Tapping more into the East Malaysia property market, more specifically Sarawak, the local real estate is not exempted from experiencing the sluggish rate of property transaction over these recent years. The market is challenging thanks to the sharp rise in housing price where new launches are showing an increase ranging from RM400,000 to RM1 million per unit, with variation depending on the location, land, building size and specification. Following to this, Sarawak has seen a decrease in numbers for new property launches as compared to back in 2014.
Despite these, the future is not at all bleak. The demand for property is still strong but it is more inclined towards mid-range price development or more commonly known as affordable housing. In a research by Khazanah Resource, the median of housing price is outstripping the median household income where the former is hiking up fast as compared to the growth of the latter. In simpler words, it is not that buyers are not interested to buy, it is more the issue of buyers could not afford. Hence, to better address the right market demand, here are more insights on Sarawak’s property market.
1. The Flood of High-rise Residences
As of recent, Sarawak is seeing more high-rise residential developments being constructed. Looking back, the high-rise development influx started emerging rapidly in 2015 but however the trend projected downward since then in terms of the number of projects. Although, launches had slowed down until the end of 2017, the market is continuously growing albeit soft hence maintaining a gradual but positive outlook for many.
More often than not, these high-rise developments would be concentrated around the main areas of Kuching city centre, Batu Kawa, Bintulu, Miri, and Sibu where take-up rate and rental yield are expectantly higher. Sarawak’s high-rise residential units that were launched or under construction currently would mostly be luxury apartments, serviced apartments, luxury condominiums, and serviced condominiums. This is largely due to the increasing demand coming from buyers of the younger age group looking for a more contemporary living option.
In order to increase take-up probability and lower the risk of unsold units, we are also seeing many developers opting to construct these high-rise residential projects with limited number of units. Utilising the most out of this, most developers promoted these projects as low-density residentials and turning it into another unique selling point. On a different note, significant upcoming high-rise developments are such as Yarra Park, Urban Residences, The Podium, Lot 16 Residency, SK One Garden City, and Toorak Park.
2. Steady Landed Residential Property Market
Speaking further into the landed housing market, in 2018, this property sector is seeing lesser launches and tilting more towards build-then-sell concept. Also for the record, most of the landed developments launched are completed in a gradual manner and consisting between 30 to 50 units. Again crediting this to the hike in house prices, developers are maintaining revenue by limiting the supply output.
The development pattern also shows that landed developments are popularly developed in the secondary areas such as Petra Jaya and Jalan Datuk Mohammad Musa. Dominating the supply in this category would be the double-storey terrace units and semi-detached units with most interested buyers would be families purchasing for own stay. On a brighter note, despite apparent slowdown of supply, there is no sign of a price downtrend.
Efforts from the Sarawak Planning Authority by monitoring and controlling the rate of overhang units are proving effective, hence, providing a steady market. Simultaneously, there has been a huge demand for affordable housing among Sarawak’s property buyers that there are more projects being developed under the federal government’s affordable housing schemes such as SPEKTRA, PR1MA, and PPA1M.
3. Challenging Climate for Commercial Developments
According to a research by Sarawak local real estate firm, WTY International, the current supply of shop-offices are located mostly in Kuching, reaching more than 40 percent of the state’s overall supply. With a heavier business activities going on and promising opportunities for business and investment, it is not a surprise that Kuching holds the biggest portion of the commercial sector. Until last year, more than 50 percent of the commercial developments have reached completion.
Currently under construction and incoming new projects are estimated to supply another 1,248 commercial units, making it a substantial figure to pose an effect on the market as reported by NAPIC. This considerable amount of commercial units may contribute to the current commercial development surplus hence promoting stiffer competition in sales and occupancies. Despite this, we are seeing more and more retail developments being constructed which may lead to difficulties in finding tenants later on.
Some major commercial developments comprising of shop-office units in talks recently include Royal Richmond Square, Saradise, TT3 Commercial Centre, and Canaan Square. At the same time, commercial development concerning retail is rising in numbers with projects such as Mydin Petra Jaya, Aeroville Shopping Mall Stutong, and AEON Mall at Central Park.
4. Promising Future Developments
Under the 2018 State Budget, around 70 percent of the total budget is allocated for development from a total budget of RM5.781 billion. Meanwhile, another 30 percent is proposed for operating expenditure. Given this sizeable amount of funding supported by the government, the focus is concentrated in constructing new infrastructure developments while concurrently upgrading existing infrastructure.
Key infrastructure with high probability of influencing the Sarawak property market would be the monumental construction of Pan Borneo Highway stretching up to 1,060km from Telok Melano, Semantan to Miri and from Limbang to Lawas. The mega-project is divided into Phase 1 covering 791km and Phase 2 covering 77km. It is slated for completion by 2022. Upon completion, it will serve as a major gateway that will enhance local connectivity and accessibility.
Another major infrastructure development in store would be the construction of a landmark bridge at Kuching’s waterfront namely the Darul Hana bridge. The S-shaped bridge is going to be a pedestrian bridge linking Kuching City North and Kuching City South. Aiming the tourism sector by adding more attraction in Kuching, the development has high potential of attracting investors to invest in short-term rental and hospitality related properties.
Conclusion:
Reviewing back to the Sarawak property market, one can summarise that its property market has a mixed outlook but promising and holding a great amount of potential. The key to prosper with current property market dynamic lies in knowing the actual demand for housing in order to match with the supply hence creating a balanced equilibrium for a healthy yield of revenues. On top of that, the market post-GE14 is expected to see strengthen effort from the federal government in providing affordable housing schemes which will benefit buyers in terms of improving affordability and benefitting developers in terms of incentives.
This is supported by the Sarawak Housing and Real Estate Developer Association (SHEDA) Chairman, Dr Christopher Ngui saying that “It is anticipated that the outlook for 2018 in Sarawak property market continues to self-correct by shifting to affordable price range, hence, now is the time to enter the property market for investment or for own use before the upturn of the local economy” in a news statement.
Want to know more about Sarawak’s properties? Head to www.propsocial.my now and start your search, or join the SHEDA Property Expo 2018 happening at Borneo Convention Centre Kuching (BCCK) from 6th to 8th July! Click here for more info.
(Written by: Aisyah Shukor, 19th June 2018)
