This article first appeared in City & Country, The Edge Malaysia Weekly on January 10, 2022 - January 16, 2022

The real estate market has been through turbulent times of late, with much uncertainty in the domestic and international markets. Sabah’s property market, however, seems to be holding steady.

According to Rahim & Co International Sdn Bhd regional manager (Sabah) Max Sylver Sintia, the state’s residential property market “has shown some upward strength, although it is still weaker than before the pandemic”. Real estate activity continued to improve in 3Q2021, he adds.

In presenting The Edge Kota Kinabalu Housing Property Monitor 3Q2021, Max highlights that the number of residential properties transacted in Sabah during the period in review stood at 1,218. These transactions were valued at RM474.16 million, up 8.44% from a year earlier.

Meanwhile, the total transaction volume for the state’s residential property market in the first nine months of the year came in at 3,444, with a total value of RM1.099 billion, an increase of 25.59% year on year (y-o-y).

The other real estate sub-sectors in the state saw a mixed performance. The commercial property market did well during the quarter in review, with transaction volume and value growing 41.91% and 4.28% respectively, while the industrial segment saw transaction volume and value decline 16.48% and 16.01% respectively.

“The total number of residential properties transacted in Kota Kinabalu, including Penampang and Putatan, up to 3Q2021 was 1,910 — or 55.46% of the number of residential properties transacted in Sabah. These transactions were valued at RM942.54 million, or 68.29% of the total value of residential property transactions in the state,” says Max.

With tight budgets and employment woes on the horizon, potential buyers have taken a “wait-and-see” approach when shopping for bargains, as their mindset has changed to one of longer-term sustainability, he notes. Moreover, the investment appetite of international buyers was dampened due to the temporary travel restrictions.

“There was some positivity in market sentiment in 2H2021. With the recent acceleration in the vaccination drive, the likelihood of borders reopening and international trade as well as travel resuming, consumer confidence and sentiment saw an uplift in general, which is key to economic growth. But even so, the affordability factor will continue to be a top priority in the minds of homebuyers,” says Max.

He adds that there were no notable residential developments launched in 3Q2021 while the strict Covid-19 movement restrictions delayed construction work and project delivery. Furthermore, there were delays in the completion of real estate transactions.

Meanwhile, the construction of SK Nexilis’ copper foil factory in the Kota Kinabalu Industrial Park (KKIP) started in 3Q2021. The investment by the South Korea-based company was reportedly worth RM4.2 billion, and its operation is expected to start in 2023.

According to Max, the sampled 2-storey terraced houses recorded a drop of about 0.2 percentage point during the quarter in review, from an average price growth of 2.11% y-o-y in 3Q2020 to 1.92% in 3Q2021.

The highest y-o-y price growth was recorded in Ujana Kingfisher, with an increase of 3.42% to RM605,000. This was followed by Golden Hill Garden (2.4% to RM855,000), Taman Jindo (2.27% to RM675,000), Taman Indah Permai (2.2% to RM465,000), Millenium Height (1.63% to RM625,000) and Taman Sri Borneo (1.53% to RM665,000). No price growth was recorded in Luyang Perdana.

Meanwhile, in terms of q-o-q, there was marginal price growth for houses in Ujana Kingfisher (0.83%), followed by those in Millenium Height (0.81%), Taman Sri Borneo (0.76%), Taman Jindo (0.75%) and Golden Hill Garden (0.59%). There was no price growth for homes in Taman Indah Permai and Luyang Perdana.

Rents remained unchanged while average gross yields for the 2-storey houses sampled fell 0.07 percentage point to 3.64% from 3Q2020. The highest yield was registered in Taman Indah Permai (3.87%), followed by Millenium Height (3.84%), Taman Jindo (3.73%), Golden Hill Garden (3.65%), Ujana Kingfisher and Luyang Perdana (both 3.47%) and Taman Sri Borneo (3.43%).

As for 1-storey terraced houses, Max says the average y-o-y price growth during the quarter in review was 3.57%, down from 4.5% in 3Q2020 — a drop of 0.92 percentage point. The highest y-o-y price growth was achieved by homes in Taman Tuan Huat, with an increase of 4.79% to RM465,000, followed by those in Taman Nelly Phase 9 (4.17% to RM480,000) and Taman Sri Kepayan (2.06% to RM495,000). The q-o-q results show houses in Taman Tuan Huat registering a growth of 1.09%, followed by those in Taman Sri Kepayan (1.02%) and Taman Nelly Phase 9 (1.01%).

Rents for 1-storey terraced houses were also unchanged, while the average gross yield achieved was 3.98%, down 0.14 percentage point from last year.  The highest yield was registered at Taman Sri Kepayan with 4.24%, followed by Taman Tuan Huat (3.87%) and Taman Nelly Phase 9 (3.84%).

The prices of condominium units held steady in 3Q2021, with no price changes recorded at all of the sampled units except in Alam Damai, which registered a y-o-y growth of 0.9% to RM575 psf. The sampled units in Alam Damai also registered a q-o-q price increase of 0.9%, while the others were unchanged.

“The average price of our condominium samples has been on a declining trend for the past three quarters. During the quarter in review, no sample registered a price decline. The average price was at RM524 psf, which translated into a y-o-y price growth of 0.11%,” says Max.

He adds that the average price was RM650 psf at Radiant Tower and The Peak Condominium, RM600 psf at Marina Court, RM580 psf at Jesselton Condo, RM535 psf at Bayshore Condominium, RM390 psf at Likas Square and RM370 psf at 1 Borneo Condominium.

Monthly rents for the high-rise units declined 3.57% y-o-y on average, according to Max. He highlights that rents at Jesselton Condo, 1 Borneo Condominium and The Peak Condominium dropped 9.38% y-o-y to RM1.93 psf, 5.88% to RM1.62 psf and 13.33% to RM2 psf respectively.

Other condos that saw rents hold steady were Marina Court (RM2 psf), Radiant Tower (RM1.77 psf), Alam Damai (RM1.64 psf), Bayshore Condominium (RM1.61 psf) and Likas Square (RM1.48 psf).

Condominium units registered an average gross yield of 4.11% — down 0.15 percentage point from 3Q2020. The highest yield was recorded at 1 Borneo Condominium at 5.24%, followed by Likas Square (4.56%), Radiant Tower (4.33%), Jesselton Condo and Marina Court (both 4%), The Peak Condominium (3.69%), Bayshore Condominium (3.61%) and Alam Damai (3.42%).