Sunday, April 4, 2010

Kota Kinabalu, Sabah

Recently I have been to Penang and seen how properties have been booming there, despite the sluggish economy. The same phenomena seems to been taking place in Kota Kinabalu (KK) as well. I have always known KK to have one of the highest cost of living in Malaysia, even higher than KL in many cases. Average income here in KK is on the other hand, much lower than KL. So, how do we then describe how landed property, premium condominiums and commercial lots prices have almost doubled and rental is on an all time high?
Every year we have predicted that the property prices will right itself with the economic downturn and every year we get it wrong. Prices just keep climbing and climbing. And interestingly too, there are many vacant shop lots, businesses at the one time hot cake Warisan Square are closing one by one... so what is justifying those high prices?

picture above and below: Times Square located beside the Sutera Harbour resort is a new commercial block but largely vacant

One friend in KK pointed out that most of the properties, especially the commercial lots are actually bought en-bloc or owned by the few rich tycoons and politicians in Sabah. They would have paid cash and would not be bothered if they could rent them today or tomorrow. One day, Sabah's economy would pick up again and prices will continue to escalate. This speculative activity is no different from what we have seen driving prices sky high in the KL city center area - we have blocks of vacant luxurious condos which are vacant but prices are hardly affected.

picture above: Vacant shops at Lintas, a relatively more matured area

As it is today, everyone doing business in Sabah will tell you that it is very difficult for the economy to do well here as long as the level of corruption here persists. Sabah properties are owned by the few rich. There is a hope of change in government as the Federal opposition has promised an increase of oil royalty from the present 5% to 20%. The money, with better transparency and governance as displayed by existing Federal opposition ruled states in the Peninsular will mean more positive development and spending power for the locals. However, although Sabah has seen a change of state government 4 times in its history, it is understood that it will be impossible to happen in the near future - the number of "phantom voters", foreigners issued with citizenship for electoral purposes now outnumber the locals.

picture above: The Marina Court resort in the picture above is one of the few condos fetching good rental. However workmanship is very bad and the building is plaqued with problems. Warisan Square located just across Jalan Dua Puluh was a very well received commercial development but lately many shops closed. Opposite the Marina Court is the controversial KK Waterfront land reclamation which will block out all the sea views from Marina Court

So, the conclusion is... wait a long time if you are willing to invest here....

1 comment:

Kevin said...

day light robbery !! underhand tactics to strip sabahans resources