Few foreign investors so far
KOTA KINABALU: Sabah Housing and Real Estate Developers Association (Shareda)
Its president Chew Sang Hai said the association disagreed with the statement that Sabah owed its unique growth of property value to the openness of the State to foreign investors.
Sabah Property Assessment and Services director Syed Anuar Syed Norddin made this statement when paying a courtesy call on Head of State Tun Juhar Mahiruddin at the Istana Negeri here Thursday, saying that the high prices of land in all categories compared to other regions could be due to the State's openness to foreign investors.
Chew however described the property purchases in Sabah by foreigners as “insignificant”.
He said that as a whole, foreigners only contributed about three per cent of property investment in Malaysia and the hottest spot for Singapore and China investors are in Iskandar, Johor.
“How many per cent of foreigners purchase property in Sabah? According to the study we have done, it is only 0.2%,” Chew revealed.
“And 95% of all these foreigners are not from China but from Brunei,” he added.
He said Immigration Department statistics show that there are only 300 social visit pass applications for the Malaysia My Second Home (MM2H) programme in Sabah between 2011 and 2015.
Even so, Chew stressed that the figure did not reflect the actual number of successful property purchase transactions in Sabah.
“This shows that our property market is driven by local demand market,” he said, adding the development cost in Sabah is 30 per cent higher compared to West Malaysia.
The Shareda president said the association had approached the State Government on the matter of high overhang property, up to 50 per cent, in Sabah for 2016.
Hee said Shareda had proposed to the Chief Minister to open up the market to foreign purchasers so developers could offer their properties, especially from the higher end, to them.
The association is still in talks with the State Government on the means and measures to realise this, he said.
Shareda council member Ben Kong Ching Vui pointed out that there have been a lot of misconceptions drawn out by certain people to the general public.
“We would like to clarify that the statement made in this article is in a way baseless because the facts are totally different,” said Kong referring to the statement that was reported yesterday.
He instead urged the government to take an in-depth look on the real reason behind the high property value in Sabah.
According to Kong, state developers import 90 per cent of their materials, which include metal door frames from West Malaysia, and pay more for construction “ingredients”, steel and cement, compared to West Malaysian developers.
Besides that, he said Sabah's lack of infrastructure, electricity coverage, and other reasons also contribute to higher development costs.
“Most developers are compelled to do public infrastructure beyond their own development site. We would have to improve the main road, upgrade main water pipe system, and do public drainage, which is all beyond the boundary of the site due to our (state) infrastructure. Then we have high capital contribution,” explained Kong.
“This high contribution is again due to Sabah's huge land mass. There are a lot of areas which do not have full coverage of electricity and telco reception. When you do development in certain areas, developer are again compelled to make this connection and as such, the development cost for capital contribution is also very high.
“A lot things are beyond the local developers' control and, to be honest, with this kind of economic environment, do you think any developer will unreasonably mark up their price? We also worry about selling out our property.
“Every one of us are sitting here sweating every single day. It's not that we don't want, our hands are tied in many ways, we have a lot of restrictions,” he added.
Kong also elaborated that high development costs were also due to the expensive earthquake resistance exercise implemented in Sabah.
He added that government guidelines compel developers to provide two car parks for each residential units, which also increased the cost by around RM30,000 per unit.
“Where do these costs go to? Selling price. This is a huge burden. This is real. This is why our people in Sabah are suffering and this is why the developers cannot push the price further because we have no room,” said Kong.
Shareda secretary general Ang Guo Wei also reiterated the association's concern over the slow approval process experienced in Sabah.
He said the long process will result in pricier developments holding up costs that will inevitably make properties unreachable to certain groups of people in Sabah.