City & Country: Marginal growth on the secondary market

FOLLOWING a slow performance in 3Q2013, secondary market property prices in Kota Kinabalu grew marginally in 4Q2013.

“Positive growth was recorded on a quarter-on-quarter basis for all sampled properties,” says Sulaiman Saheh, director of Rahim & Co Research, when presenting The Edge-Rahim & Co Kota Kinabalu Housing Property Monitor 4Q2013.

However, Rahim & Co Sabah branch manager Max Sylver Sintia sees slower growth in stratified properties. “This is most probably due to the large number of new units in the primary market, leaving buyers spoilt for choice,” he says.

Double-storey terraced houses recorded marginal growth of 0.41% y-o-y in 4Q2013 compared with a drop of 1.54% in 3Q2013.

For condominiums, prices grew 7.29% overall compared with 8.27% in 4Q2013, representing a marginal decline of 0.98%.

Most buyers, especially young professionals and small families, seem to be shying away from the higher-priced larger condos and landed homes, resulting in better take-up rates for smaller high-rise residential products in the city.

Healthy growth anticipated this year
The policies announced in Budget 2014 and other cooling measures announced by the government, coupled with more stringent criteria for loan approvals, are expected to curb price speculation and stabilise the market.  

Meanwhile, the capital values of some older houses on Kota Kinabalu’s secondary market have risen almost 100% over the last four years or so.

Citing a unit in Millenium Heights as an example, Sintia says although its price was around RM280,000 in 2009, the asking price of similar homes in the area is around RM550,000 now. The built-ups range from 1,300 to 1,600 sq ft.

Sulaiman: Prices of landed properties are growing considerably in locations such as Putatan, Penampang, Inanam, Kepayan, Menggatal and Tuaran, Saheh

Says Sulaiman: “The upward trend in house prices in Kota Kinabalu is expected to continue, especially within the city area, driven by its mature catchment, good accessibility and facilities and developed infrastructure, but at a slower pace.”

Landed homes in town continue to do well
Despite the numerous launches of condominiums, demand remains strong for landed homes on the secondary market, especially in the mature areas.

“Prices of landed properties are growing considerably in locations such as Putatan, Penampang, Inanam, Kepayan, Menggatal and Tuaran,” says Sulaiman. He adds that newer and more affordably priced units can still be found in these areas.

Two-storey terraced houses recorded an average y-o-y growth of 7.5% (about RM27,800) during the 4Q2013 review, up 0.14% from 7.36% in 3Q2013. By comparison, average y-o-y growth in 4Q2012 was 7.09%.

This indicates a slight increase of 0.41% compared with 4Q2012. A rise of 0.47% was seen q-o-q, up from 0.4% in 3Q2013.

Taman Indah Permai continues to lead for the third consecutive review period, rising 13.33% on average y-o-y (about RM40,000) in 4Q2013. Q-o-q, the area recorded 1.49% growth, up RM5,000 from RM335,000 in 3Q2013.

“Prices in Taman Indah Permai will continue to perform well due to the narrowing of the price gap with the neighbouring areas,” says Sulaiman.

Taman Jindo continues to play catch-up with newer developments with prices rising 8.33% y-o-y in 4Q2013. However, this was lower by 3.1% and 2.44% from 3Q2013 and 4Q2012 respectively.

“Prices in Taman Jindo are expected to appreciate further because it is strategically located in the mature area of Jalan Lintas, which offers better infrastructure, facilities and services,” says Sintia.

Meanwhile, Ujana Kingfisher within Kingfisher Park recorded 8.22% growth y-o-y, down 1.5% and 2.39% from 3Q2013 and 4Q2012 respectively.

With the exception of Taman Sri Borneo, which recorded growth of 7.69% y-o-y, the rest of the sampled properties grew between 3.54% and 6.94%, which were below average for the current review.

Single-storey terraced houses charted price growth of 10.11% y-o-y (about RM25,000), lower by 0.11% from the previous quarter. Compared with 4Q2012, however, prices rose 2.71%.

Average growth q-o-q for 1-storey terraced houses was 1.26%. Taman Tuan Huat led q-o-q price growth with 2.08% (about RM5,000) while Taman Sri Kepayan had the highest y-o-y rise of 15% (about RM40,000) — up 2% from 13% in 4Q2012.

Taman Tuan Huat recorded an average y-o-y growth of 11%, higher by 4% from 2012 while Taman Nelly Ph9 rose 4%, up 2% from last year.

Sintia: We anticipate better price growth for 1-storey houses due to their limited supply

“We anticipate better performance in price growth for 1-storey houses due to their limited supply,” says Sintia. He notes that some older terraced houses, especially in the Luyang and Inanam areas, have been upgraded and converted into 1½-storey units with modern façades that will likely lead to an increase in value.

Slower growth for condominiums
Although new condominium projects continue to be launched, older units in the vicinity of Likas, Damai and Signal Hill are expected to remain popular, says Sulaiman. These areas offer easy accessibility and a good environment and amenities, he adds.

The average price for condos in Kota Kinabalu rose from RM412 psf in 4Q2012 to RM441 psf in 4Q2013 — an increase of 7.13%. This was, however, lower by 0.46% than the 7.76% average growth recorded in 3Q2013 and 0.98% lower than 8.27% in 4Q2012.

The sampling registered y-o-y growth of between 4.1% and 12.5%. Bayshore Condominium was the best performer with a 12.5% rise. The other areas sampled recorded below average growth y-o-y except for Likas Square (9.1%), Jesselton Condo (8.7%) and 1Borneo Condominium (7.9%).

On a q-o-q basis, a growth of 1% was charted, up from 0.76% in 3Q2013.

Industry observers say soon-to-be-launched condominium developments in Kota Kinabalu include The Gardens and Ashton Tower. Located on Jalan Bundusan, The Gardens will have 500 units of 848 to 982 sq ft. Prices start at RM470 psf and almost 70% of the units have been booked. Meanwhile, Ashton Tower will be offering 391 units of 870 sq ft with prices said be between RM402,000 and RM472,000.

Yields remain strong
Rental growth for 2-storey terraced houses averaged 12.75% y-o-y. Taman Indah Permai recorded the highest of 22.22% y-o-y (up RM200 from RM900 per month in 4Q2012). Next was Taman Indah Permai with a 30% increase y-o-y from RM1,000 per month in 4Q2012 to RM1,300 in 4Q2013.

Meanwhile, rents of 2-storey houses recorded y-o-y growth of more than 6% in all the

areas sampled. Average gross yield rose 0.19% y-o-y from 4.09% in 4Q2012 to 4.28% in 4Q2013, but no changes were noted q-o-q.

For 1-storey terraced houses, despite no significant growth q-o-q, rents rose 4.3% to 12.81% compared with the same period last year.

For condominiums, the average rental growth was 10.71% y-o-y and 1.73% q-o-q while average gross yield in 4Q2013 was 5.06% — a marginal increase of 0.07% from 4Q2012.

The market is expected to remain resilient in 1Q2014 . “Prices will still go up, but at a slower pace. The secondary market will remain active, especially in the northern and southern part of KK,” says Sintia.

Kota Kinabalu at sunset … Most buyers, especially young professionals and small families, seem to be shying away from the higher-priced larger condos and landed homes

This article first appeared in The Edge Malaysia Weekly, on March 17, 2014.