Double storey terrace in Kota Kinabalu outskirt is now RM450,000

Double storey terrace in Kota Kinabalu outskirt is now RM450,000. Is this expensive when compared to outskirts in KL? For example Sungai Buloh? How about mainland of Penang? RM450,000 is not actually expensive. However, in 2007, the same property was just RM210,000. Now, it does seem high. This is an increase of 11.5% per year. Major reasons? The usual stuffs, land prices going up, building materials and labour costs. Oh yeah, including the fact that these developers wanted to maintain the same margin. Why is Kota Kinabalu properties so popular? Well, it is the capital of Sabah. Thus, with urbanisation, it meant that the population from smaller towns would be flocking to Kota Kinabalu. This meant a continuous stream of new demand and thus the price increase.
I fly to Kota Kinabalu on a yearly basis. I have successfully climbed the Mount Kinabalu before. When I arrived at the top, I realised that majority of the climbers are non Malaysians. I realised then that Kota Kinabalu is visited by a huge number of tourists. Kota Kinabalu airport confirmed it. It’s the second busiest airport in Malaysia, losing only to Kuala Lumpur and beating even the Penang International Airport which is expected to reach full capacity by 2017. Kota Kinabalu’s airport’s extension and upgrading would be completed by January 2015. This meant the number of tourists arrivals would increase even further. You may ask what does tourist number has to do with property prices.
tourismBriefly. Tourism numbers increase, accommodation needs increases and more hotels open, food consumption increases and more restaurants open, flight numbers increase and this spurs more economic activities. With higher earnings, where do these people spend their money? Actually, property is a good way to invest their hard earned money because at this particular moment, the malls in Kota Kinabalu are still nowhere near those in Kuala Lumpur. Yes, there’s 1Borneo but I could not rate it on the same level as established malls like Paradigm or Setia City Mall. We have not yet included those who were in KK for MM2H too.
Ok, I seriously do not think the prices can still continue its 11% growth per year. At RM450,000 it is already considered expensive because the salary range for jobs in Kota Kinabalu is without doubt lower than Kuala Lumpur. Nevertheless I see Kota Kinabalu as the beacon of property development for the state of Sabah and I seriously do think that its worth a look, especially for some diversification purpose. Just like its tourism sector which is still growing rapidly, the prices would continue inching up until everyone said, ‘no more, I could not afford. Better rent’.
written on 3 Oct 2014
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  2. Bonnie Cheng avatar
    Bonnie Cheng

    I have been to KK for six times since 2012. Bought a condo unit near KK city centre in 2012. Visited KK again last week and am really amazed by the big jump of the property prices, especially in the Peak and the Loft. As my unit has been increased by about 30%, just wonder if I should refinance and buy another unit. Frankly, the rapid growth does make me hesitate.

    1. Bonnie, the question should be how much is enough and secondly do you have any plan for the next one or not. First, if you believe the profit is already so much that it is impossible to earn from any other types of investments, then perhaps yes you can think of selling. Do note that 30% up does not mean your profit is 30%, it would be much higher because your downpayment is not 100% but merely 10% or up to 30% only. Secondly, after you have sold, are you going to do anything with the profit? If answer is no, you are putting the money into FD, then I would advise to hold. Seriously, over many more years, the growth will beat FD unless the whole world spins into a crisis. However, if after you have sold you already have another property in mind, then yes, it’s best to sell and take profit and buy another. Of course, treat your loved ones to a holiday as well in the process. Happy investing!

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