Kota Kinabalu house prices rise at a slower pace

AMID cautious market sentiment, house prices in Kota Kinabalu continued to increase in 4Q2015, but at a slower rate, says Rahim & Co Sabah branch manager Max Sylver Sintia (pictured, below). He was presenting The Edge/Rahim & Co Kota Kinabalu Housing Property Monitor 4Q2015.

For 2016, Sintia expects the property market to continue this trend of slow but steady price increases as the number of transactions falls.

“The stringent measures taken by the government have eased speculative purchases, so we anticipate continued slower price growth for both landed and high-rise properties within prime areas, but the prices will continue to go up,” he says.

However, he anticipates the first half of 2016 to reflect 2015, with low transaction volume for both the landed and high-rise property segments, unless lending conditions improve.

While transaction volume could plummet, he adds, prices are unlikely to fall, especially for houses in the medium price range where demand is highest. He says demand for residential properties priced from RM450,000 to RM800,000 remains particularly strong.

“Moving forward, the market will continue to grow as it has proven itself resilient with constant demand for properties. We expect take-up rates to be encouraging, subject to affordability and the availability of end-financing for buyers. Terraced houses, especially double-storey units, will continue to be the mainstay of the landed residential sector, followed by apartments,” Sintia says.

More launches in 2016

Sintia expects the market to pick up in terms of new launches of major developments, particularly towards the northern and southern areas of Kota Kinabalu such as Inanam, Menggatal, Tuaran, Putatan, the fringes of Penampang, Lok Kawi and Kinarut, as well as more affordable housing developments.

“Given a lack of new projects in 2015, in 2016, we will see developers officially launching a handful of new projects. More developments of affordable houses are expected in the near future as this is encouraged by the government,” he says.

The price growth of the landed residential property segment in prime and established locations is expected to be stable, with limited new supply as new developments are moving further away from central areas.

Older housing schemes nearer to the city centre and established neighbourhoods — such as Luyang, Jalan Lintas, Kepayan and Jalan Bundusan — will continue to be well sought after due to their location.

In addition, while high-rise residential developments near the city centre have been quite popular, the condominiums that garnered good responses in the past few years have seen slower price growth.

“High-end condominium units are expected to face additional challenges [depending on how sustainable the market is] providing sufficient rental returns to cover loan repayments,” says Sintia.

Meanwhile, ongoing infrastructure projects, including the construction of new flyovers in Jalan Lintas and Likas Bay as well as the construction of the Pan-Borneo Highway, are expected to have a positive spillover effect on both old and new properties in areas nearby that will lead to demand and prices going up.

Sintia also foresees increased interest in land acquisition from companies in Peninsular Malaysia and multinationals for future development, which will spur new, high-quality residential developments in the suburban areas of Kota Kinabalu.

An example is Bukit Bantayan Residence by Gamuda Land — a high-rise condominium project situated in the northern corridor comprising 296 units in a 25-storey building — which is expected to launch in 1Q2016 at an average selling price of RM440 psf.

Slow increase in house prices

Double-storey terraced houses saw an average price growth of 7.44% year on year [y-o-y] (about RM33,000) in 4Q2015, 0.84% slower than 4Q2014’s 8.28% growth.

The highest y-o-y price growth for 2-storey houses was seen at Millennium Heights and Ujana Kingfisher (both 9.52% to RM460,000), followed by Taman Jindo (9.3% to RM470,000), Luyang Perdana (7.69% to RM560,000), Golden Hill Garden (6.35% to RM670,000), Taman Sri Borneo (5.43% to RM485,000) and Taman Indah Permai (4.23% to RM370,000).

On a quarter-on-quarter (q-o-q) basis, price growth recorded for 2-storey terraced houses in 4Q2015 was 1.77% (about RM8,500), down 0.26% from the previous quarter.

The best performing q-o-q growth was seen at Ujana Kingfisher and Millennium Heights (both 2.22%), followed by Taman Jindo (2.17%), Luyang Perdana (1.82%), Golden Hill (1.52%), Taman Indah Permai (1.37%) and Taman Seri Borneo (1.04%).

Sintia concludes that the relatively small difference of less than 1% for both y-o-y and q-o-q price growth of 2-storey terraced houses shows a stable growth rate from previous quarters.

Single-storey terraced houses achieved better y-o-y price growth in the quarter at an average of 11.12% (about RM33,000), up 2.17% from 4Q2014 at 8.95%.

The highest y-o-y growth was recorded at Taman Tuan Huat at 13.21% (RM35,000 to RM300,000). This was followed by Taman Sri Kepayan (10.77% to RM360,000) and Taman Nelly Phase 9 (9.38% to RM350,000).

As for q-o-q price growth, 1-storey terraced houses recorded 2.67% growth (about RM8,000), with the highest at Taman Tuan Huat (3.57%), followed by Taman Sri Kepayan (2.94%) and Taman Nelly Phase 9 (1.49%).

The average price for condominium units in Kota Kinabalu rose 4% in 4Q2015 (to RM491 psf from RM471 psf), 2.65% slower than the pace in 4Q2014.

The highest y-o-y price growth during the quarter for condominiums was seen at Jesselton Condo (7.5% to RM570 psf). This was followed by Alam Damai (6.1% to RM520 psf), The Peak Condominium (5.3% to RM600 psf), Likas Square (4.1% to RM385 psf), 1Borneo Condominium (2.8% to RM370 psf), Bayshore Condominium (2.2% to RM460 psf), Radiant Tower (2.2% to RM460 psf) and Marina Court (1.8% to RM560 psf).

There was no q-o-q growth based on the samples recorded for the quarter.

Rental performance

In 4Q2015, rents for 2-storey terraced houses saw an average growth of 5.72% y-o-y, with the highest growth seen at Taman Jindo at RM9.09% (RM150 from RM1,650 per month). This is followed by Ujana Kingfisher (7.41%), Millennium Heights (6.06%), Luyang Perdana (5.56%), Golden Hill Garden (4.65%), Taman Indah Permai (4.17%) and Taman Sri Borneo (3.13%).

Rental growth for 1-storey terraced houses averaged 13.63% y-o-y, with the highest seen at Taman Tuan Huat at 18.18%, up RM200 from RM1,100 per month, followed by Taman Nelly Phase 9 (12%) and Taman Sri Kepayan (10.71%).

The average gross yield for 2-storey terraced houses during the quarter was 4.17% (down 0.07%), while for 1-storey terraced houses it was 5.06% (up 0.11%).

Condos saw an average rental growth of 5.45% y-o-y (1.64%), while the average gross yield stood at 4.98% (up 0.06%).

The condominium with the best yield was 1Borneo Condominium at 6.39%, followed by Marina Court at 5.11%.

Click here to check out The Edge Reference Price for Jesselton Condominium.

This article first appeared in City & Country, a pullout of The Edge Malaysia Weekly, on March 7, 2016. Subscribe here for your personal copy.