ACROSS THE ISLAND OF BORNEO

Transcription

1 ACROSS THE ISLAND OF BORNEO

2 About us. Incorporated in 1982, Raine & Horne International Zaki + Partners Sdn. Bhd. is a firm of Chartered Surveyors and Registered Valuers. Our practice covers a wide range of services including property valuation, investment and project management, property management, real estate agency and property consultancy. The firm currently operates twelve (12) offices in Malaysia: Kuala Lumpur, Petaling Jaya, Subang Jaya, Kelang, Johor Bahru, Melaka, Ipoh, Seremban, Kuantan, Penang, Kota Kinabalu and Kuching. Since its inception and establishment, Raine & Horne International Zaki + Partners Sdn. Bhd. has enjoyed an outstanding and enviable reputation and success. The firm has received wide recognition from all quarters, nationally and internationally. Founded in 1883, Raine & Horne is one of the world s largest real estate organisations with offices and affiliates all over the world, including in the major cities of South East Asia, Europe, Canada, USA, Fiji, Australia, New Zealand, Japan and Africa. Raine & Horne International Zaki + Partners Sdn. Bhd. aims to provide our clients with quality professional service. Raine & Horne International Zaki + Partners Sdn. Bhd. is committed to the Quality Management System required by ISO 9001:2008 Standards. Our team comprises of highly qualified partners in various expertise which authorize us to offer broad ranges of services in: Professional Valuation Services Corporate Advisory Services Project Management Property Management & Maintenance Real Estate Agency Auctioning Market Research & Feasibility Studies Property Investment Consultancy Building Auditing Bio Asset Valuation Forensic Valuation 2

3 Contents Summary Overview Components of Borneo Basic Information...12 Residents Data...15 Property Market in Malaysia..21 Residential Market in Borneo...26 Residential Market in Sarawak...35 Residential Market in Sabah...37 Residential Market in Labuan...39 References...41 Contact us.42 International Affiliations.43 3

4 Summary. Basic Information Located across the South China Sea with a distance of more than 2,500 km from Peninsular Malaysia, the island of Borneo is the 3 rd largest island in the world and the largest in Asia. Two of Malaysia s largest states (Sabah and Sarawak) are located in this island. Moreover, one of the three Malaysia s Federal Territories (Labuan) is found in Borneo. Compared to its Peninsular counterpart, East Malaysia (the word Borneo will be used interchangeable here) may seem very much exotic in terms of environment, inhabitants, culture, language, and economic development. Borneo accounts for a large portion of Malaysia s land mass but is underperforming the country in many different ways. They include productivity, population size, concentration, urbanization, labour force, job opportunities, and property market. Borneo s property value made up only 8% of its GDP output for The percentile of property transactions per 100 population was only half of the national average. Moreover, this rate was slowing in tandem with the national trend. Residents in Borneo preferred to dwell nearer to the centre of commercial activities of respective states. They include capital of respective states such as district of Kuching in Sarawak, and Kota Kinabalu in Sabah. On the other hand, Malaysia s population is aging slowly (but still in its early stages). Median age was 26.2 in Higher number of the population are leaving childhood and entering the workforce. This is the same for Borneo. As for ethnicity, Borneo has a higher share of other Bumiputras and non-citizens than Malaysia as a whole. The LQ/H ratio which came in at 1.09 for Borneo has confirmed that there are no current shortages of houses in this area. However, the stock availability is not too high. The wide gap between existing residential stock and breakeven point suggest that there is a considerable amount of living quarters not officially recorded. Property Market The property market is highly cyclical with a high correlation between volume and value. However, this trend was not observed in Value increased moderately, while volume dropped considerably. Average price per transaction had the best run in the 10 years being reviewed. Nonetheless, the residential sector was more resilient compared to the rest of the market. 4

5 Summary Residential sector made up the bulk of the total property market in Malaysia as well as Borneo. The combined residential number of transactions in Borneo accounted for 7% of the total transactions of Malaysia. Turnover rate was fair at 3.20%, but has declined slightly in terms of YOY. While percentage of unsold new launches were at the upper range of the country s list. Within the vicinity of the Borneo, a slow trend was seen where the total weightage of residential, commercial, and industrial markets were slowly shifting towards agricultural and development land. The state of Sarawak held the majority of residential transactions in Borneo due to its large land area. The recent YOY decline in transacted volume was extremely evident in Labuan (-34%). The entire East Malaysia was declining at a faster rate than the country. Similar to volume, Borneo s average price per transaction was increasing at a slower pace than Malaysia; led by Labuan in Q Borneo provides 8% of the total residential supply in Malaysia, which is quite comparable to the number of transactions (7%) as mentioned earlier. Collective IS/ES ratio of Borneo was higher than national average, whereas PS/ES ratio was lower. Both instances were led by Sabah, followed by Sarawak, and Labuan. YOY change for the area s IS/ES ratio was increasing slowly in tandem with the national average, whereas YOY change for PS/ES ratios of Borneo was decreasing gradually. Sabah was again seen moving at a faster rate than Borneo. Distribution of transactions was highly skewed to the left; which placed emphasis on higher price tags. The highest share was captured by the price range of RM 400, ,000. Two of the most preferred house type in Borneo were 2 3 storey and single storey terrace houses. Almost all house types recorded positive YOY changes for average price per transaction and the rate of increment seemed to be consolidating in the near term when compared to QOQ. The immense preference for terrace houses was fairly symmetrical across Borneo with the exception of Labuan which had the affinity for larger semidetached houses. While heavy weightage of strata properties was only present in Sabah. A growing number of transactions was witnessed within the price range of RM 400, ,000 for Sarawak and Sabah in Q In addition, gross rental yields for strata properties were higher than landed properties in Borneo, while single storey terrace yields were higher than their double-storey counterparts. 5

