Published on: Friday, August 08, 2014
Sabah is seen as a new growth frontier as the property market matures in the region.
As the rest of developed Asia struggles with heated property markets, Sabah is at the tipping point with a confluence of Borneo's unique offerings and strong property drivers.
Sabah today is well on its way to becoming an international hotspot for travellers and savvy investors.
"Blessed with an equatorial climate of year long summer days, amazing sunsets and virgin beaches, the world's oldest rainforests and cool mountain ranges, it is hard for Sabah not to be on the radar of neighbouring Asian cities - most of which are within a five-hour direct flight of the state's gateway in Kota Kinabalu."
Its Managing Director Sarkunan Subramaniam said so at the opening of its first branch in East Malaysia at KK Times Square Thursday which is a vote of confidence in the state's future, especially in the property industry. The date August 7 was chosen as the eve of Knight Frank Malaysia's twelve years anniversary celebration of its establishment in Malaysia on August 8, 2002.
"This is indeed an exciting time for Knight Frank Malaysia. This opportunity allows us to extend our boundaries into new frontiers and take our property services to new levels.
We're enthused and honoured to be able to bring international standards of the property industry to Sabah, we believe the state will flourish from our expertise in key service lines: Commercial Agency, Investment Sales, Retail Consultancy & Leasing, Project Marketing, Residential Agency - Sales & Leasing, Residential & Commercial Property and Project Management, Valuation and Research and Consultancy."
Headquarted in Kuala Lumpur, Knight Frank Malaysia also has offices in Penang and Johor. Knight Frank LLP is the leading independent global property consultancy.
Headquartered in London, Knight Frank and its New York-based global partner, Newmark Grubb Knight Frank, operate from 335 offices, in 52 countries, across six continents.
Knight Frank has more than 12,000 professionals all over the world to handle in excess of US$1 trillion (£643 billion) worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants.
The Kota Kinabalu office helmed by Associate Director Ginn Lai and Resident Branch Manager Stephenie Wong will serve as a launching pad for expansion to Sarawak and Brunei in future.
"I love Sabah, love coming back here. I have been doing work in Sabah in the past, it is just we do not have an office. Now with our new branch, we can give comprehensive services to our clientele here.
"Ginn Lai and Stephenie Wong are from Sabah. We are also seeking other talented people to join us by applying to our Human Resource Department or vide our website KnightFrank.com.my.
"A number of Sabahans are working for us in West Malaysia for better exposure.
With our establishment of our branch here, we are giving Sabahans the exposure they seek even in Sabah without having to leave the state, if they join us. We pay good bonus to all our people," Sarkunan said.
Knight Frank (Sabah) would be moving into Menara Hap Seng upon its completion as well as managing the state and the city's first Grade A Office complex by 2015.
"We look upon the establishment of our branch here to help Sabah retain some of her talents in the state, and we train our staff well to the highest standard of integrity and professionalism." Sarkunan explained.
"Knight Frank is founded on strong values. They are integral to Knight Frank's corporate culture of trust and integrity at every level, teamwork at the heart of everything we do, professionalism that is unrivalled with the drive to go the extra mile to exceed our clients' expectations."
To mark the historic occasion, Knight Frank Malaysia launched its first-ever Sabah Property Market report presented by Ginn Lai. The report reviews the high-end residential, office and retail markets in Kota Kinabalu in 2014 and gives an outlook for the second half of 2014.
Sabah is quickly gaining regional interest from major real estate developers and investors.
Some of the key factors driving the increase in interest in the Sabah real estate market include the region's lower capital value base; availability of financing; low interest rate environment; and a transparent legal and title system.
It reports that the Kota Kinabalu property market has remained buoyant and stable during the first half of 2014 despite recent negative factors; primarily the tightening of mortgage lending, tariff hikes on electricity and fuel, and the impending implementation of a goods and services tax (GST) in 2015.
