‘Days of contractors making huge profits gone’

Losses in GE13 and the possibility of government cutbacks on infrastructure development are not among the main reasons for gloomy forecast on Sabah's property market.

KOTA KINABALU: Yayasan Islam Sabah has disputed leading realtors CH Williams & Talhars’ claims that Sabah’s predicted plunge in property market outlook for the next five years was because of the state’s ‘losses’ in the recent general election.

Its managing director Chong Choon Kim had painted a gloomy picture of the Sabah property market at a recent forum here saying he anticipated a post-GE13 cutback in government spending on infrastructure development, particularly in the urban areas, as the state had lost 13 state seats to the opposition.

Chong opined that the government will not be spending more funds on infrastructure such as roads, schools and hospitals in Sabah as a result of having lost seats.

But Yayasan Islam secretary general Raden Kakung however felt otherwise.

Expressing his surprise at Chong’s observation, he said the main reason for the downswing was the “glut” .

In a statement here, Raden said Chong’s view was biased towards “big” contractors who’ve had made hay in the past.

“It seems like that the federal government is now a scapegoat (for unhappy contractors).

“Chong is fully aware that those days of the negotiated contractors who were reportedly making 30-50% profits are now gone.

“In actual fact the main reason behind this gloomy forecast is that the property development in Sabah is overbuilt – the schools, hospitals, roads, commercials and residentials (properties).

“With the sky rise of the property prices in the state capital, the only buyers who can afford to buy and sustain the property market are the contractors themselves.”

Poor planning

Raden further listed six main reasons for the expected gloomy Sabah property market.

Among them he said was the oversupply of property space, high property prices, the socio-economic demographics of the buyers, and the fact that banks no longer give out 100% bank loans.

Explaining further, he said the oversupply of space was because more than 1,000 approvals for new development had been issued over the past few years.

“Large buildings for offices and residentials were built without consideration for the needs of the city. There was no proper planning being carried out.

“Also property prices were just too expensive. The buyers were mostly from the upper and middle class (group) who are mostly oil palm estate owners.

“The days of the bank giving 100% loans are over,” he said.

Raden also noted that there was a drop in foreign purchasers of houses in Sabah because of existing government laws and policies which, he claimed are not conducive for foreigners to settle in state.