6 QOQ CHANGES (%) Summary Figure 1: Q QOQ changes of Borneo for Residential Volume and Average Price per Transaction (NAPIC, 2014) SARAWAK SABAH LABUAN TOTAL VOLUME AVERAGE PRICE PER TRANSACTION A summary of the current residential market in Borneo can be illustrated in the volume and price chart of Figure 1. In the most recent quarter of Q1 2014, Sabah was in the spotlight with high average price per transaction growth rate, while prices were fairly stagnant in Sarawak and Labuan. Though all states were badly hit by decreasing volume of transactions, with Labuan the most severely affected. The performance of Borneo as a whole was in a deteriorating state. 6

7 Overview Located across the South China Sea with a distance of more than 2,500 km from Peninsular Malaysia, the island of Borneo is the 3 rd largest island in the world and the largest in Asia. The sovereignty of the island is shared by 3 nations; namely Malaysia (26%) and Brunei (1%) in the north, and Indonesia (73%) towards the south. Two of Malaysia s largest states (Sabah and Sarawak) are located in this island. Moreover, one of the three Malaysia s Federal Territories (Labuan) is found in Borneo. The island is filled with natural wonders and is home to one of the oldest rainforests in the world. The highest point in Malaysia is situated in Sabah (Mount Kinabalu at 4,095 m) and longest river is found in Sarawak (Rajang River measured at km). The line between different nations in Borneo is defined to some extent by natural borders of stretching mountainous range (as depicted by the diagram below). Generally, East Malaysia has flat coastal regions with rising altitude towards the inland. The most populated city in this region is Kuching (3 rd in Borneo), followed by Kota Kinabalu (6 th in Borneo). Due to its large land mass, East Malaysia has an overall low population density. Figure 2: Terrain map for Island of Borneo (Wikipedia, 2014). 7

8 Components of Borneo Compared to its Peninsular counterpart, East Malaysia (the word Borneo will be used interchangeable here) may seem very much exotic in terms of environment, inhabitants, culture, language, and economic development. Population diversity is far greater in Borneo than Peninsular Malaysia. In Sarawak alone, there are more than 40 sub-ethnic groups with their own distinct language, culture and lifestyle. Whereas in Sabah and Labuan, the amount of ethnic groups are lesser the Land of the Hornbills. States in Borneo are blessed with abundance of natural resources such as natural gas, petroleum, timber, and palm oil. The economy of Sabah relies on 3 key development sectors; which include agriculture, tourism, and manufacturing. While the main driver for Sarawak is the new development corridor launched in 2008; known as Sarawak Corridor of Renewable Energy (SCORE). On the other hand, the Cabotage policy is the main hindrance in driving development and is one of the reason behind higher price of goods in Borneo. Nonetheless, housing is becoming an important issue in Borneo with Sabah having the most low-cost public housing built under the People s Housing Programme (PHP) after KL. There is no current official designation of boundaries for Borneo and groupings of selective areas could be highly subjective. For the purpose of studying the housing market, these selective areas are grouped according to the National Property Information Centre (NAPIC, 2014). They include: 1. Sarawak (31 districts) (Kuching, Miri, Sibu, Bintulu, Serian, Samarahan, Sri Aman, Marudi, Betong, Sarikei, and 21 other distircts) 2. Sabah (25 districts) (Kota Kinabalu, Tawau, Sandakan, Lahad Datu, Keningau, Kinabatangan, Semporna, Papar, Penampang, Beluran, and 15 other districts) 3. Labuan 8

9 Components of Borneo Figure 3: Map of Sarawak s districts (2010 Population and Weightage in brackets) (Department of Statistics Malaysia, 2014). 2. MIRI 290,274 (12%) 8. MARUDI 62,883 (3%) 4. BINTULU 183,402 (8%) 1. KUCHING 598,617 (25%) 6. SAMARAHAN 85,495 (4%) 10. SARIKEI 56,228 (2%) 9. BETONG 60,728 (3%) 7. SRI AMAN 64,500 (3%) 3. SIBU 240,165 (10%) 11. OTHERS (21 DISTRICTS) 668,469 (26%) 5. SERIAN 89,078 (4%) TOTAL SARAWAK = 2,399,839: (43% OF BORNEO) 9

10 Components of Borneo Figure 4: Map of Sabah s districts (2010 Population and Weightage in brackets) (Department of Statistics Malaysia, 2014). 1. KOTA KINABALU 452,058 (15%) 9. PENAMPANG 121,934 (4%) 10. BELURAN 104,484 (3%) 3. SANDAKAN 396,290 (13%) 8. PAPAR 124,420 (4%) 6. KINABATANGAN 146,987 (5%) 5. KENINGAU 173,103 (6%) 4. LAHAD DATU 199,830 (6%) 2. TAWAU 397,673 (13%) 7. SEMPORNA 133,164 (4%) 11. OTHERS (15 DISTRICTS) 867,462 (27%) TOTAL SABAH = 3,117,405: (56% OF BORNEO) 10

