ASEAN KEY DESTINATIONS
‘Bruneians should invest in Sabah’
THE Sabah property market is now more attractive for those looking to invest in rental property, thanks to the significantly weakening ringgit (RM).
In an interview with The Brunei Times, CEO of Sabah-based property and construction group Kinsabina Datuk Francis Goh, who is also the president of the Sabah Housing and Real Estate Developers Association encouraged Bruneians to take advantage of the weakened ringgit to make investments into the Sabah property market.
“Because of the exchange rate, buyers can indirectly save up to 10 to 20 per cent if they buy now compared to buying last year," he said. A year ago, the exchange rate was around RM2.4 to $1, compared to now which is closer to RM3 to $1,” he said.
Now is a good opportunity for those looking for a weekend home to make an investment. Goh said that about five to six thousand Bruneians go to Kota Kinabalu every month, based on tourism statistics.
“Kota Kinabalu, it is a good, livable city in this region,” he said.
Goh is in Brunei to promote some of the property the group is developing as part of a Sabah property market showcase.
One project that would be good for weekenders to Kota Kinabalu is the Riverside Residence project at Penampang, 133 units of condominiums that is located close to the airport and the city centre.
He said that the property was about RM500,000 per unit, converted at the current exchange rate to around $170,000.
Buying property in Sabah, or Malaysia in general, is relatively simple because of relative freedom for foreigners purchasing land which can be done through leaseholds, which usually start at 99 years.
However, unless it is over a price cap of a million ringgit, aspiring property owners in Sabah must pay cash as there is a foreign purchase price cap that would prevent local Malaysian banks from issuing financing for property.
But for those interested in investing in shop-houses for rental returns, Goh said that now is a good time to invest as well.
“The rental market for shop-houses is now very good. Price of land has gone up which has directly impacted the construction costs of shop houses.”
He added, “Five years ago, you can buy a three-storey shophouse for about RM700,000 to RM800,000. You cannot find this anymore within 10 kilometres of the city center. Now the typical price is about RM1.8 million to RM2.1 million.”
He explained that because of the price hike on shop house development, a lot of people cannot afford to buy anymore and would have to or prefer to rent.
Goh said they plan to capitalise on this through one of their latest developments with a development called the Titanium Technology Park, 112 units of 3-4 storey showroom offices and 58 units of warehouses built underneath the shophouses that are also available for purchase.
Financing is available through banks because it is over the price cap, he said, with prices ranging from around RM1.9 million to RM2.1 millio for a three-storey block of shop-houses.
Warehouses can be bought for another RM1.6 million. He said that the expected return is about seven to 8.5 per cent per annum for rental use, and that the company has facilities to help you identify tenants.
“Our initial idea for this park was to build and keep it for rental use. But because of gross development cost, it is not sustainable so we are testing the waters to see if anyone wants to buy and we are offering two to four blocks,” he said.
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