Will the Sabah Property Market Rebound in 2021?
Here's What People Are Saying.
It can be difficult trying to forecast the future of the economy so let's see what these 8 real estate players have to say.
The property climate across the globe, not excluding Malaysia, was hit by a massive storm due to the COVID-19 pandemic in 2020. After reaching an unprecedented high of 328,647 property transactions, Malaysia succumbed to a sharp dip by 27.9 per cent in volume.
It was the largest decline of volume transactions since the 1998 recession where Malaysia faced a 32.3 per cent decline in volume transactions, according to the National Property Information Centre (NAPIC).
Read Property Hunter’s review on the 2020 Malaysia Property Market.
Never seen before economic downfalls occurred and in turn, conjured up relentless efforts by the government to recover the economy.
You’ve heard it all - loan moratoriums, RPGT cuts, the lowest bank rates ever in history and the National Home Ownership Campaign.
Here is an Ultimate Guide to Homebuyer Incentives in Malaysia 2021.
Was it all enough and is it all over now? Is the worst yet to come?
More importantly, you came here to get some insight into the Sabah property market in the upcoming year. Sabah is a state of Malaysia with its own unique features and components, acting almost in its own independent way.
The tropical state was not spared from the slow down in transactional activity in 2020 where it’s residential sector witnessed a double-digit decline on y-o-y transactional volume and value. However, the pressing issue of property overhang did see a slight improvement, mainly due to the reintroduction of the Home Ownership Campaign (HOC) 2020 - 2021.
For 2021, we forecast that first-time homebuyers will continue to drive the property market as foreign transactions remain uncertain and buyer behaviour centralises on home values, as opposed to investment purposes. Those with good financial standing will opt to take advantage of the prevailing homebuyer incentives issued by the government and home associations to stimulate activity in the market and neutralise real estate industry growth.
What Sabah Real Estate Players are Saying
(You can skip to opinions using the navigation above!)
Mr Elson Kho
Director of Property Hunter
“Unless there is a drastic economic growth, I believe the market sentiment for the real estate industry will remain conservative in 2021. Having said that, I foresee homebuyers will rise up and take advantage of the incentives and low interest rate. We all know the golden rules of "buy low sell high", now is the time.
However, if people are still expecting property prices to drop in high demand areas, I don't think that is going to happen. Our government has sustained cashflow in our economy over the last year through moratorium, cash handouts and soft loans. Besides, we all have learned to "live with" the virus and moved on with our life. I firmly believe our nation has sailed through the storm (provided our politicians do not rock the boat, again!).”
Ex Senior Banker
“In the eyes of a banker, the outlook for the property market in 2021 will remain stagnant. Bankers are conservative and do not foresee many new launches in real estate this year. For those that are financially stable and are still looking to buy, keep in mind that bankers are more concerned with easing the overhang of properties in Sabah so be cautious when entering the market and go with the projects that have existing stock.
Furthermore, most banks are normalising payment assistance programs to help homeowners refinance their homes until the end of 2021. If you are a homeowner, you should take advantage of this! I also predict that house prices will either remain the same or drop within the year and that Bank Negara Malaysia will drop the Overnight Policy Rate at least once or even twice again this year, reaching an all time low."
On January 20, 2021 Bank Negara Malaysia’s Monetary Policy Committee (MPC) announced they would maintain the OPR at 1.75%. You can read more about this decision here.
Dr Victor Gan
#ThePropertyDoctor, a Real Estate Analysis Company
"In my opinion, the entire Sabah real estate market will remain resilient as we are not as exposed to speculation as compared to Klang Valley markets. And most of the more traditional residential housing areas in Sabah are owned by the Gen X people, fully paid for in its entirety. Thus the urgency to sell is not present.
The residential market will remain strong as long as the price is reasonable. The need for housing is always there because our population is still expanding.
Commercial retail outlets will take some hitting as business revenues drop which leads to reduced demand for shops as more and more people pivot their businesses to the online market. Nevertheless, in Zone C and Zone D areas, conventional double-storey shops in well-established neighbourhoods will continue to do well.
The only sector that will continue to do badly this year will be the tourism-related real estate for short term stay.
However, once the entire world is well vaccinated, and herd immunity is achieved and international travel open again, everything will resume to where we left off in 2019.
You just cannot replace the experience of visiting a country with visiting it on Facebook.
