Financial crisis at the end of last year might be a good lesson for all of us to learn and making sure we never invest too much into equity market. Equity portfolio is never a good asset class that we need to have. It’s proven when a big financial company like AIG & Lehman Brothers also collapse due to financial meltdown. Our neighborhood government loss billions of dollars after CITI BANK share price meltdown from USD25 to lowest USD0.97 and currently hovering around USD4. Imaging how much time, effort and peoples retirement fund gone within few months. So try accumulate more stable and solid asset as you should realize by now that “nothing is as solid as ground”. Despite world financial crisis, property prices in KK still maintains and gradually increasing especially for past 9 month mainly location like Luyang, Damai, Likas, Kingfisher, Kingfisher Sulaman, Penampang, Kelombong and Inanam area.
One of the main reasons to support my statement is the liquidity of Sabah economy. For the past 10 years, Sabah economy mainly benefited from booming of agricultural sector. We has converted our timber based economy into oil palm plantation estate and the figures presented by Malaysia Oil Palm Association shows Sabah contribute 35% of the overall oil palm production in Malaysia. Those big boys to mention a few is like IOI, KLK, Genting Plantation, IJM Plantation and SIME Darby is the main planter behind which help in upholding the purchasing power of Sabahan. Besides that, small planters who easily own 100 – 500 acres can easily making few millions net profit per year. Not surprising property price at other place like Tawau and Sandakan also hold strong despite economy downturn. One of my customer is collecting net profit of RM0.5M per month @ RM6M per annum from his plantation estate which is free from bank loans. He is retired at the age of 41. Do you want to be like him?
One of the faster ways to increase the population of Sabah state is through migration. Kota Kinabalu has been flooded with rich and aggressive foochow group from Sarawak many years ago after they saw tremendous investment opportunity especially in property early 1980s. I’m one of them but too bad I’m not as rich as they are. As I mention in previous article, property in KK commanding good rental yield of 7%-10% while in Sarawak they only can get 3%-5% return per annum. The best way to prove their present in Sabah is by looking at current flight controversial which stops Air Asia from flying KK-SIBU / SIBU-KK starting end of October. Why governments do so? That’s because the population of Sarawakian at Sabah has increase tremendously for the past 10 years. They are everywhere from construction, plantation, property development, hotel operators, timber, hardware supplier, and etc. I also don’t know which areas are not related to them!! It seems like everything they touch turn into gold.
Another reason contributing to the increase of the property price is the town planning which is more on “focus development territory”. If you notice all the development in KK is focusing on Putatan, Donggongon and Indah Permai. It’s only about radar of 15KM from city town. This has pressure the land price to go up further. With the expensive land cost, developers need to sell higher price to avoid stringent profit margin. Unlike city like KL & Kuching the development distance has reach as far as 50KM or more. This is good as it will slower slow down the increase of the land price. To solve this problem our Local town planner need to ensure the master town planning will last few generation rather than few years. Look at China and Singapore, they plan and foresee few hundred years a head. Base on my view, KK development will focus and divert to Menggatal area and Lokawi area within the next 2 years. So focus more land acquisition within this area. One of my client just complete acquired a pieces of vacant land for RM2.5M @ RM65 per sf for light industrial development at Kelombong area. He need to sell RM1.5M per unit (average land area of 5000sf with build up of 2000sf) in order for him to make money!! But I had advise him to keep the property for rental collection once construction complete as the rental yield can easily hit 10% based on his costing. The income will last him for few generation!!
The major costing that always haunted developer is the land cost. Unless the land is acquired through Joint-Venture basis, otherwise developer going to harvest lower profit if they construct landed property especially at prime location like Damai, Luyang, Likas and Penampang. Furthermore increase of material costing also will uphold the overall property price in KK. A dialog with established developer lately, he say our landed double storey house at prime location with land area of less than 2000 sf and build up of less than 1400 sf will reach RM400K by middle of next year. And new condominium launching will easily hit RM350 per sf and above. So will existing property like Indah Court, Api Api Apartment and Radiant area will drop? Not likely. I believe the price will maintain and will continue to rise at slower pace as the people are more willing pay more due to new design and brand new constructed property.
