This article first appeared in City & Country, The Edge Malaysia Weekly on July 31, 2023 - August 6, 2023

The Sabah property market saw a dip year on year (y-o-y) in its first-quarter results for 2023. However, there is nothing to worry about, says Rahim & Co regional manager (Sabah) Max Sylver Sintia in presenting The Edge Malaysia | Rahim & Co Kota Kinabalu Housing Property Monitor 1Q2023.

“The volume and value of residential property transactions in Sabah declined by 15.26% and 15.76% respectively in 1Q2023 compared with 1Q2022, with 1,227 transactions recorded worth RM482.58 million for the quarter under review.

“The decline in the Sabah residential property market in 1Q2023 is a momentary slowdown, as witnessed by the decrease of 5.7% in the overall Malaysia property market activity in 1Q2023 compared with 1Q2022.

“A reduced number of new launches, the seasonal factor in house purchases, which is usually low at the beginning of the year, overnight policy rate (OPR) hikes from last year and inflation worries, both of which affected buyer sentiment, were among the factors that contributed to the decline in residential market activity,” says Max.

The house price bracket that saw the most transactions in the first quarter was the below-RM300,000 homes with 604 transactions worth RM118.626 million, or 49.23% of the total volume and 24.58% of the total value of transactions.

The next highest were those in the price brackets of RM300,001 to RM500,000 with 366 transactions (29.83%) worth RM145.050 million (30.06%); RM500,001 to RM1 million with 200 transactions (16.3%) worth RM136.618 million (28.31%); and above-RM1 million with 57 transactions (4.65%) worth RM82.289 million (17.05%).

The property type that was most transacted was landed properties.

“One-, 2- and 3-storey terraced houses were the most transacted properties in Sabah during the quarter under review, with 439 transactions worth RM162.748 million.

“This was followed by condominiums and apartments with 343 transactions worth RM115.913 million. Next were 1-, 2- and 3-storey semi-detached houses with 146 tran-sactions worth RM96.607 million.”

The bulk of the residential transactions in Sabah — with 620 (50.53%) worth RM290.71 million (60.24%) — were seen in the Kota Kinabalu, Penampang and Putatan conurbation.

“Compared with 1Q2022, the number and value of residential property transactions in [the] Kota Kinabalu, Penampang and Putatan [conurbation] decreased by 19.79% and 23.44% respectively.

“We generally use transaction activities as indicators only. The total number of residential property transactions in Sabah during the quarter under review increased by 12.57% and 2.42% compared with the same quarter in 2020 and 2021 respectively — thus indicating that the demand is still going strong,” Max explains.

The property type that was most transacted in the Kota Kinabalu, Penampang and Putatan conurbation was condominiums and apartments with 263 transactions worth RM97.719 million, he reveals. This was followed by 1-, 2- and 3-storey terraced houses with 181 transactions worth RM81.543 million.

“The high number of new condominiums and apartments, as opposed to landed properties, in [the] Kota Kinabalu, Penampang and Putatan [cornubation] contributed to the higher number of transactions for condominiums and apartments. Buyers’ demographics were mixed; some purchased for investment and some for their own occupation,” says Max.

There were several notable transactions in the quarter under review. “Notable property transactions recorded in 1Q2023 included the purchase of four parcels of adjoining development land near Signal Hill, Kota Kinabalu, measuring 10.29 acres, by Brilliant Armada Sdn Bhd for RM44.8 million. In the meantime, Tampoi Enterprise Sdn Bhd has purchased a warehouse building in Kolombong with a land size of about two acres for RM20.25 million,” he says.

The outlook for the Sabah property market remains positive albeit with some caveats.

“Sabah’s property market is anticipated to remain cautiously optimistic in 2023. The gradual increase in the OPR since May 2022 is expected to have an impact on property market activity, particularly on the demand for residential property. The outlook of the labour force in the construction industry as well as the increase in prices of construction materials will not only affect the property supply but also the developer’s pricing strategy,” says Max.

The 2-storey terraced houses in the monitor recorded an average y-o-y price growth of 2.38% in 1Q2023, compared with the same period last year (1.92%), an increase of 0.46 percentage points, Max reveals.

“The highest y-o-y price growth was recorded at Luyang Perdana with an increase of 3.29% to RM785,000. This was followed by Ujana Kingfisher (3.25% to RM635,000), Taman Sri Borneo (2.96% to RM695,000), Golden Hill Garden (2.31% to RM885.000), Taman Jindo (2.19% to RM700,000), Millenium Height (1.59% to RM640,000) and Taman Indah Permai (1.08% to RM470,000).

“Quarter on quarter (q-o-q), there was slight price growth for houses in Taman Indah Permai, which increased by 1.08%, followed by Ujana Kingfisher and Millenium Height (both 0.79%), Taman Sri Borneo (0.72%), Luyang Perdana (0.64%) and Golden Hill Garden (0.57%). No q-o-q growth was registered in Taman Jindo,” he says.