11 Components of Borneo Figure 5: Map of Labuan s districts (2010 Population and Weightage in bracket) (Department of Statistics Malaysia, 2014). 1. LABUAN 83,920 (100%) TOTAL LABUAN = 83,920: (1% OF BORNEO) 11

12 Basic Information Table 1: Depiction of Borneo and Malaysia (2012) (Department of Statistics Malaysia, 2014). DEPICTION SARAWAK SABAH LABUAN TOTAL MALAYSIA % 1. AREA (KM2) 124,450 73, , , POPULATION (MILLION) AVERAGE ANNUAL POPULATION GROWTH RATE (%) TOTAL FERTILITY RATE LIFE EXPECTANCY (YEARS) N/A GDP (A) GDP AT CONSTANT 2005 PRICES ( RM MILLION) 71,874 44,434 3, , , (B) GDP PER CAPITA AT CURRENT PRICE (RM) 40,075 18,758 40,136 32,150 30, (C) GDP GROWTH RATE (%) EMPLOYMENT (A) LABOUR FORCE ('000) 1, , , , (B) PARTICIPATION RATES (%) (C) UNEMPLOYMENT RATE (%) According to table 1, it is worth noting that the current Borneo has a combined land area of 198,444 km 2, which is 60.08% of the country s total land mass. However, the subsequent data of the area is not proportional to its land size. Borneo is home to about 20% of the country s total population, produces 15.90% of the country s GDP, and supplies 21.41% of Malaysia s total labour force. Average annual population growth rate and total fertility rate are 0.28% higher and -0.17% lower than the national readings, whereas life expectancy is 2.50% higher. As such, it might be viable to suggest that the quality of life in Borneo is better than the nation as a whole due to its higher life expectancy. GDP growth rate of Borneo is -3.02% lower than average and GDP per capita is 3.86% higher than the country s mean; dragged down by Sabah but supported by Sarawak and Labuan. Such data illustrates the potential of Borneo (namely Sabah) to improve on its productivity and standards of living. Job opportunities are slightly lower in Borneo than other parts of the nation with participation rate of 2.74% and unemployment rate of 1.58% higher than the national average. 12

13 Basic Information Table 2: Continuation of Economic Data (2013) (Department of Statistics Malaysia, 2014). DEPICTION SARAWAK SABAH LABUAN TOTAL MALAYSIA % 1. GDP (NOMIMAL) (RM BILLION) PROPERTY MARKET VALUE (RM BILLION) PROPERTY MARKET VALUE/GDP (NOMINAL) (%) DENSITY (PER KM 2 ) (2010) URBANISATION RATE (%) (2010) Besides providing a fair share of the nation s GDP, Borneo s property market is lagging compared to its pace of development. In 2013, the area s combined nominal GDP and property market value accounted for 15.90% and 7.91% of that of the nation; with its property market growth rate and prices increasing at a slower rate than its GDP growth rate. Property market of East Malaysia made up an insignificant share of the local economy; ratio of property market value per GDP was 7.55%, which was -7.63% lower than Malaysia. Population density and urbanization rate were person per km 2 and 54.33% respectively. They were % and % lower than Malaysia s average. Such figures depict that Borneo is a lowly concentrated and urbanized area in the context of a nation. An exception is seen in Labuan. Borneo s property market was noticed to be less vibrant than the national average. Number of property transactions per 100 population = 2013: (Borneo): 0.63; (Malaysia): : (Borneo): 0.72; (Malaysia): 1.50 In addition, it was noticed that the transacted volume of property market in East Malaysia was cooling at a faster rate than the country s mean. Borneo was one of the more severely affected area in Malaysia; YOY change for number of transaction was recorded at %, which was worse than the country s mean of %. Whereas value of transactions decreased by -6.56% last year, compared to a 6.67% increment for the nation (JPPH, 2014). 13

14 Basic Information Table 3: Grouping of Household and Living Quarters by State (2010) (Department of Statistics Malaysia, 2014). DISTRICT HOUSEHOLD (H) % LIVING QUARTERS (LQ) % PERSON / H PERSON / LQ - Ratio of existing residential stock per 100 population = (Borneo): 6.16; (Malaysia): Ratio of total population to number of person per household = (Borneo): 1,185,185 unit of houses (breakeven point); assuming household size is held constant. - Existing residential stock = (Outer Valley): 374,672 unit of houses (an additional of 810,513 units is required to reach breakeven point); assuming household size is held constant. LQ / H SARAWAK 539, , SABAH 533, , LABUAN 18, , TOTAL 1,090, ,190, As expected, Sarawak recorded the highest count for both the number of household (539,473: 49.45%) and living quarters (594,472: 49.91%). Coming in second was the state of Sabah with 533,364 households (48.89%) and 576,808 living quarters (48.43%). Labuan only accounted a small portion of the pie; with households and living quarters slightly over 1 percent of Borneo. True to the wealth effect, Sabah which has the lowest GDP per capita (lowest purchasing power) has the highest ratio of person per household and living quarters. The overall readings for Borneo were 5.13 person per household and 4.70 person per living quarters. The combined LQ/H ratio which came in at 1.09 for Borneo has confirmed that there are no current shortages of houses in this area. However, the stock availability is not too high. It is anticipated that there could be a high possibility of smaller household size in the future. Such a reduction in the number of person per household would directly increase the demand for new living quarters and strain the existing housing stock in the market. However, caution must be exercised when anticipating smaller household size due to the different culture and lifestyle practiced by certain ethnic groups which emphasizes on larger household size per living quarter. 14