I believe Sabah especially Kota Kinabalu (capital city) will continue grow to the higher level with unbelievable return rewarded to those who start invest now. I strongly urge local Sabahan to join in before they saw the real growth of Sabah economy next 5-10 years. Be the reward receiver rather than giver. Happy Investing
You cannot Grow Land.. Ck Wong & KH Wong
Related posts:
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{ 46 comments… read them below or add one }
hi there,
it’s me again. i must say that i really enjoy the articles in ur blog esp most of the experience that u share with us.
i’m sorry but some people do hv some different point of view esp when it comes to investment. i’m not here to disagree or try to do any damage. but i’m more of a beginner in properties and try to get as much opinion from the experts like you and a few of my friends to further improve on my investment skills.
after reading ur comment on my questions, i had a few discussion with my investor friends and one of them give me this reply. which i find it quite interesting as it gives a different point here and i would like to share with you, and of course ur comment on this would be very much appreciated.
here we go:
————————————————————————————————-
….We live in a free world and everyone has his
opinion and point of View. Have said that it is only a opinion with a
view from one site looking at it from Malaysia, when i was 4 month in
Malaysia, i study the people and their way of doing
things and looking at the western world. I was always seen (by malaysian) like the guy from Wertern world with too much money and I should give them extra on the
price because i have too much and things are so cheap in Malaysia.
But here is the problem Malaysian people think they are so smart
against the white guy because they get away overcharging for little
things like Taxi, Restaurant Hotel etc The end of the day the white
just let it go and pay he is on Holiday and don’t want to spoil his
good time.
In Todays international world of finance and Biz Malaysia is nowhere
to be found.
The are to many things to list and internet traffic is recorded by
Google search engine i don’t want to talk about here. I send you a
email which i got 2 days ago from a guy which buys property in US and
sells to Canadians for investment almost new house USD32K he propably
bought for 10 to 20K a week ago at auctions. People in US are broke
and it will be a long time before the recover the worst is still to
come there are 400 banks on the edge of bankruptcy as of right now.
Germany UK Russia etc are in the same position right i just came back
from Germany looking at a few houses which are for sale for 4 to 5
years and the keep drooping the price nobody buying so don’t count on
US UK German Dubei to come to Malaysia and over pay for property any
time soon to increase prices.
The other thing people in Malaysia don’t see is the locals own most of
the property and can only pay so much for it with little income the
have Once the ratio of income goes over a specific percentiles dead
/ratio to income people stop buying waiting for price to come down but
in reality they can’t afford to buy any more, everything stops going up
and prices collapse very soon after the start of a chain reaction. I
know many people in Canada from asia and their point of view is many
times clowded by greed to make money fast without looking at the risk
and down side, In my training for investing in stock market forex and
options the first and most important is to look how much can one lose
and what is the risk/reward ratio before jumping in,Once in the
investment a different magic power takes over, the subconscious mind is
in controlling the decission and fear and greed rule to the greatest
power with all rational thinking out the window. When I was young and
eager to get rich make millions i was many times taking over by such
powers and seeing the reality of the market and investment. To think
Land is a save investment is so naive thinking with real estate the
land is what makes the money the building part always goes down in
value so when the market tanks it is the land it gets hit the most.
You should print and save our e mails for future reference and see
how you grow and how your views are changing and one day you will see
how everything falls in to place and all the stars line up……..
———————————————————————————————–
i think this friend of mine seems to hv a different point of view with u even in terms of vacant land… i hv invited him to come and live in kk for a few weeks/months to see how things are run and he had already bought his ticket to come in november
thanks in advance for ur reply.
foo
Foo,
Its good we can share among all of us. No point we argue here right?As I always say, who have the most number win. So different people have different approach of winning the games. I met one remisier who told me property is as good as “savings account”!! So different people will definitely have different view. The most important at the end of the day is how you win at your way. I have no intention to invest abroad so far. I haven’t fully master the skill at my backyard yet so no point following you into the deep sea for big catching. Happy Investing.
You cannot Grow Land.. Ck Wong & KH Wong
Ya, many sarawakian in Sabah now. All my uncles is at Sabah. By the way, is that the main reason why AA stop the route sibu/kk? Most of my friend complaining so much because AA stop the Sibu/KK route as they are studying in UMS.
By the way, I see sarawak is urge in developing as many vacancies in project manager, quantity surveyor and sivil engineering. Those all are related in construction work. Another proof of developing is project SCORE in Sarawak. Are these proof of development? What else can we see as a sign of development?
Hi,
I think one of the reason AA stop is because government want Firely Fly to enjoy all these profit. What to do? SCORE is coming in big wave. I believe true picture of Sarawak development will reflected after Bakun start operating next 2 years. The opportunity is tremendous. If you follow SCORE news, alot of Japanese, Taiwan group and world largest steel producer is eyeing Sarawak. Main development going to happen at Sarikei, Tg Manis, Mukah and all the way to Bintulu. Happy Investing.
