KOTA KINABALU: Real estate developers will continue to build houses in Sabah although there have been no buyers for a fifth of developed properties in the state.
This is according to the Sabah Housing and Real Estate Developers Association (Shareda).
Shareda president Chew Shang Hai told FMT the association was optimistic about the immediate future of the property market.
“It will pick up soon,” he said. “Local developers are already planning to build more housing units.
“Sabah remains a good market for properties. People still buy and our projection says the number will only increase as the population grows and the economy improves.”
He said the proportion of built but unsold properties in the state seemed high only to those unfamiliar with the business. In fact, he added, the number was low relative to the total number of overhung properties across the country.
The government’s Valuation and Property Services Department considers a piece of property overhung if it remains unsold more than nine months after its launching.
Chew said Sabah accounted for only about 3% of the total number of unsold properties in the country, adding that the property glut was most noticeable in Johor, Selangor and Penang.
According to a study done by Shareda, the primary reason for property overhang in Sabah is the failure of developers to conduct proper research before proceeding with their projects.
“Most of these overhung properties are in areas where very few people want to live,” Chew said.
He also said private developers tended to build on cheap pieces of land, usually in unfavoured locations, so that they could price the properties competitively against those built by government-linked companies.
“It is always hard to compete with the government, but that is something we have to face every day,” he said. “Because of this competition, we have to be creative about creating products and marketing them.”
He said another reason for the overhang was that banks had become stringent with loans for development projects and also for property purchases.