KOTA KINABALU – The property overhang in Sabah remains high this year, involving a total value of RM1.2 billion.
The reasons cited for this include unresolved disputes, legal wrangles and the rising cost of construction.
The state’s once renowned Star City and 1Sulaman projects – which many had believed would help generate jobs in Sabah – have been left abandoned, a testimony to how developers are unable to fill up vacant lots fast enough to cover cost.
The National Property Information Centre’s 2020 statistics showed that 1,437 residential units (RM600 million), 620 shop units (RM500 million) and 64 industrial units (RM114 million) remain unsold in the state.
Sabah Housing and Real Estate Developers’ Association (Shareda) president Datuk Chua Soon Ping told The Vibes that a major factor is businesses finding no need to have physical offices for staff nowadays.
“More and more businesses these days prefer to not have offices or premises, thanks to the work-from-home trend.
“Entrepreneurs are also able to reduce their costs.
“The way to go now is e-commerce, and there’s strong demand for improved logistical services.”
He added that vacant lots at commercial areas can be used as warehouses and cold-storage spaces.
On unsold properties, he said Shareda is adopting big databases and artificial intelligence to predict the type and quantity of properties that will be in demand, to prevent a glut.
“Overall, Sabah does not have much of an issue with unsold properties, although the association must move forward to keep up with the times.
“Being developers, we need to obtain licences before commencing developments. We want to collect this data through the advertising permit and developer’s licence.
“The agency will provide us with the quantity and type of housing to be built, whether it’s a landed or high-rise development.
“We will be cautious if demand is not there.”
Members are also told to not compete with one another, he said, to prevent a property overhang.
Experts believe commercial properties in Sabah remain unsold due to, among others, high rentals and the low number of entrepreneurs.
Barely any takers
State Industrial Development Minister Datuk Joachim Gunsalam declined to comment on the matter of Sabah having the fewest small and medium enterprises (SMEs) nationwide.
According to 2020 data, SMEs in Sabah and Sarawak stood at only around 12% of the country’s total, despite billions of ringgit spent by the federal and state governments to spur entrepreneurship.
Joachim said SMEs’ goods and home-made products will be sold on online marketplaces, such as E-Pasar Sabah, Shopee, Borneo Kaki, ShopDirect, Tamuku, MyBorneoShop and GoNet, and this is expected to increase local entrepreneurs’ income.
Many businesses also prefer to operate in suburban areas due to the expensive rent in the city.
“Even before the pandemic, Sabah was already accumulating a number of unsold properties,” added Joachim.
In terms of residential properties, many Sabahans find it unaffordable to buy homes of their own.
Poor credit scores have been given as a reason why banks do not easily approve housing loans in the state – an issue that has often been highlighted by the state housing body.
House prices in the state capital here have soared, with some units costing over RM500,000.
Residences in adjacent districts like Penampang, too, are becoming pricier, with locals facing the likelihood of being pushed out into the suburbs.
Reports had suggested that the 1Sulaman project, declared abandoned in 2016, would see a new developer last year.
The condominium development had been due for completion in 2012, but developer Sagajuta Sdn Bhd was declared bankrupt, leaving it only 80% finished.
It could not be ascertained whether the new Gabungan Rakyat Sabah government will bail out 1Sulaman, which was initiated by the previous Warisan-led administration.
As for the Star City project, the Star City Buyers’ Association reported that the developer had proposed to resell their units to the Sabah Urban Development Corporation (SUDC) last year.
There are around 200 buyers and investors in the said project, located along the coastal highway here.
SUDC is the building’s landowner.
In 2019, it was reported that the Hong Kong-incorporated Fusun International Holdings Ltd’s local subsidiary, Skyrich Development Sdn Bhd, planned to partner with SUDC to construct KK One to replace Star City.
The foreign firm plans to invest up to RM3 billion to kick-start the endeavour, and is expected to complete works in 2023. – The Vibes, April 22, 2021
