Look to the east: The new location for property investment

Updated 11 Sep 2017 – By Caitlyn Ng


With supply quickly surpassing demand nowadays, the property market in Selangor is already saturated with development after massive development. Most of these developments are high-rises, owing to the slowly declining plots of land available. Throw in a hefty price tag for these compact units, and you get plenty of buyers adopting a ‘wait and see’ approach.

You’ve already checked and found that you’re eligible for a home loan. Don’t want to wait to become the proud owner of a property? We’re not recommending you to look for one in far flung locations, but have you ever stopped to consider buying a property in East Malaysia? You might find a few pleasant surprises in the form of landed properties at more affordable rates.

Overall view of the market

East Malaysia is a promising sector for property investment – it is currently enjoying a phase of rapid economic development as part of the Nation’s Economic Transformation Programme. The economy is mainly supported by oil palm commerce as well as the oil and gas industries.

While the property market of Sabah and Sarawak may not be as exciting as the rollercoaster prices that Kuala Lumpur and Selangor undergo, there is certainly still optimism in the air with upcoming developments planned for maintaining healthy growth.

The value of properties has seen an appreciation of approximately 10% to 20% over the years, spread over all the segments such as residential, commercial and industrial. Georg Chmiel, who is the managing director and CEO of the iProperty Group, agrees saying “As such, it was no surprise that in 2015 alone, a total of 81,894 searches were done on properties in Sabah, while in Sarawak, there were a total of 63,589 searches.”

With Sabah and Sarawak are both still in the preliminary stages of development, it’s no surprise that both states have considerable tracts of unexplored land available for growth. Back then, property developers were focused on the main cities of Kuching and Kota Kinabalu but in recent years, the spotlight is slowly but surely shifting to other parts of the states. This will open up plenty of opportunities for West Malaysians who are seeking to diversify their portfolios.

For example, according to extensive property sales data compiled by The National Property Information Centre (NAPIC), the top transacted areas in terms of residential properties for Sabah would be Kota Kinabalu, Sandakan and Penampang; for Sarawak, it would be Kuching, Sibu and Miri. Another example would be in terms of commercial properties whereby for Sabah, the top transacted areas are Kota Kinabalu, Sandakan and Tawau; as for Sarawak, it would be Kuching, Sibu and Miri.

Let’s zoom in a little more

Two- and three-storey terrace homes are the most popular type of property in the residential category that is purchased in both Sabah and Sarawak, data from NAPIC shows. Over in the commercial sector, two or two and a half-storey shoplots are popular in Sabah whereas in Sarawak, three or three and a half-storey shoplots are preferred.

From Q1 2016 to Q1 2017, there has been a decrease in the overall value of transacted residential properties in both Sabah and Sarawak – from roughly RM399mil to RM380mil and RM602mil to RM567mil respectively. Commercial properties too have suffered a similar setback, dropping from roughly RM138mil to RM125mil and RM167mil to RM159mil respectively.

The data echoes the words of Liaw Lam Thye, who is a property valuer and principal consultant for estate agency Taylor Hobbs. “The market has slowed down further in 2H 2016, and the decline has just started to take place. We have yet to see any substantial decline, but if the market continues to be weak, the property prices will start to drop,” he said.

Liaw is of the opinion that if the market gets tougher in the near future due to the economic slowdown, there is a high possibility that Malaysians will see a drop in property prices over at East Malaysia. However, it isn’t all doom and gloom; he recommends potential investors and homebuyers to keep an eye on the southern part of Kota Kinabalu as the upcoming Pan Borneo Highway (spanning 2,325km) promises to provide much-needed connectivity between rural areas and towns.

However, the prices of properties itself for both the major cities have seen a slight increase. If we take the data from the tables above, the average price for a two-storey terrace house in Kota Kinabalu (Table 2a & 3a) during Q1 2016 was approximately RM425,000 whereas the average price for a two-storey terrace house in Kuching (Table 2b & 3b) during the same period was approximately RM240,000.

Fast forward to a year later and there is a slight increase, though not very pronounced. The average price for a two-storey terrace house in Kota Kinabalu during Q1 2017 was approximately RM434,000 whereas the average price for a two-storey terrace house in Kuching during the same period was approximately RM282,000.

As there is much emphasis on rural development in East Malaysia right now, both states are seeing more government support in the form of increased budget allocations. The Deputy Minister of Rural and Regional Development, Datuk Alexander Nanta Linggi, has said that out of the RM5.83bil budget that the ministry has received for rural development, 50% was apportioned for Sabah and Sarawak.

This is where Property Hunter (PH) comes into play, as you make your decision to buy up a property, therefore taking advantage of the current soft market and waiting for the price to double. PH is the largest property media network in East Malaysia, where they own a monthly publication (Property Hunter Magazine), an interactive property web portal (www.PropertyHunter.com.my) and mobile application (PH App) where the public can search for the latest properties available on the market, trending news and upcoming events in East Malaysia.

They are also the organizers of the Property Hunter Expo (PH Expo), the largest property exhibition series in East Malaysia. An authoritative voice on the property market in East Malaysia, they are the experts you can trust to help you find that perfect property.

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