Greater Kota Kinabalu 2011

The Land Below the Wind is poised for tremendous growth within the next 10 years judging from the hive of activities in its property sector aided by its booming tourism industry. iProperty.com.my examines the phenomenon

Hive of Activities

Across the South China Sea in Sabah, something is brewing. Actually, it’s been sizzling for the past 9 years. Long overlooked by West Malaysians, Sabah is the proverbial unpolished jewel which has been seen its property and land prices steadily climbing up despite the ups and downs in the property market. Clearly, Sabah’s property cycle bucks the trend from the rest of the country and has finally caught the attention of West Malaysians. Developers from Kuala Lumpur who have beaten a path there include SP Setia, WCT and a few others. UEM Land wants in as well.

At last count, there were several more West Malaysian developers who have expressed an interest to join in the ‘gold rush’. Better late than never. In terms of capital appreciation, Sabah is the number one for the past 9 years beating Penang and KL, observed property consultant Ho Chin Soon.

The Federal Government has also taken notice as evidenced by the RM3 bil mentioned in Budget 2011 to develop Karambunai into an eco resort commencing next year. However, scant details were available such as how and from whom the money will be raised.

It’s acknowledged that the government has pumped in money to build a wide range of infrastructure with the Sabah Development Corridor blueprint on track. But the most glowing report of the East Malaysian state’s potential has got to be the strong vote of confidence given by foreigners. They don’t just come and stay in resorts built by locals. They are starting to build their own resorts and selling them to their countrymen back home. Example: Tiara Boutique Pool-Villa in Bukit Padang by South Koreans and Sutera Harbour by Singaporeans.

Ample Liquidity

A convergence of many factors led to the piping hot property market, chief among them is the ample liquidity in Sabah’s economy arising from the high prices fetched by palm oil exports for the past 10 years. Estimates has it that small planters owning 100 – 500 acres can easily make a few million ringgit profit a year.

Flushed with cash, planters from the East Coast of Sabah (Lahad Datu, Tawau and Sandakan) decided to pump in their money in land and property for want of more land for palm oil and to better diversify their portfolio. Developers saw the money and started to build notably in and around Kota Kinabalu (KK), the capital of the East Malaysian state.

No less compelling is the natural attractions that Sabah is blessed with. The highest mountain in Southeast Asia, Mount Kinabalu is only 80kms east of KK. It’s managed to attract mountain climbers from all over the world. Divers worldwide converge on Sipadan Island, dubbed as one of the top 10 diving sites in the world. Nearer KK, the Tunku Abdul Rahman marine park provides a naturally beautiful setting for the capital. It’s not overstating it to say that some parts of Sabah present similarities to Bali and Phuket especially the fact that it is surrounded by a beautiful coastline fronting the South China Sea. It’s only a matter of time before its potential is fully realized. The new Kota Kinabalu International Airport, the busiest international airport in Malaysia second only to Kuala Lumpur International Airport continues to bring in more foreigners. As UEM Land’s MD/CEO Dato’ Wan Abdullah Wan Ibrahim said: “Foreigners just love KK as it has a lot to offer, for example eco-tourism, the mountains, beaches, cuisine and now a fantastic airport, one of the best in Malaysia.”

Another factor believed to play a part in the current run-up of property prices in Sabah is the growing population, particularly from migration. Thirty years ago, Foochows from Sarawak settled in KK and helped build up the city. At the same time, southern Filipinos came looking for jobs and stayed on.

Now, we can add foreign investors and long-stay tourists as well especially those from Hong Kong, Korea, Japan, Australia and the UK. Quite a number have come in under the Malaysia My 2nd Home programme. They help in bringing up the purchasing power of the locals.

Other factors cited are real estate transparency, availability of property titles and local financing as well as political stability.

Hot Spots

Areas that are poised to experience a hive of building activities include Kota Kinabalu (Putatan, Donggongon and Indah Permai) and its fringes such as Luyang, Damai, Likas, Kingfisher, Kingfisher Sulaman, Penampang, Kelombong and Inanam. Further away, Lahad Datu, Sandakan and Tawau are promising areas with Lahad Datu benefitting from the government-initiated Lahad Datu Palm Oil Industrial Cluster (POIC Lahad Datu). POIC was set up to spearhead palm oil downstream processing so as to add value to its 1.4 mil hectares of oil palm plantations. As a result, Lahad Datu has become a boom town with various newly launched projects comprising mostly commercial and retail properties receiving good response.

According to See Kok Loong, director of Metro Homes Sdn Bhd, a PJ-based real estate agency with a strong presence in Sabah, the hottest area there is the limited beachfront land located in and near KK while other areas are too “far” from the town centre.

Buy Land or Property?

In an area still brimming with untouched land, buying land is a good proposition because once development comes to the area, the income from selling the land or joint-venturing with developers could probably last you a few generations! Anecdotal evidence has it that in the early 1990s when Sulaman Road was built, the land price transacted was between RM20K-RM60K per acre. When Indah Permai was built in the late 1990s along with the building of University Malaysia Sabah in mid 2000, the land price reached RM200K-RM350K per acre. With the opening of 1Borneo, and ongoing property developments by Wong Kwok Group, Lintasan Mayang Development Sdn Bhd (Alamesra) and Hap Seng group, the price shot to upwards of RM1.5 mil per acre.