The average rental growth recorded by the samples was 3.74%. Rents in Ujana Kingfisher improved by 8.57% y-o-y to RM1,900 per month. Taman Sri Borneo 

recorded rental growth of 5.26% y-o-y to RM2,000 per month; Taman Indah Permai (3.33% to RM1,550 per month); Millenium Height (2.5% to RM2,050 per month); Taman Jindo (2.38% to RM2,150 per month); Luyang Perdana (2.17% to RM2,350 per month); and Golden Hill Garden (1.92% to RM2,650 per month).

Q-o-q, Ujana Kingfisher rec-orded 5.56% growth, followed by Taman Indah Permai (3.33%), Taman Sri Borneo (2.56%), Millenium Height (2.5%) and Luyang Perdana (2.17%). No q-o-q growth was recorded by the other 2-storey terraced house samples.

“For 2-storey terraced houses, the average gross yield for the quarter under review was 3.67%. Comparing the gross yield in 1Q2023 with 1Q2022, there was a slight increase of 0.05 percentage point,” says Max.

The highest gross yield was registered at Taman Indah Permai (3.96%). This was followed by Millenium Height (3.84%) and Taman Jindo (3.69%). Ujana Kingfisher, Luyang Perdana and Golden Hill Garden all recorded a gross yield of 3.59% while Taman Sri Borneo registered 3.45%, according to Max’s data.

“For the 1-storey terraced houses, the y-o-y price growth for the quarter in review was 4.03%, down from 4.2% in 1Q2022, a decrease of 0.17 percentage point.

“The highest y-o-y price growth was recorded in Taman Tuan Huat, with an increase of 4.21% to RM495,000, followed by Taman Sri Kepayan (3.96% to RM525,000) and Taman Nelly Phase 9 (3.92% to RM530,000),” says Max.

Q-o-q results show that Taman Tuan Huat registered 1.02% price growth, followed by Taman Sri Kepayan (0.96%) and Taman Nelly Phase 9 (0.95%).

Rents for 1-storey terraced houses in Taman Tun Huat improved by 6.67% y-o-y to RM1,600 per month. In Taman Nelly Phase 9, rents improved by 3.13% y-o-y to RM1,650 per month. No rental growth was recorded in Taman Sri Kepayan, according to Max.

Q-o-q rents saw Taman Tuan Huat improve by 3.23% while the rest of the samples did not register any growth.

“Average gross yield achieved for 1-storey terraced houses was 3.87%, down by 0.08 percentage point compared with 1Q2022. The highest yield was registered at Taman Sri Kepayan with 4%, followed by Taman Tuan Huat (3.88%) and Taman Nelly Phase 9 (3.74%),” he says.

“The condominiums in the monitor recorded an average of 1.5% price growth y-o-y in 1Q2023 which translates into an increase of 0.46 percentage point compared with the average y-o-y growth registered in 1Q2022,” says Max.

Alam Damai condominium registered the highest price growth y-o-y (3.4% to RM600 psf), followed by Bayshore Condominium (2.8% to RM550 psf), Jesselton Condo (1.7% to RM600 psf), The Peak Condominium (1.5% to RM660 psf), 1 Borneo Condominium (1.3% to RM385 psf) and Likas Square (1.2% to RM410 psf). The prices for Marina Court and Radiant Tower stood at RM600 and RM495 psf respectively, Max reveals.

Overall, the price for condominium samples averaged RM538 psf in 1Q2023.

As for q-o-q price growth, Likas Square registered a price growth of 1.2%, followed by Alam Damai with 0.8% growth. No q-o-q price growth was recorded by the rest of the samples.

The rental rates at Alam Damai improved by 2.5% y-o-y to RM1.86 psf per month. Those at other condos held steadily with Jesselton Condo at RM2 psf/month, Marina Court (RM2 psf/month), Bayshore Condominium (RM1.61 psf/month), 1 Borneo Condominium (RM1.62 psf/month), Likas Square (RM1.48 psf/month), Radiant Tower (RM1.77 psf/month) and The Peak Condominium (RM2 psf/month). Q-o-q, Alam Damai recorded a 0.03% increase in rental while no growth was recorded in other condominiums.

“Condo yields, on the other hand, registered an average gross yield of 4.07%, a slight decrease of 0.05 percentage point compared with the average yield recorded in 1Q2022.

“The highest gross yield for our condominium sampling was recorded at 1 Borneo Condominium with 5.04%, followed by Likas Square (4.34%), Radiant Tower (4.29%), Jesselton Condo and Marina Court (both 4%), Alam Damai (3.73%), The Peak Condominium (3.64%) and Bayshore Condominium (3.52%),” Max concludes.

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