KOTA KINABALU, Aug 30 – Having experienced a sluggish market with some negative growth since 2013, Sabah property developers are shifting gear from profit-driven luxury properties to smaller, more affordable projects that target the masses.
Sabah Housing and Real Estate Developers Association (Shareda) deputy president Chew Shang Hai said that developers have responded to the slump and several upcoming projects are aimed at middle-income earners who constitute the major share of potential buyers.
“We are hoping that the current and future units aimed at the mid-income market will pick up and take off next year. This will counter sluggish property sales and start the wheels turning again by the second quarter of the year,” he said.Property event and publication company Property Hunter managing director Elson Kho said that after a stagnant period in terms of new property launches and sales, developers are now scheduled to enter the market later in the year or early next year.
“We have inquiries for a handful of property launches next year. There is a demand for affordable homes but people are afraid of buying now, which makes developers hold off on their launches too.
“But if the market goes on as projected, new projects which are smaller and outside of the city will enter the market next year and this should see the industry picking up again,” said Kho.
Recovery in the worksChew said recovery is highly dependent on a change in government policy, especially to loosen the stringent housing loan criteria particularly for projects that qualify as affordable homes.
“If there is some stimulus, there will be a boost of activity in the market, and other sectors will follow suit. We need to see something to help this.
“Looking at current indications, we are expecting that halfway through 2017, we will be able to see some improvement. But whatever it is, we are also sure the worst is over,” he said, pointing out that global oil prices are starting to rise again.
Based on first quarter of 2016 property sales data by the National Property Information Centre, Sabah registered a total of 1,595 transactions at the value of RM820.9 million, a decrease of 27 per cent and 40 per cent in volume and value respectively against the same period last year.
In 2015, Sabah recorded 7,824 transactions worth RM3.89 billion, a decrease of 12.2 per cent on volume and 10.8 per cent in value from 2014.
Developer Ben Kong of Borneo Estate Development said that the “prolonged dry spell” that Sabah is going through is a result of prices here finally catching up with west Malaysia property prices and of course, global market forces.
“In 2008, we had a huge surge in prices after being stagnant for many years. That was our correction period. But instead of stabilising and normalising, we were dependent on global forces that kept prices going up.”
At the height of Sabah’s property boom a few years ago, cash-rich tycoons sought to buy high-end luxury condominiums in the city, leading to an abundance of high-rise buildings, but this created a vacuum in low-to-mid-end property.
“Developers have to listen to consumer needs which are changing. And they have to be alert because the ups and downs are no longer 10-year cycles, ” he said.
Kong said that his firm will be launching a new affordable housing project along the city’s rim soon to cater to the biggest market demand.
“We know there is a demand, this is evident, but people are holding on to their money. Developers are still holding on to their projects. But the wealth is still here,” he said.
According to Shareda, the gross development value (GDV) for properties launched in Sabah has plummeted significantly in the last few years, from RM7.65 billion in 2013 to RM3.75 billion in 2014 and further dropped by approximately 28 per cent to RM2.7 billion in 2015. This year, the value has barely achieved RM2 billion.
Kho said that much of the downturn is now sentiments-based and consumers are just afraid of spending money in light of new factors such as GST and the perception of an economic crisis.
He said he used to organise up to four property launches every month but this has slowed down in the last year to zero this year.
Napic also reported the unsold residential, commercial and industrial units standing at 1,493 units valued at RM444 million against a 4,781 units launched, according to Napic. The bulk of this was 967 residential units priced RM300,000 and above.In 2015, there were 652 units of overhang properties worth RM177.5 million, up by 86.8 per cent in volume and 53.9 per cent in value.
Chew, who is also Grand Merdeka Development director attributed the unsold homes to the high rejection loan rate from banks, at about 75 per cent, an issue the association has been vocal about and is working with the government to overcome.
“We have some ideas. Like offering a lower loan or introducing a different credit check based on the fact that properties are ‘good debts’, unlike cars or personal loans. After all, owning property has major long-term benefits to retirement plans and its appreciation value,” he said.
