The overall house price index of these East Malaysian states have remained on the uptrend, understandably at a slower pace given the current economic and political climate locally and globally. The growth of three main sectors in the past, agriculture, oil and gas and tourism have contributed to strong socio economic growth and the development of infrastructure in East Malaysia. Rising prices of land too has propelled the property sector to the forefront generating interest in land acquisition in urban and suburban areas of the states.
According to the CH Williams Talhar & Wong (WTW) 2016 Property Market report, Sabah property prices are expected to be sustained in 2016. There has been no evidence to indicate a fall in property prices. The only notable development in the market is the state government’s approval of the earthquake-resistant building guidelines. which is envisaged to raise construction costs, affecting property prices.
The overall property market for Sarawak is best described as being cautious. The rise in construction costs has pushed up the prices of residential property despite it being exempted from GST. WTW reported the increase in the residential sector as being 3% to 6% and described the property sector as stable especially those in prime locations. Residential property below RM400, 000 remained in good demand but those at the upper end of the scale are affected by slower sales. Other positive developments in Sarawak include it maintaining its foreign ownership minimum pricing of RM350, 000 per property as well as the announcement by the Sarawak Chief Minister that subsidiary land titles shall follow the land tenure of the original parent title sector. This augurs well for the property sector as the interests of owners and purchasers are protected.
DEVELOPMENT PLAN ON TRACK
Both states are currently in a rapid economic development phase as under the 11th Malaysia Plan, as part of the Nation’s Economic Transformation Programme. The Plan underscores the initiatives of the Sarawak Corridor of Renewable Energy (SCORE) and the Sabah Development Corridor. Concentration is on the construction of more than 3000 km of roads between 2016 and 2020 and the improvement of healthcare standards in the state, which will see the upgrading of Tawau and Marudu hospitals in Sabah and the Miri Hospital in Sarawak. Additionally a new hospital will be built in Sri Aman, Sarawak. Other major infrastructure projects include the construction of airports in Mukah and Lawas, which will boost the Sarawak’s progress. The construction of the Pan-Borneo Highway (PBH) linking Sabah and Sarawak, scheduled for completion by 2025 will span 633 kilometres The highway is instrumental in stimulating further economic development and facilitating the opening up of small towns and villages.
RISING DEMAND FOR AFFORDABLE HOMES
Rising prices particularly in the residential sector and increase in economic activity has created an unprecedented demand for affordable homes in areas surrounding Kuching and Kota Kinabalu. Majority of residential development in the next two years will be focused on low cost, low cost plus and affordable housing. Developers will be compelled in addition to fulfilling their obligation to government requirements, to build according to market wants and what buyers can afford rather than what developers prefer in terms of profitability.
Both Sarawak and Sabah are in the preliminary stages of growth, with much undeveloped land and untapped resources. The focus has been mainly in Kuching and Kota Kinabalu but as the reach of the main infastructure frame is extended to other twonships, ample investment opportunities and options will open up particularly for West Malaysians looking to diversify their portfolios.
This article was first published in the iProperty.com Malaysia August 2016 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine. Better yet, order a discounted subscription by putting in your details in the form below!