Pan Borneo Highway to boost property prices
Published on: Wednesday, May 18, 2016
Kota Kinabalu: The Pan Borneo Highway is expected to increase the business volume and social mobility within East Malaysia, Brunei and Indonesian Borneo.In Bintulu, excess industrial shops near the federal-status port face a slow take up rate, unlike those nearer to new malls in the gas export industrial town of Sarawak.This is despite that currently downstream activities are concentrated in Bintulu – aligned with natural gas as feedstock as in the Shell Middle Distillate Synthesis (SMDS), Asean Bintulu Fertiliser (ABF) and MLNG etc.ADVERTISEMENT Likewise in Sabah, those supply-driven speculative new shops near the Kimanis oil and gas depot also face a slow take up rate and tenancy occupancy.This is also hampered by the fact that there are no downstream activities in Sabah and Sarawak (Lutong refinery in Miri had closed down) using crude oil as feedstock for refining or producing products.There is a strong East Malaysian desire to force a more a balanced development between East and West Malaysia where all the oil refinery are location even in Port Dickson and Pengarang where there are no crude oil or gas extraction within the territories of the two states.West Malaysia refineries are Petronas Malacca 220,000 bbl/day, Shell Port Dickson 145,000 bbl/day, Petron 85,000 bbl/day, Petronas Kerteh 120,000 bbl/day, KBC 30,000 bbl/day and under construction Pengarang 300,000 bbl/day. ADVERTISEMENT Only Terengganu has off shore oil fields."It is politically imperative that Sabahans and Sarawakians do not feel left out of the natural resources development growth and their downstream prospects in Malaysia with industrialisation now concentrated in West Malaysia," said a property consultant.
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East Malaysians expect projects like the long overdue Pan Borneo Highway infrastructure, tax incentives, licensing etc. for facilities in Sabah and Sarawak from the government, long bent on prestige projects like Petronas Twin Towers and Putrajaya from oil and gas proceeds."With the completion of the Pan Borneo Highway beyond 2021, prices and occupancy of these East Malaysian commercial and industrial properties nearby export hub ports are expected to appreciate and improve due to business demand and mobility access," he said.In Sandakan, some industrial properties were transformed into hospitality accommodation and training facilities.By then, the economic situation is expected to have improved and the property market on the ascendant with better governance and stability contingent on world, region peace and global economic sustainability.Supply of landed residential units in Sibu has slowed down as transaction activities and take up rates have contracted.Generally, newly launched intermediate terraced and semi-detached houses have command prices above RM400,000 and RM600,000, respectively.In Miri, selling prices of newly launched residential properties were higher mainly due to inflation and the impact of GST.Transactions activity and take-up rates are expected to slow down in 2016 due to the overall slowdown of Malaysia's economy. With Miri sprawling north and south, current and new projects are moving to outlying areas where the land cost is relatively lower.Housing units under construction are the highest in Lutong-Kuala Baram area (927 units), largely contributed by Desa Senadin developed by Miri Housing Development Realty Sdn. Bhd.Luak-Bakam and Taman Tunku-Taman Jelita which have seen increasing housing activity in recent years are expected to maintain their momentum in the next few years. Generally, it is expected that the Miri housing market will continue to be stable but with noticeably less launches and completions.Prices of residential units in Bintulu in 2015 were higher compared to 2014. However, the market was stable in general due to the current on-going SCORE Projects in Bintulu but it is expected that the transaction volume and take up rate for new projects may experience a downward trend due to overall economic slowdown.Since the last five years, developments of high-rise residences have picked up in Miri with five projects completed and four new project launches that will be completed in the next one to two years.Likewise in Sibu, stratified residential properties were picking up in recent years, due to increasing land cost and scarcity of land in prime locations. Selling prices of newly launched apartments have been rising fast after gaining popularity.In Bintulu, the condominiums/apartment market was weak in 2015. The number of high-rise residential units is expected to increase with nine projects, totalling 783 units slated for completion within the next three years.Moving forward, 2016 is likely to see less transaction activities.In year 2015, the take up rate for shophouses in secondary location, such as Eco Garden Commercial Centre at Sibu Jaya and Uni City Commercial Centre at Jalan Wawasan has generally improved although the occupancy of existing shophouses projects remained low.Selling price for shophouses in these commercial areas are lower and more affordable compared to those in the vicinity of the town centre. Companies are still looking at shophouses as business premises, and as such there is no existing market for purpose built office space.In the short run, more commercial shophouse projects are expected to be launched as many were granted approval in the past few years. However, market activities and take up are likely to remain sluggish.The average annual addition for shophouses in Miri is about 120 units per year, however, year 2015 observed a larger supply coming into the market. This was largely contributed by the completion of Senadin Commercial Centre (108 units), Desa Bahagia@Bandar Baru Permyjaya (81 units) and Marina Square I@ Marina ParkCity (106 units).The take up rates of these newly completed projects were relatively slow, underlying the lack-lustre performance of Miri's shophouses market in 2015. It is expected that the coming few years will see less new launches, as the unsold units will require a year or two to be fully taken up.In 2016, the shophouses market in Miri will be a tenants' market in 2016.Bintulu also is facing an oversupply of shopoffice. At present, there are around 1,084 units of shop offices due for completion in the next two to three years.The selling price of shopoffices had moved upward significantly since 2014, to between RM1.6 million and RM2.2 million in 2015.Rentals were rather competitive, at around RM1.38 to RM1.84 per sq. ft. in both 2014 and 2015.Stay up-to-date by following Daily Express’s Telegram channel.
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Launches of shop offices will be lesser in 2016 as the cautious market sentiment and oversupply issue see more developers postpone some of the approved projects.In Sabah, new commercial and industrial property from Beaufort to Papar face oversupply woes and low occupancy rate that hopefully the Pan Borneo Highway can bring some improvement in business prospects.