The residential property market remains soft, especially for landed residences, while the other housing subsegments, such as high-rise apartments are witnessing a slowdown in sales.
In its 2019 Real Estate Market Outlook, CBRE and WTW Research noted that this trend is a continuation of the ‘slow and cautious’ stance last year, reported The Borneo Post.
“Both developers and buyers are cautious in decision-making, pending further political and economic developments,” it said in the report.
The report showed that Kuching’s landed residential market saw very few new launches particularly in prime housing areas. Most of the launches last year were from the outer-lying secondary prime areas.
Kozin Real Estate director Dato Alex Ting expects the property market in Sarawak to continue to soft in the short to medium term.
He explained that the oversupply of condominiums, which accounted for half of the overhang units in Sarawak, was not due to lack of buyers, but because units are priced beyond the reach of buyers.
In fact, there is robust demand for properties priced below RM250,000.
The high demand for affordable properties was evident in the booming sales of PR1MA units within the state.
Ting also noted that the increased sales of the PR1MA units could be attributed to the recently announced Home Ownership Campaign which effectively lowered unit prices by 28%.
“When we first started selling the units, we sold about 100 units but after the Home Ownership Campaign started on 1 March, we’ve sold about 1,350 in just a month and a half.”
The rising sales for PR1MA units priced below RM250,000 indicate that demand for property is still there, with high prices being the only hindrance.
When asked why properties in Sarawak continue to be high, Ting pointed out to the high cost of land.
Elaborating on the matter, he added: “Land prices in good areas like Jalan Song are now commanding around RM5 million per acre. In the old days, we would only get approval for maybe eight units per acre.”
“Now, it is 10 units per acre but in these sought-after areas it may likely still be eight. So just imagine, RM5 million divided by eight – that is already over RM600,000 in land costs alone. Even at 10 units per acre, it’s still over half a million. What about the building itself? That is another RM200,000 at least.”
With this, he called for the revision of the current plot density regulations.
While the allowed density for high rises is now 30 units per acre, the guidelines are still too restrictive and result in higher property prices, Ting explained.
“Using a plot ratio would be better as developers can then use their knowledge of the industry and market to deliver units that match the needs and demands of the people,” he said.
Under plot ratio, the total floor space on a site can reach up to twice the site’s area.
In the meantime, because of the absence of new landed housing, homebuyers are now seeking alternatives in the form of second-hand landed units and high-rise apartments.