This article first appeared in City & Country, The Edge Malaysia Weekly on October 4, 2021 - October 10, 2021

Sabah’s residential property market has shown some upward strength although it is still weaker than before the pandemic. “Despite the significant drop in residential property sales in 2020, real estate activity began to improve in 1H2021, albeit far from where it was prior to the pandemic,” says Rahim & Co regional manager (Sabah) Max Sylver Sintia, in presenting the Kota Kinabalu Housing Property Monitor 2Q2021.

“Transaction volume for the residential subsector in Sabah in 2Q2021 stood at 1,198, up by 9.91% compared with the number of residential transactions in 2Q2020. The value of transactions increased by 32.08% to RM501.73 million in 2Q2021 against 2Q2020. Compared with 2Q2019, however, the volume and value of transactions fell by 24.7% and 2.94% respectively.”

The bulk of the transactions were in Kota Kinabalu, Penampang and Putatan, with a total of 673 units or 56.18%, valued at RM352.28 million. About 49.33% (591 units) were priced RM300,000 and below, followed by 31.05% (372 units) in the RM300,001 to RM500,000 tier; 15.03% (180 units) in the RM500,001 to RM1 million range; and 4.59% (55 units) in the above RM1 million bracket.

According to Max, good deals and low interest rates are some of the primary reasons for the sales of residential property in Kota Kinabalu. 

“The residential market will remain strong as long as the price is reasonable. Kota Kinabalu’s population is still expanding, especially with the influx of young people from other districts getting or seeking jobs in the city.”

He highlights that properties within traditional hotspots remain popular even during economic downturns. “The prices of our samples for landed residential properties remain resilient with minimal year-on-year growth during the quarter under review despite having a lower growth percentage as compared to the years prior to the pandemic.”

The issue of land scarcity limiting new development has also played a part in keeping prices stable. “Demand for landed residential properties within the Kota Kinabalu district, such as in the Luyang, Damai, Penampang, Kepayan, Kolombong and Putatan areas,  will remain intact as there is limited suitable land left for development, especially landed properties. The existing house prices will hold up firmly due to the good location and buyers will never go wrong buying in these areas.”

Meanwhile, notable transactions in the quarter under review comprised two acquisitions and a project that opened for sale.

In April, a 10.49-acre tract along Jalan Bantayan-Minintod was acquired by Visaland Sdn Bhd for RM12.1 million. In the same month, a 0.5-acre parcel fronting Jalan Penampang and close to Queen Elizabeth Hospital was sold to Incoprime Sdn Bhd for RM4.1 million. 

“In the quarter under review, the new residential development of Taman Jelita in Tambalang, Tuaran — developed by Shelltown Development Sdn Bhd — started selling,” says Max. 

Taman Jelita has 68 one-storey terraced houses. The land area for the intermediate units ranges from 1,460 to 2,214 sq ft, and for corner units, from 2,304 to 3,574 sq ft. The selling price is between RM304,000 and RM476,000. The development, located 5.6km northwest of Tuaran city centre, has a take-up rate of 60% after three months, says Max.

He has observed a cautious mindset among property stakeholders during this challenging period. 

“As buyers, financiers and developers are all in a cautious mode, we foresee the property market remaining soft. Market confidence is expected to return gradually but it will take time for our market to re-engage with the recovery path seen in 2019.” 

The 2-storey landed properties in the monitor recorded an average growth of 1.47% y-o-y for the quarter under review. This is a drop of 1.81 percentage points (ppt) from 3.28% a year ago. While this may appear to be a negative, Max points out that 1Q2021, which recorded an average growth of 1.78%, actually saw a 2.28ppt drop from the year before. 

“Therefore, even though 2Q2021 recorded a drop in y-o-y price growth, the percentage point drop was slightly better compared to 1Q2021.”

The properties in the monitor all showed growth except for Luyang Perdana, which remained unchanged. “The highest y-o-y price growth was recorded at Ujana Kingfisher, with an increase of 2.56% to RM600,000,” says Max.