15 Residents Data Figure 6: Breakdown of Sarawak s population by district (2010) (Department of Statistics Malaysia, 2014). OTHERS (21 DISTRICTS) 28% KUCHING 25% SARIKEI 2% BETONG 2% MARUDI 3% SRI AMAN 3% SAMARAHAN 3% SERIAN 4% BINTULU 8% SIBU 10% MIRI 12% It may seem logical that most inhabitants will usually reside around the central hub of commercial activities. In the context of Sarawak, this area of central activities include state capitals and ports. In the case for Sarawak, most of the state s population is concentrated in southwestern and northeastern parts. Whereas in Sabah, the state s capital (Kota Kinabalu) is the core district in the state s west coast. While a large portion of Sabah s population is spread across the state s eastern coastline from Sandakan totawau. Figure 7: Breakdown of Sabah s population by district (2010) (Department of Statistics Malaysia, 2014). OTHERS (15 DISTRICTS) 28% BELURAN 3% KOTA KINABALU 14% TAWAU 13% PAPAR 4% PENAMPANG 4% SEMPORNA 4% KINABATANGAN 5% KENINGAU 6% LAHAD DATU 6% SANDAKAN 13% 15

16 WEIGHTAGE (%) Residents Data Figure 8: Demographics of Malaysia by Age (2000 & 2010) (Department of Statistics Malaysia, 2014) < AGE 15 AGE > AGE 64 AGE GROUP Age Malaysia s population is aging slowly (but still in its early stages); with lower portion of children age group (< age 15) in 2010 compared to Working age adults (age 15-64) and retirement segments (> age 64) have increased by 4.5% and 1.2% respectively. Median age has increased from 23.6 (2000) to 26.2 (2010); which is still a relatively young population. The country s dependency ratio has dropped from 0.59 (2000) to 0.49 (2010), reinforcing the fact that: 1. Population growth is slowing 2. Children age group is diminishing (entering the age of workforce) 3. Working age group is increasing 4. More working adults are supporting the non-working classes (children and elders). 16

17 POPULATION Residents Data Figure 9: Demographics of Borneo by Age (2010) (Department of Statistics Malaysia, 2014). 2,500,000 2,000,000 1,500,000 1,000, , LABUAN SARAWAK SABAH AGE GROUP Figure 10: Dependency ratio of Borneo (2010) (Department of Statistics Malaysia, 2014). DEPENDENCY RATIO LABUAN SARAWAK SABAH East Malaysia accounts for 20.60% of the total population in Malaysia and has a dependency ratio of 0.92; which is quite high. This indicates a significant proportion of non-working age groups (children and elders) as compared to the working age groups. It was worth noting that Labuan has the lowest dependency ratio in Borneo (0.74). This island is the only Federal Territory of Malaysia located in East Malaysia. The overall population of Borneo is very young as well; which is in tandem with the national average. The 3 largest age groups are 0-19 (41.74%), (20.29%), and (13.77%). They account for 75.80% of the total population in Borneo. However, the huge gap between age group of 0-19 and suggests a large outflow of young working adults from this region. A possible explanation might be that they are moving to Peninsular Malaysia in search of better job opportunities. 17

18 POPULATION Residents Data Figure 11: Demographics of Malaysia by Ethnicity (2010) (Department of Statistics Malaysia, 2014). OTHERS 1% INDIANS 7% CHINESE 22% NON- CITIZEN 8% BUMI 62% Malaysia has a total population of million as at 2010; with 61.87% as Bumiputeras, 22.58% as Chinese, 6.70% as Indians, 0.64% classified as others, and 8.20% as non-citizens. Figure 12: Demographics of Borneo by Ethnicity (2010) (Department of Statistics Malaysia, 2014). 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 MALAY OTHER BUMI CHINESE INDIANS OTHERS NON-CITIZEN LABUAN SARAWAK SABAH ETHNICITY Ethnicity Borneo has a higher portion of minorities in its overall population composition than Malaysia; 13.54% Malay-Bumiputeras, 52.22% other Bumiputeras, 15.24% Chinese, 0.27% Indians, 1.02% others, and 17.70% non-citizens. This large portion of non-citizens is especially unique to Sabah due its location and history. In the state of Sarawak, the three main ethnic groups include other Bumiputeras (48.27%), Chinese (23.34%), and Malay-Bumiputeras (22.98%). Whereas in Sabah, other Bumiputeras and non-citizens made up the bulk of population at 55.66% and 27.78% respectively. Population composition in Labuan include 37.50% other Bumiputeras, 34.50% Malay-Bumiputeras, 14.04% non-citizens, and 11.49% Chinese. 18

