SABAH ON A GROWTH CURVE

By : SELVARAJA SOMIAH

LOCATION continues to be the key factors for real estate developers. And higher focus, within the real estate parameters, has been provided to occupiers demand followed by supply and indicator fluctuation.

Sabah’s real estate market has responded to the improved sentiments now being seen across the rest of the country. Construction activity is evident largely in residential as well as commercial projects including condominiums, shopping malls and multiplexes, since this is currently the primary growth sector on the state property front. Pragmatically, Sabah’s residential and commercial real estate segment has pulled itself rather convincingly out of stagnation mode.

Despite knowing the fact that the support infrastructure is a huge challenge in most towns and even the city of Kota Kinabalu, the domestic as well as national developers have not been deterred in decking the state’s continuous growing sense of modernity.

And the property rates for new schemes at its various potential districts have spiked by significant figures over the last few years. Residential projects are coming up fairly rapidly in Kota Kinabalu, Sandakan, Tawau, Lahad Datu, etc with a fair amount of residential construction including other adjacent areas of Labuan around Kuala Penyu.

With special real estate and education hub initiatives for the masses especially in Sandakan, the Sandakan Education Hub, a 1,200 acres site to be developed as an educational hub for five colleges that have expressed interest to establish campuses in Sandakan and the Sandakan Harbour Square which consists of 129 unit of shopoffices, a new central market, a Town Square, a shopping centre, hotels and a convention centre, the state is destined to get a face lift. Currently, Sabah is witnessing a huge revamping exercise.

According to a report compiled by the Syarikat Perumahan Negara Berhad (SPNB), which has data on all states, Sabah recorded one of the highest growth of 8 per cent during 2009-10. Lauding the prodigious achievement of the state, George Khoo, CEO of Properties Malaysia said, Sabah is the new miracle economy of the country.

To support and sustain the real estate growth trend in Sabah, the state government seeks Federal Governments immediate support in special package for infrastructure development in all the districts in Sabah.

Disseminating the news on current scenario of real estate, Sabah Chief Minister Musa Aman said, ”There has been a boom in the real estate in Sabah. I am often told that the cost of a high-end condominium unit in Sabah at present is higher than many developed cities in the country. This has happened in spite of the economic slowdown which had depreciated property prices elsewhere. The property prices had remained stagnant in Sabah for many years preceding my tenure.”

The Musa Aman regime has shown quick spike in state’s overall growth. Even, the improved law and order situation has attracted builders and investors to invest in the state contributing to its economic growth.

Another significant move taken by Musa Aman’s government is the halting of the proposed seafront development projects encompassing some 400 acres of seafront from Tanjung Aru to all the way to Likas signed away by Former Chief Minister Yong Teck Lee to some private companies one of which is connected to Sarawakian Datuk Seri Tiong King Sing who is also involved with the controversial ‘The Port Klang Free Trade Zone’.

To save the waterfront and the Likas Bay, Musa Aman had to stop the project and the state government was bought to court and RM1.6 billion was claimed by ‘The Developer’, luckily the government won the case.

The waterfront project in fact threatened to turn the waterfront and the Likas bay into a vast tower-block hotel and housing estate. The ‘Developer’ hoped to build a sprawling series of high-rise blocks, including multistory colossus. With the consequent seafront population explosion, the old concrete ramps linking the development to the seafront would be gridlocked and medical, emergency, bus and education services overwhelmed.

There would be pile-driving seven days a week for years and a decade of chaos with convoys of slow lorries trundling along Kota Kinabalu seafront roads with thousands of tons of building materials. The scheme would not just be a disaster for Kota Kinabalu residents but it would ruin the city’s seafront skyline, block sea views, cause road congestion and parking chaos way beyond the waterfront area, set an appalling precedent for over-development and sound the death knell for Sabah as a peaceful leisure venue.

Musa Aman’s aim is to accelerate development and undertake urban development in a way that is kind to both people and the environment and that’s why he had to put a stop to this project, he has sent a strong message in so doing.

Then there is another large industrial project, near Sipitang, US$ 1.5 billion Sabah Ammonium-Urea plant project also about to take off shortly by the Sabah government and Petronas. This undertaking also will do much to open Sipitang’s real estate growth into a new direction.

Now, the developers have started tapping Sabah’s fragmented locations after seeing a paradigm shift in affluent property buyers. They, with a serious need to spread their wings over wider geographies, now see no further mileage in delaying their move to untapped locations where the favourable penetration rate adds extra perk to develop the real estate.

And going 10 years down the line, the state will witness a consolidated position in the real estate market as developers are stretching their capacities to the maximum in order to meet the growing market demand.

Then the recent RAM Ratings has reaffirmed the AAA rating of the Sabah State Government’s RM544 million Bonds (2009/2014) and this is great news. RAM Ratings said the long-term rating has a stable outlook for Sabah and it also reflects healthy fiscal position.

Sabah recorded a fiscal surplus of RM730.3 million on the back of RM4.2 billion of revenue and this announcement further accelerates the growth curve.