Security angst impact property desirability
Published on: Monday, May 18, 2015
Kota Kinabalu: The recent kidnapping case in Sandakan by Southern Philippine bandits has again put Sabah's image as a safe haven on the thin red line of undesirability in the minds of the unaccustomed foreign prospects, be they vacation tourists, medical tourists, business or property investors.Even locals are feeling the angst of insecurity since the 1970s when the Usno administration open the floodgates to thousands of refugees or economic migrants from the Southern Philippines from a provoked conflict with arms supplied into the Southern Philippines.This will impact the Sabah property scene from more sales and leases of homes on the West Coast by buyers and tenants from the East Coast to shift their families whether temporary or permanently to hotels and resorts suffering declining clientele patronage especially in the East Coast.
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Sabah businesses in the East Coast like the Ocean Seafood Restaurant would need to seriously consider spending their profits on hiring arm security guards to instil a measure of public confidence in their safety.When the Philippines Airlines first started its Sabah route operation flying from Kota Kinabalu to Manila and return in the 1970s -1990s prior to its insolvency hiccup, visitors from Sabah noticed that many reputable establishments in Manila had armed uniformed guards protecting their business facades.If the security situation worsened in Sabah, it is not too far-fetched to assume that such scenario would also be seen here in Sabah, particularly on the East Coast. Even the armed robbery on a goldsmith shop outlet in Wisma Merdeka next to the South China Sea here remained unsolved today.The unfortunate case in West Malaysia where an armed guard reported to be from Sabah recently shot dead a bank officer in a heist again present another aspect to consider whether armed guards could turn out to be rogue threats as staff turned robbers in plantation robbery cases remained unsolved.
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Meanwhile, agricultural property transactions in Sabah increase despite facing labour problems and declining commodity prices.Today, more than 300,000 smallholders rely on producing oil palm – a statistic that is economically significant and holds importance for the social fabric of the nation, particularly in rural areas.
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What is not shown in the statistics is that with the government providing some farming plots to some landless farmers, these farmers enjoy something that many others in the developing world and in the region still solely lack: property rights.Malaysia has a stable property rights system, and strong legal institutions to back it up.The system was inherited from the British colonial period, and is similar to those in place in Australia, New Zealand, Canada, Singapore and parts of the US.There are a number of ways in which strong property rights and stable land tenure contribute to sustainable development.When property rights are stable, farmers feel secure in obtaining ongoing benefits from their land.This means they will make long-term investments in the sustainability of the land, including environmental aspects.It also means that inferior farming practices that establish tenure over land – such as slash and burn agriculture – are dispensed with.Additionally, land titles can be used as collateral for loans. This leads to investment in capital improvements or, alternately, new investments.In short, a system of stable property rights promotes a transition from subsistence to modern agriculture, and pays an environmental dividend as well as a social dividend.All this can be threatened when bandits start killing and robbing planters or farmers in rural areas.At the macro level, the oil palm industry directly contributes around three per cent of GDP, and directly employs around 800,000 people in Malaysia.Secondary industries, such as processing, lift the contribution to around 6 per cent of GDP and employment of about 1.4 million people.Until December 2013, there were about 5.23 million hectares of oil palm planted in Malaysia located in Peninsular Malaysia (49.5 per cent) followed by Sabah (28.3 per cent) and Sarawak (22.2 per cent).In Sabah, the agricultural sub-sector is the second most active at 19.1 per cent of the market share of the 8,926 property transactions recorded in 2014.The market was dominated by the residential sub-sector at 57.4 per cent. Commercial sub-sector accounted for 14.3 per cent, followed by development land at 5.9 per cent and industrial sub-sector at 3.3 per cent all valued at RM4.36 billion.Against 2013, both volume and value were down by 2.1 per cent and 7.4 per cent respectively (2013: 9,116 transactions worth RM4.71 billion).Compared to 2013, commercial, industrial and agricultural sub-sectors grew by 8.1 per cent, 2.8 per cent, and 0.4 per cent respectively.Conversely, residential and development land sub-sectors declined by 5.0 per cent and 5.5 per cent respectively.In terms of value, residential and commercial sub-sectors experienced growth of 6.7 per cent and 5.8 per cent respectively signifying rising prices.As at the fourth quarter of 2014, the All House Price Index for Sabah stood at 295.6 points, up from 293.3 points in the fourth quarter of 2013.Serious crime statistics only served to make guarded and gated homes most desirable for those who could afford them, driving up prices and construction of more of such properties that attract higher and higher security costs and measures.Recently a property investment group dominated by young professionals, the inheritors of the country's high income prospects promised by the government, from Sabah working in Sabah, toured the federal capital to look at property investment there rather than the local scene.Other property tour groups went to Australia, Iskandar Malaysia, and even Manila with prices at half of Kota Kinabalu.Daily Express asked an exhibitor of Manila properties in Kota Kinabalu recently. The sale executive said: "The Philippine economy unlike Malaysia, is the second fastest in Asia after China, in terms of growth rate. We are offering 10 per cent return on investment whether annual rental rate or capital appreciation."Since Genting's entry into Manila, other Malaysians are eyeing the lively capital.Stay up-to-date by following Daily Express’s Telegram channel.
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