19 % CHANGE YOY Property market in Malaysia Figure 13: Malaysia s overall property market ( ) (NAPIC, 2014) VOLUME (% CHANGE) VALUE (% CHANGE) AVERAGE PRICE PER TRANSACTION (% CHANGE) The property market in Malaysia is highly cyclical. There is a high correlation between volume and value (correlation of efficiency value of 0.75; from ) proved to an excepting year, which recorded the worst decline in amount of transaction for the last 10 years; declining by % YOY. However, the total value of transaction recorded a decent gain of 6.67% YOY. This led to the biggest yearly gain in the last 10 years for the average price per transaction (rising by a staggering 19.65%). It is yet to be determined that such a rise in average price per transaction is sustainable if volume does not exist to support it. 19

20 % CHANGE YOY % CHANGE YOY Property market in Malaysia Figure 14: Volume of Malaysia property market by sectors ( ) (NAPIC, 2014) RESIDENTIAL COMMERCIAL INDUSTRIAL AGRICULTURAL DL & OTHERS Volume 2013 saw a broad decrease over all sectors of the property market; led by the commercial sector (-16.51%), industrial (-15.69%), agricultural (-12.37%), residential (-9.70%), and development land and others (-6.99%). Value Unlike volume, the commercial sector witnessed the highest incremental in value (27.96%), followed by the residential sector (6.34%), industrial (2.69%), agricultural (-6.97%), and lastly development land and others (-8.89%). For both of these instances, the residential property sector showed resilience compared to the rest of the market. Figure 15: Value of Malaysia property market by sectors ( ) (NAPIC, 2014) RESIDENTIAL COMMERCIAL INDUSTRIAL AGRICULTURAL DL & OTHERS 20

21 Property market in Malaysia Figure 16: Malaysia s average price per transaction by sectors (RM in million ( ) (NAPIC, 2014). Average price per transaction In 2013, the commercial sector recorded the biggest change in the last 10 years (53.27%), followed by the industrial sector (21.79%), residential (17.76%), and agricultural (6.16%). Whereas average price per transaction for development land and others marked the steepest unusual decline in the last 10 years (-43.28%). Abiding by the norm, the industrial sector has the highest average price per transaction of RM 1.46 million, followed by commercial (RM 1.04 million), development land and others (RM 0.89 million), residential (RM 0.29 million), and agricultural (RM 0.14 million). 21

22 Property market in Malaysia Figure 17: Weightage of Malaysia property market by sectors (Volume) ( ) (NAPIC, 2014). Weightage of sectors The residential market made up the bulk of the total property market in Malaysia; with a 10 year mean value of 63.87%, followed by the agricultural sector (19.59%), commercial (9.36%), development land and others (4.67%), and industrial (2.47%). A decrease in weightage for all sectors except residential (0.82%), and development land and others (0.25) was observed in

23 UNITS Property market in Malaysia Figure 18: Number of transactions by state in Malaysia ( ) (JPPH, 2014) % , , , , % (YOY) 2013 COUNTRY MEAN (% YOY) Number of transactions In 2013, Selangor recorded the highest amount of transactions (81,955: 22%) in Malaysia, followed by Johor (52,779: 14%), and Perak (46,234: 12%). These 3 states made up almost half of the total transactions in Malaysia. Sarawak was ranked number 4 out of the 16 states being examined (28,389: 7%), Sabah was at the 13 th spot with 9,116 number of transactions at 2%, and Labuan was second last with 570 transactions (0.15%). The combined number of transactions in Borneo made up approximately 10% of total transactions in Malaysia. In terms of YOY changes, all states recorded negative growth rates except for Johor (7.07%), and Perlis (5.93%). Sarawak was ranked number 9 (-11.15%), while Labuan came in at number 10 (-13.77%), and Sabah at number 12 (-17.45%). Borneo as a whole was worse off than the national average. The former declined by %, compared to a decline of % of the latter. 23

24 TURNOVER (%) Property market in Malaysia Figure 19: Turnover Rate of Malaysia Residential Market by state (2012 & 2013) (JPPH, 2014) CHANGE (%) % (YOY) 2013 COUNTRY MEAN (% YOY) Turnover rate (Residential) For the year ended 2013, the state of Perak recorded the highest turnover rate in Malaysia; clocking in at 4.35%, coming in second was Sarawak (4.04%), then Melaka (3.92%). The bottom 3 states were Labuan (1.60%), Kelantan (2.28%), and Sabah (2.29%). Borneo has a combined turnover rate of 3.20%. The country s mean turnover rate was 3.34%. In terms of YOY changes, Perlis was the highest (0.79%), followed by Johor (0.37%), and then Pahang (0.22%). The bottom 3 states were Putrajaya (-2.85%), Kuala Lumpur (-1.71%), and Pulau Pinang (-1.20%). Borneo as a whole recorded YOY change of -0.67%. The country s mean YOY reading was -0.50%. 24

25 UNSOLD (%) Property market in Malaysia Figure 20: Percentage of Unsold Residential Units (New Launches) by state in Malaysia (2013) (JPPH, 2014) CHANGE (%) TOTAL UNSOLD 2012 TOTAL UNSOLD 2013 % CHANGE (1 YR) COUNTRY MEAN (1 YR) Unsold units of New launches (Residential) In 2013, based on individual states; Kelantan recorded the highest percentage of unsold residential units (new launches) in Malaysia (66.70%), followed by Terengganu (63.46%), and Sarawak (51.43%). Borneo has a collective unsold fraction of %. The country s mean reading was 43.90%. In terms of YOY changes, Sarawak was the highest (11.21%), followed by Kelantan (10.95%), and then Terengganu (5.35%). The bottom 3 states were Perlis (-38.62%), Pahang (-8.67%), and Putrajaya (-7.74%). Borneo has a mutual YOY change of 5.06%. The country s mean YOY reading was -3.22%. 25