Thus, tourism will be back, but just not this year.
In general, I do not foresee real estate prices to drop.
We will nevertheless have a mild drop in growth index as per the entire nation is experiencing right now. Sabah real estate will continue to be resilient and stable."
Datuk Chew Sang Hai
Chairman of Sabah Housing And Real Estate Developer Association (SHAREDA)
In a recent statement, SHAREDA commended the Budget 2021 for it's intiatives to boost the real estate industry, especially the waiver of stamp duty and Rent-to-Own scheme.
“This will help the rakyat own their dream homes," Datuk Chew said after the industry has experienced an “obvious slow take-up rate on bookings in the last few months, mainly caused by the Covid-19 outbreak.”
They also suggested additional incentives adding, “We propose for the Sabah government to consider waiving at least three to five years of assessment tax for properties registered under the HOC."
“This would be an additional effort and incentive from the state to help revitalise the Sabah property market and subsequently improve market sentiment and confidence."
Furthermore, they hope to see the "Sabah My Second Home", that was proposed last year, would be implemented as soon as possible "to encourage greater foreign investment by reducing the foreign purchaser threshold to property valued at RM500,000 onwards."
Dr Daniele Gambero
Author, TEDX speaker and Co-founder of Propenomy.com
"In general, we can expect the past property “up-zoning” trend (high density within urban areas) to move towards “down-zoning” (low density development, low raise or landed properties and away from city centres).
Property primary market still offers great opportunity and more will come our way in the forthcoming future. The Malaysian Property Market will definitely recover, raise and shine as never before but it might be taking a while.
In the meantime, better get ready to grab the good opportunities which will come our way following the table below for the “buy” or “don’t buy” decision."
"Malaysia has still a substantial shortfall of affordable housing and empty office and hospitality space might be partially re-developed to address this demand. It is a medium-term game but could be working. Another very interesting niche of the property market that few have been looking at, is the fast-growing group of aged Malaysians.
In the next 20 years the “third age group” (people aged 65 years and above) will almost double while the natural grow rate for Malaysia, will keep on remaining stable. Result is, higher demand for “residential-cum-medical-care-services” properties and several resorts and hospitality designed building, would be perfect to address this demand.
In conclusions, Malaysia has and is surviving the “2020 Perfect Pandemic Storm” pretty well, we know when it started but cannot foresee, for the moment, when it will end but, like all the storms it will end, and sun will shine again better than before, eventually!"
TJ Wong
IQI Sabah Team Leader
"For the subsale market, especially landed houses, now is your chance if you have been searching for years and are financially equipped. There are quite a number of Terrace houses ranging from 600k to 700k and semi-d 900k to 1mil which are hard to come by when the market is good and the supply of landed house is limited.
For new projects, developers would be giving their best offer now in order to clear inventory. Projects will only be completed in 2-3 years time when the market rebounds and supply on the market at the time will be limited as well because lesser projects are being launched at this time."
Enoch Khoo
Author, TEDx Speaker and Director at Property Hub Sdn Bhd
"The market will be soft in 2021.
We see a lot more transaction of rentals for residential property. We see a shift of tenants moving to newer developments for rental as compare to older condominiums as the rental prices are almost similar.
However, we see an increase of interest in warehouses as businesses needs more storage spaces due to delay in shipments and etc.
Landed properties sales also on the upward trend as more and more people realise the importance of space due to previous lockdown experience."
Mr Chaw Kok Wong
Director of Azmi & Co
“How long will this persist? It is difficult to predict considering our political issues, where things are changing every month, but in 2021 we will see increasing pressure on house prices. I would expect to see maybe a 10%-15% overall downward adjustment but some sectors and geographical regions will suffer more than others.
In Sabah context, Kota Kinabalu is a narrow coastal city with only about maximum 10km in width and because of this, land is very scarce. According to the local town plan, produced about 12 years ago, we have developed almost 80% of the land, not leaving very much available. Therefor home prices are actually sticking and not falling as much as we thought they would.
If the market continues to deteriorate, I think the government will implement more initiatives to stimulate the economy so there are levers that we can rely on. The good thing about Malaysia is that we have a resilient banking industry, after learning from the lessons of the crash in 1997. If you are looking to buy in 2021, do your research and I would suggest that you consider affordable housing and auction homes. You never know, you might get a great bargain!”
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