On the other hand, for those with less starting capital, buying an apartment or landed property is a good start. A new terrace house cost less than RM300K two years back, but now a similar new property would cost 50% – 60% higher, revealed Stewart Tew, General Manager (Marketing) of WCT Land Sdn Bhd. He added that most residential properties in KK areas were taken up very fast during launch, especially in the last two years.

Tourism-Related Properties

In the foreseeable future however, tourism-related properties will be the flavour of the day. With the MD of SBC group, Sia Teong Heng saying that their future projects are likely to be tourism-based with emphasis on international purchasers, more such properties are expected to come onstream.

This is to be expected given the bigger purchasing power of foreigners in Sabah. Looking ahead, tourism-related properties such as resorts, homestays, guesthouses and hotels are probably the big money-churners as Malaysia gradually depletes its oil and manufacturing income. If such an occurrence ever takes place, we are going to depend a lot more on tourism, concludes Gavin Tee, founder and President of SwhengTee International Real Estate Investors Club. “This is because we are not competitive in many areas,” he explains.

For poperty players seeking to diversify their portfolio, what better place than our own backyard? Why go overseas when there are golden opportunities just a short flight away? There is undoubtedly still a lot of upside as Sabah’s property and land prices are still low compared to other states in Malaysia or neighbouring countries.

List of Sabah Property Developments

2)Karamunsing Capital 8 Blocks Of Commercial Development – 16 lots of 3-storey shops/offices & 39 lots of 2-storey shops
The Mall at KK Times Square – 800,000 sq. ft. of nett lettable space

3) Bina Puri Sdn Bhd – http://www.binapuri.com.my/PR01c_On_Property.html
Jesselton Villa – One Block 18 storey 80 units of Condominium at Lorong Tahan 3, Layang,

Kota Kinabalu
4) Hap Seng  Consolidation Sdn Bhd – http://www.hapsenghomes.com/

5) Suria Capital Holding Berhad

6) Sagajuta (Sabah) Sdn Bhd – http://www.1borneo.net/public/sagajuta/index.htm
1Borneo hypermall has a total retail built-up area of 5.2 mil sq ft, with GDV of RM1.2bil,
1Borneo Prince Tower comprises high-end penthouses, duplexes and apartments.
1Sulaman – 3 parcels of mixed development
 Ujana Kingfisher Park (Phase 1~Gardenia, Phase 2 Iris, Phase 3 Begonia, Phase 4 and 5 Rivina Homes) Kuala Inanam, KK
Warisan Square consists of Imperial International Hotel (208 room), Radius International Hotel (96 room); 5 shops/office blocks (44 units) and 141 retails outlets.

7) SP Setia Bhd – http://www.spsetia.com.my/aeropod/index.htm
Aeropod @ Tg Aru is a RM1 bil mixed development project jointly developed with Jabatan Keretapi Negeri Sabah (“JKNS”). The 60-acre project will have a shopping mall, a five-star as well as a three-star hotel, and residential condominiums etc

SBC Corporation Berhad – http://www.sbcgroup.com.my/html/coming_soon.html
 Ongoing – The Peak Vista with GDV of RM100 mil consisting of 134 units in 3 types A (1,288sf) ,B (1,678sf) & C  (2,428sf)
The Peak Vista II with GDV of RM155 mil consisting of 155 units in 3 types A (1,293sf) ,B (1,760sf) & C (2,446sf)   
 Future – The Peak Soho at Signal Hill, Kota Kinabalu

9) WCT – http://www.wct.com.my/CMS/Content/135/1.aspx
Banyan Residency @ Sutera, Kota Kinabalu consisting of 122 luxury homes made up of 3 storey detached villa (fully sold), 2½ storey semi-D and 2 storey superlink villa. Selling price ranges from RM1.6mil to RM2.5mil in the GDV RM270mil project
 
10) Mega Sunwise Sdn Bhd – http://wsggroup.showroom.sabahexpress.com/
River Park Kinarut consisting of 207 units of double storey terrace houses, located in Kinarut, Sabah. The latest new project is River Park Apartment which consists of 1,456 units of condo apartments and River Park Plaza which consists of 12 units of double storey shop office.

11) Wah Mie Group - http://www.wahmie.com
Alam Damai and Puteri Damai  Condominium

FUTURE: Condominium near Fung Yu Ting
    
12) TYH Properties 

13) Wong Kwok (The W group) – www.thewgroup.com.my/v2/property.php
a) Cyber Square comprises of 148 standard double storey shop offices.
b) University Condo Apartment 2 (UCA2) comprises 2,464 standard apartments available in 2 and 3-bedroom designs.
c) Cyber City Apartments 2 (CCA 2) comprises of 1,600 units of 3-bedroom design, and 2-bedroom design

14) Karambunai Corp Bhd – http://www.nexusresidence.com/main.html
Nexus Residence Karambunai –  2,000 units of beachfront villas serviced by the award-winning five-star Nexus Resort. Priced from RM800,000 to RM1.5 mil.

15) BriSteel Properties Sdn Bhd 
PortCity@POIC, a 10ha commercial project in Lahad Datu comprising 193 shop and office units & 35 detached home units and industrial warehouses.

16) Lintasan Mayang Development Sdn Bhd
Alamesra township

17) Permaju Industries bhd

Near future – 100 acres mix development along Tuaran by pass