Developers in Sabah are expected to focus on the construction of residential properties over the next few years, due to a glut of commercial space, according to a real estate association.

The surplus in commercial property, especially in Kota Kinabalu, is caused by high property prices and strict loan application requirements imposed by banks, Sabah Housing and Real Estate Developers Association president Chew Sang Hai told FMT. "This is a temporary problem that we will hopefully overcome" he said.

"From now until 2018, there are only one or two commercial real estate projects to be launched. There's no more development for this type of property in the coming years.

"Developers now will have to concentrate on the affordable property, most probably residential, those priced at RM400,000 and below. There won't be much launching of high-end property.”

According to some reports, Sabah's capital city already has some 6.2 million sq ft of retail space with another 1.1 million sq ft to be made available in the next two years.

The situation has triggered doubts about whether sufficient tenants can be found to occupy the retail units. The city has a population of less than 500,000, translating the retail space there to an average of about 14.6 sq ft per person.

In comparison, certain areas in the Klang Valley have an average space of eight sq ft per person while Petaling Jaya has reached 16 sq ft.

"The glut is not only in Kota Kinabalu, but everywhere" Chew said.

"Property prices are slowly going up because of increasing oil and commodities prices and also rising public expenditures, including the government's spending on infrastructure projects, such as the Pan Borneo highway.

"Real estate is a challenging industry now. Developers have to be in the industry for long-term, not short-term, gain. They need to have strong sustainability to overcome adverse market conditions and be competent.”