“There has been a lot of meetings with the government so we are crossing our fingers that next year’s budget will include some plans to help address this problem,” he said.Knight Frank also pointed to several factors, including two big infrastructure projects, that would put Sabah’s economy on the up, and drive the property market as well, but only in the long term.
Phase one of the much-anticipated Pan Borneo highway in Sabah costing RM12.86 billion for 706 kilometres is expected to be completed by 2021 and is hailed to be the biggest game changer to Sabah’s socio-economic standing while a bus rapid transport (BRT) system is expected to be completed in 2020, transforming the current public transport system.
Tourism to the state is also expected to bolster all sectors of the economy by yearend as direct flights to China and Korea by both local and foreign airlines plus new charter flights from Malaysia Airlines have started.
According to Sabah Tourism statistics, international visitors to Sabah grew by 11.2 per cent in the first five months of the year compared to the same period last year. Out of the 455,071 international arrivals till May 2016, 143,199 were from China, an increase of 49 per cent, while 75,585 were from South Korea, a growth of 33 per cent. Sabah has received a total 1.3 million visitors so far.
People are still buying
Kho said that although official statistics is scarce, the reality is that there are still buyers in the market, but due to current circumstances, many are opting to buy outside of the country for investment and personal reasons.
Citing Australia as a popular choice, Kho said that those who can afford it have started asking about property aboard.“Some say it is because they have children studying overseas and it made sense to purchase property with the expectation that their children would likely live abroad following the completion of their studies.
“This is also linked to the current political landscape where they find themselves on an uneven playing field and are looking for more options,” he said.
Meanwhile, chairman of the Malaysian Institute of Estate Agents Henry Tai said that the current scenario meant that the secondary buyers market was on the rise although the reduced number of buyers meant that speculative buyers had to be more flexible with their selling prices now.
“Also, fewer buyers in the market and poor buying sentiments have driven more sellers to engage the services of real estate agents now, compared to before when they could afford to be selective,” said Tai.
“Because of the surge, there is a bit of a surplus now, and there are some people selling their units at cost, or even a loss. Investors in this sector are hard pressed for tenants and buyers. We have actually seen cases where owners in this category are selling at a loss or on even term.
Property consultancy firm Knight Frank said that although there were fewer product launches this year, there was a slight improvement in sales in the first quarter as indicated by developers who have experienced a 60 per cent take-up rate.
“Developers have responded to the market environment with smaller units and more affordable projects leading the way,” said the firm’s research developer Welton Chin.But it may still not be enough
The property firm remained cautious and said that although there were signs of recovery, they were not anticipating significant improvements in the immediate future, owing to external factors.
“Similar to many other countries, the property market in Sabah will mostly likely remain stagnant in the coming one or two years, owing to multiple factors such as political uncertainties, concern over global economy, skittish financial markets, sign of hypersupply to name a few,” said Chin.
He explained that a typical property cycle is loosely based on four phases: recovery, expansion, hypersupply, and recession. Sabah is currently teetering between the expansion and hypersupply phase.
“As Sabah experienced a significant growth over the past few years, demand increased while developers actively planned for more products to be launched. However, development and construction of real estate takes time, therefore there is always a ‘lag’ between demand and supply,” he said adding that many developments are already in the pipeline waiting for the right time.
Chin said that the challenging property environment has led to a greater level of innovation in terms of marketing strategies. Developers with prime land are devising projects to appeal to international buyers who are keen to capitalise on currency conversion and lenient loan approvals.
“As there is a mismatch in product pricing and affordability in the domestic market, more developers are widening their target catchment by marketing overseas, taking advantage of the weakening local currency which translates to attractive pricing and a low entry level for foreigners,” he said.
“For the domestic market, developers are looking to expand their land banks into the suburbs to offer a wider mix of affordable housing products,” said Chin.
“Unfortunately, we are unable to provide a fixed time frame or time period that would signify the turning point in the property market as there are too many factors, predictable or unpredictable, in this dynamic and ever-evolving industry,” he said. THE MALAY MAIL ONLINE
No comments :
Post a Comment