Property Talk: A weekly column by S.C. Cheah
BIG shopping centres as well as more shop office developments are being launched or will be coming up in Kota Kinabalu (KK). This is a clear sign of better economic times for Sabahans.
During a trip to Kota Kinabalu on March 3, I was amazed to see the vast transformation compared to seven years ago when I last visited it.
Then the Sutera Harbour Resort and other projects were not up yet. Today the city has taken a more “swinging” outlook, especially the coastal highway area where seafood restaurants, other food and beverage outlets and entertainment joints like the Waterfront Cafe dot the seafront. They lend a modern flair to the previous laid-back image of KK. Even the Waikiki apartments that were uncompleted for many years had been rehabilitated and occupied.
Fronting Jalan Tun Fuad Stephen is the Warisan Square that is under construction in front of Centrepoint, one of the biggest shopping centres in the city. It has an unusual concept as the upper level has a more upmarket retail area called the Palm Square with offices looking down an atrium.
Over the next two to three years, Centrepoint would be dwarfed by at least two major integrated developments: the 1 Borneo boasting, among other components, a RM1bil, 1.5 million-sq-ft “hypermall”; and another major shopping centre in KK Times Square.
1 Borneo by Sagajuta (Sabah) Sdn Bhd is along Jalan Sulaiman and next to Universiti Malaysia Sabah and the Alam Mesra new township. KK Times Square by the KL-based Asian Pac Group is off the coastal highway in the city centre.
Another commercial project has been planned on a piece of muddy reclaimed land opposite KK Times Square where many squatters live in shabby stilt houses.
Developers are confident that the time is ripe to provide fresh supply of office, retail and hotel space in Kota Kinabalu. They believe there is a pent-up demand for such properties. They feel that to cater to the rising tourist arrivals, there should be better regional shopping centres. By making Kota Kinabalu a shopping haven, they hope that Sabahans would be encouraged to spend their money at home rather than overseas.
Anyway, there seems to be a rush among developers, some from the Klang Valley, to have a piece of the action in KK. In fact, last week, top executives of a very successful shopping centre-cum-tourist-class-hotel in Kuala Lumpur flew down to have a firsthand look with a view to investing in KK Times Square.
Everyone seems to be gung-ho about the retail scene here, but will this lead to a glut in office and shopping centre retail space? Are there that many shoppers, retailers and office set-ups? Some newly completed commercial centres like the Tanjung Aru Plaza with a high covered atrium is still quite empty.
Meanwhile, every evening many seafood restaurants are full of tourists and locals. One also has to wait in line for a seat at small but popular coffee shops like the Yan Yan and Restoran Beaufort (that serves the famous Beaufort noodles) during lunch and breakfast time.
Office workers still prefer to walk from their offices to Wisma Merdeka, an old shopping complex, to have their meals or do a bit of shopping. The market value of a shop lot there is around RM2,500 per sq ft (psf).
I was told that a recent transaction of a shop lot was about RM2,800, more than four times higher than the RM688 psf initial “bargain” price offered by the 1 Borneo shopping mall about six months ago. The price of the 1 Borneo retail lots has shot up to RM888 psf during the preview launch at Palm Square's atrium level on March 4. Prices are expected to rise once the hypermarket name in 1 Borneo is announced.
Unlike the many empty properties in the Klang Valley, most of the ground-floor shops in commercial centres like Plaza Damai, Wisma Damai, and Lintas Square are fully occupied. Places like Lu Yang and Taman Foh Sang are often packed with people.
The main problem facing the older shop office developments is the lack of surface parking and the “unpractical” two-storey retail design where you have two floors of shop lots each served by a corridor and offices occupying the upper floors.
According to some business people, the abolition of the rotation system for Chief Minister has spurred investor confidence in this east Malaysian state. The Sutera Harbour Resort has boosted the city's image.
The Sabah Monthly Statistical Bulletin for May 2004 revealed that tourist arrivals at Sabah airports had risen 50% from 305,448 (January to April 2003) to 454,612 (corresponding months in 2004).
Kota Kinabalu International Airport (KKIA) has direct flights to 15 international destinations and is surpassed only by Kuala Lumpur International Airport in terms of passenger traffic. KKIA has also waived landing charges as part of the state's efforts to promote tourism.
The State Government has allocated RM200mil to expand KKIA from six bays to 16 to cope with anticipated higher passenger traffic. There is also the KKIA extension project involving land reclamation costing about RM1.1bil awaiting approval from the Federal Government.
The population of Kota Kinabalu has been growing rapidly and consistently at 6% annually, according to Census 2000 Malaysia. Its population was 468,700 in 2004 while the greater Kota Kinabalu area that includes Penampang, Papar and Tuaran has a population of 837,694.
l Next week: KK Times Square and 1 Borneo to change the face of Kota Kinabalu.
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