The city's southern corridor would be significantly transformed with the completion of major projects this year including Imago shopping mall, The Loft apartments, OCEANUS waterfront mall, Pelagos Suites, Riverson and Gleneagles private hospital - bringing about a positive impact on the modernisation of Kota Kinabalu.
Ginn Lai opined, "We expect the second half of this year and early 2015 to pick up in terms of new major development launches and announcements, particularly in the new development precincts of the old Jesselton port area and Tanjung Aru Eco Development.
"We are also seeing land scarcity in this city of 351 square kilometres rapidly placing pressure on land prices and as a result property prices. "There are no significant landed developments in the pipeline which is attributed to rising land costs and scarcity of land, deterring developers from this sector. "As a result, future landed property supply is contained outside of 15 kilometres from the city centre."
"On the high-end residential market, Kota Kinabalu's residential sector is in a growth cycle with projected demand of 2,000 residential units per annum with an estimated new supply of 4,318 condominiums are coming on stream over the next three years.
"The outlook for the second half of 2014 will see a handful of new residential projects officially launching. Given a lack of new inventory this year, we expect take up rates to be solid albeit subject to affordability and the availability of end financing to buyers. "
On the Kota Kinabalu office market, the average occupancy rate is currently sitting at 91.3 per cent; there has been no new supply over the 2012 and 2013 period, and we expect the same for this year. "The pent up demand for city office space will be met with a significant amount of new supply coming to completion in 2015, most notably Menara Hap Seng, Aeropod, Sutera Avenue and Riverson Suites, totalling approximately 814,613 sq ft - an average 3 per cent of new supply per annum.
"Based on current office market values, yields are achieving an a verage 5 per cent per annum. The development of purpose built and signature offices continues to uptrend and replace traditional shopslots as Kota Kinabalu's commercial sector matures and modernises.
"As for the Kota Kinabalu retail market, the rapid and unprecedented supply of retail malls are coming to completion over the next three years cementing Kota Kinabalu's position as Borneo's gateway city.
"Retail floor space vacancy rates are moderate at 13.7 per cent, predominantly due to tenancy relocations to newer malls coming to completion over the next six months. Based on stratified retail unit values, retail yields are achieving between 7 per cent and 9 per cent per annum.
According to Lai, tenant take-up rates could be slow, but the sector is expected to perform in the mid to long term.
Knight Frank offers high-quality professional advice and solutions across a comprehensive portfolio of property services. The Company is registered with Board of Valuers, Appraisers and Estate Agents and is licensed to undertake property, valuations / consultancy, estate agency and property management. The Company is also on the panel of all leading banks and financial institutions.
Lai has been in the real estate industry for 16 years with global experience in project marketing, property and facilities management, commercial and retail agency, hospitality, and development feasibility analyses.
Born and raised in Sabah, Wong has over six years of experience in the property sector and brings with her a solid background in valuations and estate management. She has managed various forms of valuations including hotels, resorts, golf clubs, islands, arcade malls, offices and specialises in land development valuation in Sabah.
Both Lai and Wong are joined by Dato' Peter Yong who will serve as advisor. Dato' Yong is on the board of many Sabah's prominent companies and institutions with vast experience in the local real estate sector.
They said that performance across tourism, agriculture and aquaculture, and oil and gas sectors have been a catalyst for urban and rural property development, both for domestic demand and the increasing number of expatriate relocations to Sabah.
Also spurring development and property values in Kota Kinabalu is an expanding population, which is estimated to grow to more than 1 million by 2020 according to the Sabah Economic and Development Investment Authority (SEDIA).
Fuelling this is migration from within Borneo as well as internationally, supported by Malaysia My Second Home (MM2H) applications and the growing oil and gas industry which is expected to create more than 23,000 jobs.
In his message for the occasion, Eric Ooi, Executive Chairman, Knight Frank Malaysia states: "With the maturation of the property market there is much potential to be tapped in new territories. This is a great opportunity for Knight Frank Malaysia to bring professional services of international standards to developers, tenants, owners and vendors in the Sabah region." According to Knight Frank Malaysia, Sabah will become one of Southeast Asia's strongest growing market.