Kingfisher (0.88%) and Millenium Height (0.84%).

 

1-storey landed properties

The average 3Q2019 growth figures for 1-storey houses was 8.04%, an increase of 1.13% compared with a year ago. Q-o-q data reveals an average increase of 2.28%.

Narrowing down to the individual areas, values of Taman Tuan Huat homes increased 9.09% to RM420,000 y-o-y, followed Taman Sri Kepayan (8.05% to RM470,000) and Taman Nelly Phase 9 (6.98% to RM460,000).

Comparing the q-o-q results, Taman Tuan Huat leads with 2.44% growth, followed Taman Nelly Phase 9 (2.22%) and Taman Sri Kepayan (2.17%).

 

Condominiums

The average prices of condos in the monitor increased 2.83% to RM541 psf compared with a year ago. Q-o-q, the average increase was 0.59%, down a marginal 0.02% from the previous quarter.

The highest y-o-y price growth was seen at Likas Square — 5.1% to RM410 psf. This was followed Bayshore Condominium (5% to RM525 psf), The Peak Condominium (3.9% to RM670 psf), Radiant Tower (3.2% to RM490,000), Alam Damai (2.6% to RM590,000), Marina Court (1.6% to RM620 psf), and 1Borneo Condominium (1.2% to RM410 psf). There was no growth for Jesselton Condominium.

Q-o-q, the best performing property was The Peak, up 1.5%, followed Likas Square (1.2%), Radiant Tower (1%) and Bayshore Condominium (1%). There was no movement for the others.

 

Rents and yields

For 2-storey terraced houses, rents grew an average 2.99% in 3Q2019. Taman Jingo registered the highest rental growth of 5% to RM2,100 per month, followed Taman Indah Permai (3.45% to RM1,500), Ujana Kingfisher (2.94% to RM1,750), Taman Sri Borneo (2.7% to RM1,900), Millenium Height (2.56% to RM2,000), Luyang Perdana (2.33% to RM2,200) and Golden Hill Garden (1.96% to RM2,600).

“The average gross yield for 2-storey terraced houses during the quarter under review was 3.79%, down 0.1% compared with 3Q2018,” says Max. “The highest gross yield was seen at Millenium Height at 4%, followed Taman Indah Permai (3.96%), Taman Jindo (3.88%), Golden Hill Garden (3.85%), Ujana Kingfisher (3.68%), Luyang Perdana (3.57%) and Taman Sri Borneo (3.56%).

Rents for 1-storey terraced houses grew an average 3.2% in 3Q2019, slowing 0.11% compared with a year ago. Taman Tuan Huat registered the highest rental growth at 3.45% to RM1,500 per month, followed Taman Nelly Phase 9 (3.23% to RM1,600) and Taman Sri Kepayan (2.94% to RM1,750).

“The average gross yield for 1-storey terraced houses was 4.31%, down 0.2% compared with 3Q2018. The highest gross yield was seen at Taman Sri Kepayan at 4.47%, followed Taman Tuan Huat (4.29%) and Taman Nelly Phase 9 (4.17%),” says Max.

For the condo segment of the monitor, there was no rental growth and some condos showed a drop in rates from the year before. Radiant Tower dropped 6.12% to RM1.77 psf per month, Alam Damai fell 5.88% to RM2.18 psf,

1 Borneo Condominium declined 5% to RM1.92 psf, Marina Court lost 2.86% to RM2.62 psf and The Peak Condominium 1.41% dropped to RM2.69 psf.

“The average gross yield for our condominium samples in 3Q2019 was 4.72%, down 0.27% from the average gross yield of 4.98% recorded in 3Q2018,” says Max. “The highest gross yield in 3Q2019 was registered 1 Borneo Condominium, at 5.62%. This was followed Marina Court (5.06%), Likas Square (4.99%), The Peak Condominium (4.82%), Jesselton Condominium (4.79%), Alam Damai (4.44%), Radiant Tower (4.33%) and Bayshore Condominium (3.68%).”