26 NUMBER OF TRANSACTIONS Residential market in Borneo Figure 21: Weightage of Borneo property market by sectors (Volume) (2013) (JPPH, 2014). 40,000 35, ,000 25,000 20,000 15,000 10, CHANGES (%) 5, SUB-SECTORS LABUAN SABAH SARAWAK YOY (%) Weightage by sectors Similar to national norm, the residential market made up the bulk of the total property market transactions in Borneo; with a share of 44.28%, followed by agricultural (37.12%), commercial sector (8.90%), development land and others (7.49%), and industrial (2.21%). There was a shift in weightage from the residential, commercial, and industrial sectors to agricultural sector and development land as a share of the total transactions. It is worth noting that the weightage of residential and commercial sectors were lower than national average. Whereas the development land and agricultural sectors were higher. YOY, all sectors recorded broad decrease; led by the commercial sector (-24.05%), industrial (-21.87%), residential (-13.11%), agricultural (-9.37%), and lastly development land (-8.42%). Borneo s average was %. 26

27 NUMBER OF TRANSACTIONS Residential market in Borneo Figure 22: Number of residential transactions by state in Borneo (2013) (JPPH, 2014). 300, , , , ,000 50, CHANGES (%) 0-4 SARAWAK SABAH LABUAN TOTAL MALAYSIA AREA 2013 YOY (%) Weightage by area (Residential) Due to its sheer size, population, and wealth effect; Sarawak captured the major share of the total residential property transactions in Borneo. The state recorded 67% of Borneo s transaction, whereas Sabah and Labuan account for 32% and 1% of the total transactions respectively. Borneo as a whole only possessed 7% of Malaysia s total residential property market transactions. In terms of YOY, Labuan was affected the most by the recent declining trend. The territory s transactions declined by %, followed by Sarawak with %, and Sabah at %. This resulted in Borneo s transactions to deteriorate by %; which was worse than the national average of -9.70%. 27

28 AVERAGE PRICE PER TRANSACTION (RM IN MILLION) Residential market in Borneo Figure 23: Average price per transaction for Residential Properties in Borneo (RM) (2013) (JPPH, 2014). 350, , , , , , , , , , CHANGES (%) 100,000 50, SARAWAK SABAH LABUAN AVERAGE MALAYSIA AREA 2013 YOY (%) Average price per transaction (Residential) Contrary to its sluggish nature, Sabah has the highest average price per transaction in the Borneo; RM 280,685 (YOY: 9.55%). Coming in second was its neighboring island (Labuan) with RM 237,737 (YOY: 11.39%). The largest contributor in terms of number of transactions was last at RM 198,890 (YOY: 10.77%). The combined average price per transaction of Borneo was RM 225,599 (YOY: 10.41%). The country s average was RM 292,661 (YOY: 17.76%). Hence the absolute and relative values of both Borneo were much lower than the national average. Given the favorable conditions, there is high potential for further development in this region. 28

29 NUMBER OF UNITS (SUPPLY0 Residential market in Borneo Figure 24: Supply compilation of Residential Properties in Borneo (2013) (JPPH, 2014). 7,000, ,000, ,000, ,000,000 3,000,000 2,000, SUPPLY RATIO (%) 1,000, SARAWAK SABAH LABUAN TOTAL MALAYSIA AREA PLANNED SUPPLY (PS) INCOMING SUPPLY (IS) EXISTING STOCK (ES) IS/ES (%) PS/ES (%) Supply compilation As usual, Sarawak hoards the largest number of existing residential stock in Borneo (56.54%), followed by Sabah (40.32%), and Labuan (3.14%). Planned supply was witnessed to be in a declining state when compared to incoming supply. In terms of IS/ES ratio, only Sabah was higher than the national average at 29.00%, whereas Sarawak and Labuan were lower at 11.12% and 5.44% respectively. The national reading was 14.76%. Whereas PS/ES ratio for all states were lower than the national average. Favorable economic and employment conditions, coupled with resilient demand, and high turnover rate might put Sarawak market in the spotlight within Borneo. Valuation was still relatively cheap, and price appreciation and supply were steady in Land of the Hornbills. However, caution must be exercised where a rising number of unsold new launches were seen in this state. 29

30 YOY CHANGES (%) Residential market in Borneo Figure 25: Supply compilation of Residential Properties in Borneo (2013) (JPPH, 2014) YOY CHANGES (%) SARAWAK SABAH LABUAN TOTAL MALAYSIA IS/ES STATE PS/ES NEWLY LAUNCHED/TOTAL TRANSACTIONS COMPLETED/TOTAL TRANSACTIONS TOTAL LAUNCHES/TOTAL TRANSACTIONS -2 Supply compilation (Cont d) Referring to Figure 25, near term supply growth rate was moderate with Sabah leading the charge at 29.00%. Whereas supply in the mid term was in a declining state led by Sabah as well at 8.20%. When segregating new supply into physical availability, it was observed that majority of the launches were under construction (54.23%). YOY change for those newly launched and under construction was positive, whereas those completed and not constructed were in a declining trend. Such expansion was especially pronounced in the state of Sabah. The YOY change for newly launched units per total transactions was positive across Borneo (15.63%). YOY for completed houses per total transactions was negative except for Sabah (5.48%). While YOY for total launches per total transactions were positive (22.34%). 30

