This article first appeared in City & Country, The Edge Malaysia Weekly on April 29, 2024 - May 5, 2024

The Sabah residential property market looks to have returned to positive growth in the last quarter of 2023, although the total volume of transactions in the year saw a slight decrease from 2022. The good news is that even with the dip, the transaction value increased in 2023 from the previous year.

“The Sabah residential property market improved in 4Q2023, indicated by higher volume and value of transactions as compared to 4Q2022. The state registered 1,541 residential transactions worth RM636.15 million in 4Q2023, with a year-on-year (y-o-y) growth of 16.83% and 24.24% respectively,” says Rahim & Co regional manager (Sabah) Max Sylver Sintia in presenting The Edge Malaysia | Rahim & Co Kota Kinabalu Housing Property Monitor (4Q2023).

“Despite the positive growth recorded both in volume and value of transactions, residential property in Sabah recorded a slight decrease in the volume of transactions during the whole year of 2023 compared to 2022, with 5,689 transactions — down 1.78% from the total transactions of 5,792 in the previous year. The value of transactions increased 4.14% y-o-y, however, to RM2.372 billion in 2023,” he says.

Max highlights that the residential sector, the biggest segment in the Sabah property market, has returned to pre-2020 levels, thanks to consistent annual growth in 2021 and 2022.

“Boosted by returning buyers and interests, developers made headway with new launches, albeit on a smaller scale in order to respond to demand levels more efficiently. Overhang numbers improved slightly in 2023, as developers focused on selling ongoing projects before launching new ones,” he says.

In the quarter under review, Max says, the Kota Kinabalu, Penampang and Putatan conurbation made up the bulk of the volume of residential property transactions in Sabah, with 827 transactions (53.67% of the total number of residential property transactions in Sabah) worth RM423.39 million (66.56% of the total value of residential property transactions in Sabah). Compared with 4Q2022, the number and value increased 17.81% and 26.93% y-o-y.

“Overall, the Sabah property market trend in 2023 normalised with a relatively steady performance year on year, compared to the strong rebound observed in 2022. The market resumed the gradual improvement trend that began in 2019 and weathered the pandemic disruption,” he says.

“Market performance was mixed across different sectors, but the overall market did show stability that underlined the resilience of the Sabah property market.

“The recovery track notwithstanding, market sentiment remains on the side of caution. Concerns about political stability and economic challenges continue to linger. They include issues such as inflation-led high cost of living, high building material costs, affordability of homes, as well as disposable income levels of consumers. Despite these concerns, the economy still grew moderately, anchored by domestic demand — [maintaining] the property market momentum for the year.”

“The 2-storey terraced houses in the monitor recorded an ave­rage price growth of 2.6% y-o-y in 4Q2023, up 0.47 percentage points y-o-y. The highest y-o-y price growth was recorded in Taman Indah Permai, with an increase of 3.23% to RM480,000,” says Max.

The other houses performed well, with Ujana Kingfisher (3.17% to RM650,000), Millenium Height (3.15% to RM655,000), Taman Sri Borneo (2.9% to RM710,000), Taman Jindo (2.14% to RM715,000), Luyang Perdana (1.92% to RM795,000) and Golden Hill Garden (1.7% to RM895,000) on the uptick.

Quarter on quarter (q-o-q) performance showed marginal growth throughout, except for Golden Hill Garden, which held steady. Taman Indah Permai increased by 1.05%, followed by Ujana Kingfisher (0.78%), Millenium Height (0.77%), Taman Sri Borneo (0.71%), Taman Jindo (0.7%) and Luyang Perdana (0.63%).

As for rental rates, according to Max, the average y-o-y growth for 2-storey terraced houses is 4.34%, with all houses in the sample showing positive growth. Ujana Kingfisher improved by 8.33% to RM1,950 per month, followed by Taman Sri Borneo, which recorded rental growth of 5.13% to RM2,050 per month; Millenium Height (5% to RM2,100); Luyang Perdana (4.35% to RM2,400); Taman Indah Permai (3.33% to RM1,550); Taman Jindo (2.33% to RM2,200); and Golden Hill Garden (1.89% to RM2,700).

The average gross yield achieved for 2-storey terraced houses was 3.67%, up 0.06 percentage point from a year ago. The highest gross yield was registered at Taman Indah Permai (3.88%), followed by Millenium Height (3.85%), Taman Jindo (3.69%), Luyang Perdana (3.62%), Golden Hill Garden (3.62%), Ujana Kingfisher (3.6%) and Taman Sri Borneo (3.46%).

For 1-storey terraced houses, the y-o-y price growth was 3.91%, down from the 4.07% recorded in 4Q2022, a drop of 0.16 percentage point.

The highest y-o-y price growth was recorded in Taman Tuan Huat, with an increase of 4.08% to RM510,000, followed by Taman Sri Kepayan (3.85% to RM540,000) and Taman Nelly Ph 9 (3.81% to RM545,000). Quarterly results show Taman Tuan Huat registering 0.99% growth. Both Taman Sri Kepayan and Taman Nelly Ph 9 registered 0.93% growth.

The average annual rental growth for 1-storey terraced houses was 3.04%. Rents in Taman Tuan Huat improved by 3.23% y-o-y to RM1,600 per month. In Taman Nelly Ph 9, they rose 3.03% to RM1,700. Taman Sri Kepayan recorded an increase of 2.86% to RM1,800. There was no q-o-q increase in rental growth.

The average gross yield achieved for 1-storey terraced houses was 3.84%, down 0.03 percentage point from 4Q2022. The highest yield was achieved at Taman Sri Kepayan (4%), followed by Taman Tuan Huat (3.76%) and Taman Nelly Ph 9 (3.74%).

“The condominiums in the monitor recorded an average y-o-y price growth of 1.64% in 4Q2023, or a drop of 0.5 percentage point from 4Q2022,” says Max.

Likas Square registered the highest price growth y-o-y at 3.7% to RM420 psf, followed by Bayshore Condominium (2.7% to RM565), 1 Borneo Condominium (2.6% to RM395), Alam Damai (1.7% to RM605), Radiant Tower (1% to RM500), Jesselton Condo (0.8% to RM605), Marina Court (0.8% to RM605) and The Peak Condo (0.8% to RM665).

“Overall, the price for our condominium samples averaged RM545 psf in 4Q2023,” he adds.

On a q-o-q basis, 1 Borneo Condominium saw a price growth of 1.2%, followed by Likas Square with 0.9% growth. No q-o-q price growth was recorded for the others.

Rental rates in Alam Damai grew 5% y-o-y to RM1.91 psf per month, followed by Bayshore Condominium (3.45% to RM1.67), 1 Borneo Condominium (3.13% to RM1.67), Likas Square (2.5% to RM1.52) and Marina Court (1.92% to RM2.04). The other condominiums sampled remained unchanged.

On a q-o-q comparison, only two condos showed improvement: Likas Square, up 2.5%, and Marina Court, up 1.92%.

“The highest gross yield for our condominium sampling was recorded at 1 Borneo Condominium, with 5.06%, followed by Likas Square (4.34%), Radiant Tower (4.25%), Marina Court (4.04%), Jesselton Condo (3.97%), Alam Damai (3.79%), The Peak Condominium (3.61%) and Bayshore Condominium (3.54%),” says Max.

The condominiums sampled registered an average gross yield of 4.07% — a slight increase of 0.01 percentage point from 4Q2022.

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