The Edge | Kota Kinabalu Housing Property Monitor (2Q2020): Strong demand for real estate, growing rental market

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Kota Kinabalu’s secondary market land properties have maintained their value, thanks to the limited supply and lack of new inventory in or near the city center. In addition, the rental market could see an increase in supply as owners of short-term products attempt to seek long-term tenants to accompany them during this difficult period which sees a drop in the number of tourists and tourists. visitors. These observations were made by Rahim & Co (Kota Kinabalu) agency manager Max Sylver Sintia during the presentation of the 2Q2020 Kota Kinabalu Housing Property Monitor.

“While it is still too early to predict the economic cost of Covid-19 in the real estate market, the volume of transactions and the value of real estate in Sabah will inevitably decline in 1H2020, even if we do not expect the sector of the residential real estate is also hit hard. as a tourism sector, ”says Max. “In 1Q2020, the number of residential properties processed in Sabah was 1,090 – a decrease of 31.49% year on year from 1,591 transactions in 1Q2019. The value was RM379.88 million – a decrease of 26.51% from RM 516.91 million recorded in 1Q2019. “

He notes that asking prices for high-rise residential buildings in the secondary market have fallen, but some asking prices for land properties in mature residential areas of Kota Kinabalu such as Luyang, Damai, Jalan Lintas, Jalan Bundusan, Lido and Kepayan / Kobusak have increased.

“The prices of residential land properties are considered to be more stable than those of high-rise buildings. This is evidenced by the positive and better growth rate of our land property samples compared to condominium samples. [in the monitor],” he says.

“One of the factors contributing to the stability of residential property prices in Kota Kinabalu is the limited supply of new real estate properties located in or near the downtown area. It is observed that residential land properties, especially townhouses in mature residential areas, enjoy favorable demand rates or high demand despite the age and old conception of development.

Meanwhile, Max notes that landlords who rent short-term homes will be looking for long-term tenants during this dry spell. But this increase in rental properties will only add more pressure and competitiveness in the market, he says.

“Tenants will have more options in the market and the bargaining power of landlords will be worse than before. Covid-19 could affect renters’ income; thus, they will be more sensitive to rental rates, ”explains Max.

According to primary market data, the number of transactions has been low, but this does not mean that the sector has remained calm.

He says: “In the primary market, we have observed that although transaction activity has been weaker, buyers continue to buy residential products that are correctly priced and positioned, such as townhouses located on the outskirts. from the city, for example in the Lok Kawi and Kinarut areas are priced between 350,000 RM and 550,000 RM.

“With buyers taking a ‘wait-and-see’ approach, developers are also seen as offering more attractive incentives and offers such as furniture and furnishings packages, discounts, discounts, giveaways, and booking fees. reduced to increase their sales. “

Whether in the primary or secondary market, Max believes now is a good time to look for a new home and advises buyers to keep abreast of market trends and be aware of the latest asking prices.

“We expect more properties to go up for sale at the end of 2H2020. The prices of residential real estate, in particular condominiums, apartments and serviced residences as well as SoHos (small offices / home offices), on the secondary market are expected to fall by 10% to 20% in the coming months… under the effect of Covid -19 continues to unfold, coupled with poor economic conditions. This gives potential buyers and investors a bargain purchase opportunity to purchase such properties at discounted prices, ”says Max.

He cautions, however, that obtaining bank loans can be a challenge in a low interest rate environment.

“In addition, investors should anticipate a longer timeframe to get their return on their investment, due to falling rental rates and slower rental growth. Consequently, they will have to have a strong holding power, ”he adds.

Meanwhile, a new project was launched in the quarter under review, says Max. The Yayasan Sabah Group has signed a development agreement with Zillion Ventures Sdn Bhd to develop a mixed-use commercial development called The Waterfront.

Max says: “Located in the heart of Kota Kinabalu city and with an estimated gross development value of RM3.5 billion, the proposed development consists of four blocks of three and five star hotel towers, three blocks of serviced apartment towers, a block of hotel suites, a 300-room three-star hotel owned by the Yayasan Sabah Group, a 3-story shopping mall with a theme park, promenade plaza and marina pier for berthing yachts / boats.