31 NUMBER OF TRANSACTIONS NUMBER OF TRANSACTIONS Residential market in Borneo Figure 26: Number of residential transactions by price range in Borneo (Q1 2014) (NAPIC, 2014). 1, , WEIGHTAGE (%) 0 (A) 0-50,000 (B) 50, ,000 (C) 100, ,000 (D) 150, ,000 (E) 200, ,000 (F) 250, ,000 PRICE RANGE (RM) (G) 300, ,000 (H) 400, ,000 (I) 500,001-1,000,000 (J) 1,000,001 - ABOVE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) Figure 27: Number of residential transactions by house type in Borneo (Q1 2014) (NAPIC, 2014). 1,200 1, WEIGHTAGE (%) HOUSE TYPE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) 31

32 AVERAGE PRICE PER TRANSACTION (RM IN MILLION) Residential market in Borneo Figure 28: Residential average price per transaction by house type in Borneo (RM in million) (Q1 2014) (NAPIC, 2014) CHANGES (%) -6 HOUSE TYPE Q Q Q YOY (%) QOQ (%) Distribution of the value of transactions Borneo was highly skewed to the left, which placed emphasis on higher price tags of RM 200,000 and above. The most transacted price range was RM 400, ,000 (25.27%) in Q1 2014, followed by RM 200, ,000 (17.91%), and RM 250, ,000 (15.21%). This redistribution of weightage from the lower price range to higher price range was pronounced beginning of The most preferred house type in Borneo was terrace houses which made up close to 40% of the total transactions in Q In addition, there was a high preference for 2 3 semi-detached houses which represents 15% of the total transactions. Condominiums and apartments made up 11% of the Borneo Q transaction market. All of the other house types were less than 10% each. Number of transactions for all strata properties was less than 17%. Generally, almost all house types recorded positive YOY changes for average price per transaction except for housing classified under detached and townhouses. When compared with QOQ changes, the rate of increment seemed to be consolidating in the near term. 32

33 Residential market in Borneo Figure 29: Average gross rental yield of Residential Properties in Sarawak (2013) (JPPH, 2014). DOUBLE-STOREY TERRACED (%) 2.62 SINGLE-STOREY TERRACED (%) AVERAGE GROSS RENTAL YIELD (%) Figure 30: Average gross rental yield of Residential Properties in Sabah (2013) (JPPH, 2014). APARTMENTS (%) 4.76 TERRACED HOUSES (%) AVERAGE GROSS RENTAL YIELD (%) 33

34 Residential market in Borneo Figure 31: Average gross rental yield of Residential Properties in Labuan (2013) (JPPH, 2014). DOUBLE-STOREY TERRACED (%) 3.47 SINGLE-STOREY TERRACED (%) AVERAGE GROSS RENTAL YIELD (%) Gross Rental Yield It was observed that the average gross rental yield for Sabah was higher for the strata segment compared to the landed sector. This may be attributed to the faster appreciation of house prices in the landed sector compared to strata in recent times; in which the incremental in rental yields has not caught up with the appreciation rate of house prices. Average gross rental yield was higher in Sarawak and Labuan for single-storey terrace houses than double-storey terrace houses. When comparing between Sarawak and Labuan, the latter was higher than the former. This was expected owing to the scarcity of land in Labuan; because it is an island. Whereas in Sarawak and Sabah, the rental bandwidth was much broader than Labuan. Due to their vast land sizes; more emphasis was placed on the factors of locality, quality and purpose of these units when determining the incoming rental yields. 34

35 NUMBER OF TRANSACTIONS NUMBER OF TRANSACTIONS Residential market in Sarawak Figure 32: Number of residential transactions by price range in Sarawak (Q1 2014) (NAPIC, 2014) WEIGHTAGE (%) 0 (A) 0-50,000 (B) 50, ,000 (C) 100, ,000 (D) 150, ,000 (E) 200, ,000 (F) 250, ,000 (G) 300, ,000 (H) 400, ,000 (I) 500,001-1,000,000 (J) 1,000,001 - ABOVE PRICE RANGE (RM) Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) Figure 33: Number of residential transactions by house type in Sarawak (Q1 2014) (NAPIC, 2014) WEIGHTAGE (%) HOUSE TYPE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) 35

