Knight Frank: Catalytic projects needed to boost Kota Kinabalu property market

PETALING JAYA (Jan 31): The property market in Kota Kinabalu is expected to remain flat in 2017 due to multiple uncertainties, said Knight Frank Malaysia in its “Real Estate Highlights 2H2016” report.

According to the latest Napic Property Market Report for the first half of 2016 (1H2016), Sabah registered 3,155 transactions with a total value of RM1.52 billion, a decrease of 27% and 31% in volume and value, respectively, against 1H2015.

“Based on the current economic conditions, weak property market sentiment and influx of new supply, experts are not anticipating a recovery in the immediate future,” said the property consultancy firm.

It said catalytic projects are needed to spur growth and investments. Spearheading these will be infrastructure improvements such as the Bus Rapid Transit, the Pan Borneo Highway and the proposed Light Rail Transit.

“With the commencement of these infrastructure improvements, it is likely that there will be fresh injection of interest and added development impetus in Kota Kinabalu.”

For now, a further softening and consolidation of the residential property sector is expected with the increasing supply and poorer take-up, particularly in the high-rise residential segment.

According to data from Napic, the total supply of condominiums/apartments in Kota Kinabalu is about 19,998 units as of 2Q2016, an increase of 2,893 units from end-2015. In terms of future supply, there will be a major influx of high-rise residential units into the market with about 15,237 units in the pipeline.

Looking forward, the total number of high-rise residential units may surpass its landed counterpart in the near future.

“The region will take time to digest the existing and incoming high-rise residential supply.

“However, prices of residential properties in good locations are expected to hold. There is also rising demand for affordable homes because the market is dense with first-time homebuyers,” the report stated.

Meanwhile, the commercial office sector may face pressure in terms of occupancy in early 2017 with the completion of new purpose-built offices around the CBD fringes.

In the retail sector, shopping centres may face challenges due to the decrease in consumer spending.

However, Knight Frank believes that the tourism sector in Sabah will pick up pace and will help to stabilise retail spending.