You cannot Grow Land.. CK Wong & KH Wong
Quote, “With the expensive land cost, developers need to sell higher price to avoid stringent profit margin.”
Property prices in KK area, a radius of 15km, is certainly going up. But this happens when the developer (esp new developers) pushes the price upward. We need to be careful if this is the actual market value… or is it a price tag simply placed by the developer.
Who decides the cost of land and building in KK? Is there a body that overseas and put a control/cap over this? We do not want to buy into an over-inflated price property. Neither do we want the bubble to burst.
Hi Joe,
Price is push up by DEMAND…if you drive around 15 KM radius from city..actually not many more land for development. So I strongly believe demand will always be there.. Liquidity of KK is still high..Happy Investing.
You cannot Grow Land.. Ck Wong & KH Wong
You said: “As I mention in previous article, property in KK commanding good rental yield of 7%-10%”
I would like to know where is the estate in KK have such rental yield?
Appreciate if you share a few the estate.
Hi Bull,
Please refer to win-win property at KK articals. I mention few examples.Happy Investing.
You cannot Grow Land.. CK Wong & KH Wong
Interestingly, why you never mention estate in Tanjung Aru such as Waikki Condo, Tanjung Aru plaza etc?
Are properties over that area dead? Completely no hope?
Please share your view on the properties at that area.
Hi,
Simply I dont own any property there. But for your information Waikiki Condo has increase tremendously since 2003. I remember my client bought it for RM220K for 2 bedroom now renting for RM2K per month and value not less than RM350K. While Tg Aru Plaza lately draw abit of interest after Govt office opened couple with few Korean resident open their business especially at ground floor. But having these is not good enough to support the whole mall.
John,
Tg Aru is like stand alone market with limited numbers of people. So its not easy to bring up the whole place knowing not much future development. This will be abit different when the race course move and I heard they will develop into commercial development. Furthermore SP Setia (the largest property developer in Msia) is owning a pieces of land near to Railway Station will bring Tg Aru into different level next 5-10yrs. Happy Investing.
You cannot Grow Land..CK Wong & KH Wong
please could u tell me where is the best area to invest right now in Borneo?
Hi,
Kudat…its will be one of the world class tourism destination. Happy Investing.
You cannot Grow Land.. CK Wong & KH Wong
What has kudat got to offer? With just a few good beaches, how could one say its good investment? Reminds me of port dickson/ morib.
Hi,
Lets us wait and see. When time come it will prove whether your foresight or my foresight…:) Happy Investing.
You cannot Grow Land.. CK Wong & KH Wong
I know I’m a bit late in joing your blog. I would rather invest in Papar anytime than invest in Kudat. South of KK is relative ignored because of the low cost houses in Lok Kawi but if you go past that, Papar has great potential as it is a relatively quiet township with all the necessary facilities and closer proximity to KK. KK is getting to be too hectic.
HI,
Let time release the true value of Kudat. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
hi..guys
how’s Kudat to prosper?
Kudat need a major highway to be built for better transport..
coconut? palm oil? tourism?or bird nest?
no major development/business activites..
HI,
The strategy of buying land at Kudat is the same “buy & wait”. Today the prices of vacant land has increase few hundred percent compare to my previous acquired prices..of course there is activity like Oil Palm adn birdnest farming started to help in pulling the price up further. But if you are not comfortable then avoid this area then..Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
hi CK Wong,
Thank you so much for sharing your great knowledge. Recently I have bought two unit of double storey terrace houses in Sandakan,one is corner lot under construction with land area 2700 sf,built up 1400 sf and one is intermediate lot with 1300 built up area with 1400 sf land area. Cornet lot costs me RM295k and intermediate RM196k with montly rental income RM700. I was thinking to rent out the cornet lot with RM1k upon completion.
Can u please advise my property portfolio.
Thank you very much!
Best regards,
Lam
HI,
Sandakan rental property especially for residential area is not enjoying fantastic rental yield. What advise you expect me to give? Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
hi..guys..
Papar or tuaran? for land investing purposes..
I believe Keningau will be the next hot-spot. It is developing very fast with new shoplots and housing coming up. Plus the oil-palm/agro and interior hub connecting all the way to Tawau/Lahad Datu. Prime land already fetching more than RM100k/acre.
Hi,
Buy & wait is the good strategy to be use in accumulating small town like Kgau, Kudat, Tenom, KB & Ranau..the time will come..Happy Investing.