36 AVERAGE PRICE PER TRANSACTION (RM IN MILLION) Residential market in Sarawak Figure 34: Residential average price per transaction by house type in Sarawak (RM in million) (Q1 2014) (NAPIC, 2014) CHANGES (%) HOUSE TYPE Q Q Q YOY (%) QOQ (%) In this finale, the number of transactions in Borneo will be further broken down into individual states; mainly Sarawak, Sabah, and Labuan. Sarawak The highest number of transactions was recorded in the price range of RM 400, ,000; which accounts for 22% of the total transactions in Sarawak. The second was RM 200, ,000 at 19%. Mid-price range of RM 250, ,000 was at third with 16%. As for other categories, every single one of these price range has less than 15% each from the total transactions in Sarawak. In previous quarters, it was noticed that the price range was skewed to the right, which put more emphasis on lower price range. However, in Q1 2014; this trend was reversed, which put slightly more weightage on higher price range. The most preferred house type in Sarawak was terrace houses which made up more than 40% of the total transactions in Q This was followed by 2 3 storey semi-detached houses which represents 16% of the total transactions. All of the other house types were less than 15% each. Number of transactions for all strata properties was only capped at 7%. Generally, almost half of all house types recorded positive YOY changes for average price per transactions. Some of the biggest advancers were condominiums and apartments, and 2 3 storey semi-detached houses. QOQ, almost all house types recorded positive growth except for townhouses, detached houses, and cluster houses. Two of the notable gainers were flats and terrace houses. However, when compared with QOQ changes, the rate of increment seems to be slowing down in the near term for all house types except for flats and low-cost flats. 36

37 NUMBER OF TRANSACTIONS NUMBER OF TRANSACTIONS Residential market in Sabah Figure 35: Number of residential transactions by price range in Sabah (Q1 2014) (NAPIC, 2014) WEIGHTAGE (%) 0 (A) 0-50,000 (B) 50, ,000 (C) 100, ,000 (D) 150, ,000 (E) 200, ,000 (F) 250, ,000 (G) 300, ,000 (H) 400, ,000 (I) 500,001-1,000,000 (J) 1,000,001 - ABOVE PRICE RANGE (RM) Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) Figure 36: Number of residential transactions by house type in Sabah (Q1 2014) (NAPIC, 2014) WEIGHTAGE (%) HOUSE TYPE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) 37

38 AVERAGE PRICE PER TRANSACTION (RM IN MILLION) Residential market in Sabah Figure 37: Residential average price per transaction by house type in Sabah (RM in million) (Q1 2014) (NAPIC, 2014) CHANGES (%) -2 HOUSE TYPE Q Q Q YOY (%) QOQ (%) Sabah Most transactions in this state was concentrated within the price range of RM 200,001 1,000,000 (85%); with the most under RM 400, ,000 (32%). Other categories were less significant. As such, the price range was somewhat skewed to the left, which put more emphasis on higher price range. Unlike Sarawak, condominiums/apartments and terrace houses were equally preferred in Sabah. The most transacted house type in Sabah was condominiums and apartments (28%), followed by 2-3 storey terrace houses (25%). Contrary to the national norm, there was a shift in weightage from lower-end segments such as low-cost houses and flats to more affluent units such as 2 3 storey semi-detached houses, and condominiums and apartments. Basically, almost all house types recorded positive YOY changes for average price per transactions. Some of the biggest advancers were flats, townhouses, cluster houses, and low-cost flats. QOQ, all house types recorded positive growth except for 2 3 semi-detached houses, and condominiums and apartments. Two of the notable gainers were cluster houses, and low-cost houses. When compared with QOQ changes, the rate of change seems to be mixed in the near term for all house types. 38

39 NUMBER OF TRANSACTIONS NUMBER OF TRANSACTIONS Residential market in Labuan Figure 38: Number of residential transactions by price range in Labuan (Q1 2014) (NAPIC, 2014) WEIGHTAGE (%) 0 (A) 0-50,000 (B) 50, ,000 (C) 100, ,000 (D) 150, ,000 (E) 200, ,000 (F) 250, ,000 (G) 300, ,000 (H) 400, ,000 (I) 500,001-1,000,000 (J) 1,000,001 - ABOVE PRICE RANGE (RM) Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) Figure 39: Number of residential transactions by house type in Labuan (Q1 2014) (NAPIC, 2014) WEIGHTAGE (%) 0 HOUSE TYPE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) 39

40 AVERAGE PRICE PER TRANSACTION (RM IN MILLION) Residential market in Labuan Figure 40: Residential average price per transaction by house type in Labuan (RM in million) (Q1 2014) (NAPIC, 2014) CHANGES (%) HOUSE TYPE Q Q Q YOY (%) QOQ (%) Labuan Unlike Sarawak and Sabah, Labuan did not have a spike in the price range of RM 400, ,000. Distribution of the value of transactions within Labuan was focused on the lower range of RM 100, ,000 (57%). The shape of the entire distribution was somewhat skewed to the right. There was a weightage redistribution from the range of RM 50, ,000 to RM 100, ,000 in Q The most preferred house type in Labuan was 2 3 semi-detached houses which made up close to 27% of the total transactions in Q This was followed by vacant plots which represents 18% of the total transactions. Detached, 2 3 storey terrace houses, and flats each account for close to 13% respectively. All of the other house types were less than 10% each. Number of transactions for all strata properties was 20%. Generally, YOY changes for average price per transactions were positive for all house types. Notable advancers include flats, low-cost flats, and 2 3 storey terrace houses. However, when compared with QOQ changes, the rate of increment seems to be stablizing in the near term. 40

41 References Department of Statistics Malaysia. (2014) Statistical Releases, [Online], Available: com_content&view=article&id=472&itemid=111&lang=en&negeri=malaysia [15 Aug 2014]. JPPH. (2014) Property Market Report 2013, Putrajaya: Valuation and Property Services Department. NAPIC. (2014) Key Statistics, [Online], Available: [15 Aug 2014]. 41

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