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Property Market Is Expected to Remain Flattish in 2017
By Knight Frank / Apr 20, 2017

Based on the current economic conditions, weak property market sentiment and influx of supply, experts are not anticipating a recovery in the immediate future. The property market is expected to remain flattish in 2017 due to multiple uncertainties.


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The residential sub-sector, which has been contributing the lion’s share of the local market influenced the overall performance. Further softening and consolidation of the residential sector are expected with increasing supply and poorer take-up rates, particularly high-rise residential. The region will take the time to digest the existing and incoming high-rise residential supply. However, we opined that prices of residential properties in good locations are expected to hold and there are also increasing demand for affordable homes because the market is dense with first-time homebuyers.

Developers are keen to sell off their existing stock before starting new launches. In order to entice buyers in this current weak property sentiment, developers have offered multiple incentives such as the rebates and discounts, as well as bearing the legal fees for SPA and loans. Moreover, innovative marketing strategies such as financing packages are also offered by some of the major developers as a step to overcoming difficulties faced by homebuyers in securing bank loans.

Commercial office occupancy may see some pressure towards the end of the year and early 2017 when we expect to see completions of a new purpose built offices around the CBD fringes.

As for retail sector, the incoming supply of retail space will place some pressure on the rental market. Shopping centres may also face new challenges due to a decrease in consumer spending as the increase in income is not proportionate to the increase in the cost of living. Despite a drop in domestic consumer spending, we believe that the tourism sector in Sabah will pick up the pace and contribute to stabilising retail spending.

Catalytic projects are needed to spur growth and investment. Spearheading these will be the infrastructure improvements such as the Bus Rapid Transit (BRT), Pan Borneo Highway and the proposed Light Rail Transit (LRT).

With the commencement of infrastructure improvements, it is likely that there will be a fresh injection of interest and added development impetus in Kota Kinabalu.

Kota Kinabalu property market

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