You cannot Grow Land.. CWong & MY DAD
I am looking for landed property (double storey corner lot) near Nossob penampang area. Do you know what is what is the market value for this type of property there?
Also, do you know any new landed development there? I had looking around there for quite a time but failed to find a unit.
Thank you
HI,
Its all depend on environment, location, condition of the house and etc. I cant just give you the value straigth away..Its not easy to find terrace house within matured area. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
hi ck,
i looking for putatan platinum apartment now,is 850sqft with RM 180,000 ,issnt worth with this?
have a nice day
Hi CK, glad to be open to the world of property investment through investkk.com especially to me as I am rather new in this industry. Since I discovered your website last November through a friend of mine I am more alert of the properties coming up and how much price has gone up in the last 8 months and going up further due to demand. Condos price are way up there and the latest being Jesselton Residence. Personally I cannot affort it but a joint investment is always possible.
Refering to your topic of likas area where there are no more land to built landed property, my parents have an intermediate terrace house in Taman Antarabangsa and they have owned it for 20 over years now and we have been renting it since with latest rental rate of RM1000/ month. As its an old house the condition is not so good. I have some proposals
1) Continue renting it – rental rate is not so great
2) Sell the house as it is – may not get good price
3) Repair the house and sell it – price may go up slightly
4) Renovate and sell it – take up a loan and renovate as it may fetch a higher price.
Seeking your kind advise if I am thinking the right directions.
HI,
Sell it and pick up high growth commercial centre to compensate your future appreciation and steady rental. Happy Investing.
You cannot Grow Land..CK Wong & MY RiCH DAD
Hi CK, Fantastic recommendation and thanks.
Hi CK,
May I know which banker is most aggressive for Home Loan in the KK? What I mean is the most competitive rate and package they offer? I have ask around the most of them are the same, same package and same best rate. Thanks.
Hi
As you have rightly said, the banks have very similar packages, but their criteria for lending you the money is different. Some banks are more strict when profiling property investors.. Some are more investors friendly and so on. How do you decide? If you are an investor, look beyond interest rates and pay more attention to the asset itself (the potential capital gain, location, the price/deal etc). Mortgage specialists (any good one in KK?) will be able to help you discern which banks are difficult.. Actually as investors, the tip is to try your best for the ‘difficult’ bank first so that later on its easier to leverage with the friendly ones… You shouldn’t stick with one bank if you are investing professionally..
Hi,
Thanks Nic Yap for your help in replying. Anyway all the bank offer the similar package unless you have bigger loan amount. Happy Investing.
You cannot Grow Land..CK Wong & MY RiCH DAD
Thanks Nic Yap and CK sharing those helpful tips. Learn a lot from both of you.
What do you think about Inanam at KK? Worth investing commercial property there? If yes, what price would be reasonable for 3 storey shoplot?
Thanks
HI,
Its depend on which location. I cant just give you the figure..What is the rental yield?Frontage or not? Inanam is consider 2nd place after KK City Centre. So the potential is there. Furthermore there will be foreign bank will be open in Inanam soon. Happy Investing.
You cannot Grow Land..CK Wong & MY RiCH DAD
It is a new project. Soon to be launched. Was told there will be around 180 units shoplot. Price is around 1.5m.
HI,
The land was newly purchase from Sandakan tycoon. I havent see the project details yet. Should be next week. Once I get it I will let you know. Happy Investing.
You cannot Grow Land..CK Wong & MY RiCH DAD
Have you seen the project details (Inanam)? Your opinion on this project is greatly appreciated. Thanks.
Hi,
Tell me whats your opinion first.. Happy Investing
CkWong
Really sorry. I have no idea at all. I am from KL and not familiar with this area. This is my first investment in property. You must have said that I am a nut to invest something which I have no idea where is the place.
Hi,
Then AVOID. No point keeping gf at far distance not knowing how she look like!!! Happy Investing
CkWong
Hi, How do you think 1 Sulaman Project? is that good for investment for condominium?
is the project even moving up it look’s to me is in the same shape,very slow project and am not sure about the workmanship mostly say’s is bad.
good luck.
When there is too many freebrites, do you think it is good? Is the developer related to you? Sometimes, as a buyer, one have to be more careful as it is a lifetime commmiitment. If there are too many unts, it is a no no.
Hi,
I need to know how much per ac is the value market at kota Kinabalu, Kuala Penyu , Kg Purun.
hope to heard you soon..
Thanks
Hi,
Very subjective due to condition of the land, types of title ie CL or NT, road access, utility access and etc. Happy Investing.
Ckwong