This was followed by Golden Hill Garden (2.41% to RM850,000), Taman Indah Permai (2.2% to RM465,000), Taman Jindo (1.52% to RM670,000), Millenium Height (0.81% to RM620,000) and Taman Sri Borneo (0.76% to RM660,000).

“Quarter on quarter, there was marginal growth for houses in Ujana Kingfisher, up 0.84%, followed by Millenium Height (0.81%), Taman Jindo (0.75%) and Golden Hill Garden (0.59%), while the other developments showed no price growth,” says Max.

For this property type, rental rates remained unchanged for both the quarter and in 2Q2020. 

Meanwhile, average gross yield fell 0.05ppt y-o-y to 3.66%. The highest yield was registered at Millenium Height and Taman Indah Permai (both 3.87%), Taman Jindo (3.76%), Golden Hill Garden (3.67%), Ujana Kingfisher (3.5%), Luyang Perdana (3.47%) and Taman Sri Borneo (3.45%).

For 1-storey terraced houses in the monitor, the average price growth for the quarter under review fell 3.57ppt to 2.9% from 6.47% a year ago. Y-o-y performance for 1Q2021 had dipped 4.45ppt from 2.93%. As such, 2Q recorded a slight improvement in performance over 1Q. 

All three individual areas under the monitor showed positive price growth. “The highest y-o-y price growth was at Taman Tuan Huat, with an increase of 4.55% to RM460,000, followed by Taman Nelly Ph 9 with 3.13% to RM495,000 and Taman Sri Kepayan with 1.03% to RM490,000.

“Q-o-q results show Taman Tuan Huat registering 1.1% growth, followed by Taman Sri Kepayan with 1.03% and Taman Nelly Ph 9 with 1.02%,” Max says.

Rental rates remained unchanged for both the quarter and year. 

As for yields, he notes: “The average gross yield achieved for 1-storey terraced houses was 4.03%, down 0.11ppt from 4.14% in 2Q2020. The highest yield was registered at Taman Sri Kepayan with 4.29%, followed by Taman Tuan Huat (3.91%) and Taman Nelly Ph 9 (3.88%).”

The downward trend continued with condominiums in the monitor although prices at some condos held steady. “Prices for Bayshore Condominium and Radiant Tower remained unchanged while the rest declined,” says Max.

On average, condo prices declined 4.12% to RM523 psf, from RM544 psf a year ago. In 2Q2020, the y-o-y price growth was 1.34%. As such, there was a 5.46ppt y-o-y drop in prices in the quarter under review. Compared with the y-o-y price growth in 1Q2021, the percentage point drop in 2Q2021 was slightly better, by 0.24ppt, he says. 

For the individual condos, the biggest decline in 2Q2021 was at 1 Borneo Condominium, which dipped 9.8% to RM370 psf. This was followed by Likas Square (-7.1% to RM390 psf), Jesselton Condo (-4.9% to RM580 psf), Marina Court (-4.8% to RM600 psf), Alam Damai (-3.4% to RM570 psf) and The Peak Condominium (-3% to RM650 psf). 

According to Max, in terms of q-o-q performance, 1 Borneo Condominium registered a 2.9% price drop while the others remained unchanged.

Meanwhile, condo rental rates declined 12.55% y-o-y on average. Only Bayshore Condominium and Radiant Tower rents were unchanged.

The biggest decline in rental rate was recorded at The Peak Condominium, where rents fell 25.71% to RM2 psf/month. This was followed by Alam Damai (-25% to RM1.64 psf/month), Marina Court (-16.13% to RM2 psf/month), Likas Square (-13.04% to RM1.48 psf/month), 1 Borneo Condominium (-11.11% to RM1.62 psf/month) and Jesselton Condo (-9.38% to RM1.93 psf/month).

Condos registered an average gross yield of 4.11%, down 0.41ppt from 4.52% a year ago, but slightly better than the 4.09% in 1Q2021.

The highest yield was recorded at 1 Borneo Condominium with 5.24%, followed by Likas Square (4.56%), Radiant Tower (4.33%), Jesselton Condo (4%), Marina Court (4%), The Peak Condominium (3.69%), Bayshore Condominium (3.61%) and Alam Damai (3.44%).

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