Max says it’s no surprise that Covid-19 and the current economic uncertainties have affected buyer sentiment. But he believes that with the help of the government, the residential market will be maintained during this period.

“With the help of the government’s stimulus measures, we expect the Kota Kinabalu residential market to remain resilient, with strong demand from genuine buyers looking for properties with affordable prices and features that meet their needs. personal occupation needs. With more pressure on the rental and pricing of some residential properties, the current market would be favorable to long-term investors as opposed to short-term speculators, ”he said.

Two-storey terraced houses

The average year-over-year price growth for all homes in the sample was 3.28%, compared to 5.93% year-over-year in 2Q2019, and the average quarter-to-quarter price growth. the other was 0.74%.

Luyang Perdana homes recorded the strongest year-on-year price growth of 4.11%, at RM760,000. Next come Taman Sri Borneo (3.97%), Golden Hill Garden (3.75%), Ujana Kingfisher (3.54%), Millenium Height (3.36%), Taman Jindo (3.13%) and Taman Indah Permai (1.11%).

Homes in Ujana Kingfisher saw quarterly growth of 0.87% to 585,000 RM, followed by Taman Sri Borneo (0.78%), Taman Jindo (0.77%) and Golden Hill Garden (0.61%) .

There was no change in rental rates for the homes in the sample and the average gross yield declined 0.12%, to 3.71%, from the 3.83% average recorded. in 2Q2019. The highest gross yield obtained was that of Taman Indah Permai at 3.96%, followed by Millenium Height (3.9%), Taman Jindo (3.82%), Golden Hill Garden (3.76%), Ujana Kingfisher (3.59%), Taman Sri Borneo (3.48%)%) and Luyang Perdana (3.47%).

Terraced houses on one level

The average year-on-year price growth for one-story townhouses was 6.47% in the second quarter of this year. Compared to the 2Q2019 annual results of 6.92%, this shows a marginal decrease of 0.45%. The highest annual growth recorded was recorded in Taman Tuan Huat with 7.32% at 440,000 RM, followed by Taman Nelly Ph 9 (6.67%) and Taman Sri Kepayan (5.43%).

The Qoq results showed an average growth of 1.08%. The houses of Taman Tuan Huat recorded a growth of 1.15%, followed by Taman Nelly Ph 9 (1.05%) and Taman Sri Kepayan (1.04%).

Like its 2-storey cousin, there was no rental movement and the average yield recorded was 4.14%, down 0.27% from the 4.41% recorded in the 2Q2019. The highest gross yield was obtained by Taman Sri Kepayan (4.33%), followed by Taman Tuan Huat (4.09%) and Taman Nelly Ph 9 (4%).

Condominiums

The average year-over-year condominium price growth was 1.34%, down 1.89% from the 2Q2019 average of 2.93%. The strongest year-on-year price growth was recorded by Likas Square, up 3.7% to RM420 psf. Next come Bayshore Condominium (2.9%), Marina Court (1.6%), The Peak Condominium (1.5%) and Radiant Tower (1%). No price increases were recorded for Jesselton Condominium, Alam Damai and 1 Borneo Condominium. Likewise, there were no qoq price movements.

For rental rates, Max says three condos saw their rates drop: Jesselton Condominium (down 12.33% to RM 2.13 per month), followed by Marina Court (down 8.82% to 2 , RM38 per month) and 1 Borneo Condominium (down 5.26% to RM1.82 psf per month). The rates for the rest remained unchanged.

The average yields achieved were 4.52%, down 0.23% from the average gross yield of 4.74% in 2Q2019, Max emphasizes.

The highest return was recorded by 1 Borneo Condominium with 5.32%, followed by Likas Square (4.87%), The Peak Condominium (4.82%), Marina Court (4.54%), Alam Damai (4.44%), Radiant Tower (4.33%), Jesselton Condominium (4.2%) and Bayshore Condominium (3.61%).

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