Fancy a resort home in Kota Kinabalu?

AT Sutera Harbour Resort in Kota Kinabalu, more than 2,500 people attended a New Year’s Eve party that featured a live performance by Singa­pore band Reverie and a 12-minute fireworks display on the waterfront. This was the third consecutive year that the resort had held such an event, and the turnout was the highest so far. The event was not only attended by hotel guests but also local residents. 

Singapore-listed GSH Corp, controlled by Singapore tycoon Sam Goi, purchased a majority stake in Sutera Harbour Resort in 2014 for RM700 million. The resort sits on 384 acres (about 155ha) of reclaimed land fronting the South China Sea, 1.3 times bigger than Sentosa Cove, Singapore’s waterfront residential resort.

Sutera Harbour Resort contains two hotel properties: the 500-room Pacific Sutera and the 456-room Magellan Sutera. After acquiring the resort, GSH set aside RM50 million to upgrade the property, including the hotel rooms and presidential suites. Developed by Singaporean entrepreneur Edward Ong of OCK Group more than two decades ago, the resort was completed in 1998. 

The resort also contains a 104-berth marina that can accommodate 13 mega-yachts and 91 smaller vessels. Within the grounds are a helipad and a marina clubhouse with an Olympic-sized pool, jacuzzi and sauna, a 100-seat theatre and a children’s club. There is also a 27-hole Graham Marsh-designed golf course and the Golf Academy Borneo, which is famous for nurturing young Malaysian talent. The resort operates the North Borneo Railway, which runs twice weekly from Kota Kinabalu to Papar. A yacht-chartering service, the North Borneo Yacht Charter, is provided by a third-party operator from the marina.

Pickup in tourism

During the peak seasons, such as the year-end holidays, the two hotels at Sutera Harbour Resort operate at 95% to 100% occupancy. During the slow months, the occupancy rate is around 55%. The average occupancy rate throughout the year for both hotels is 75%, says GSH CEO Gilbert Ee.

The number of visitor arrivals in Sabah in 2014 was 3.23 million, a 4.5% drop from the 3.38 million in 2013, according to figures from the Sabah Tourism Board. International investors represented just under 30% of all visitors at 996,552 in 2014, down from 1.09 million in 2013. Overall visitor arrivals dipped a further 1.7% y-o-y in 2015 to 3.18 million. The biggest number of overseas visitors to Sabah continue to be from China, Indonesia and South Korea.

However, the tourism sector in Sabah picked up pace in 2016 and this helped stabilise retail spending despite a drop in domestic consumer spending, says Knight Frank in its 1H2016 Malaysian real estate report. The increase in the number of foreign arrivals and accommodation and retail spending is due to the recent launch of flights to Kota Kinabalu by Chinese carriers Spring Airlines, China Southern Airlines and Shanghai Airlines, as well as South Korea’s Jin Air. AirAsia also launched a new service from Wuhan to Kota Kinabalu in January last year, and Malaysia Airlines obtained approval to operate new charter flights from China in October 2015. International flights to Kota Kinabalu increased 7% over the past year, according to the Centre for Aviation and OAG, a UK-based air travel intelligence company.

Coral Bay @ Sutera

According to GSH’s Ee, the pickup in tourist arrivals is evident at the hotels at Sutera Harbour Resort, which has become very popular among visitors from China, Hong Kong, South Korea and Taiwan. He points out that the number of five-star hotels in Kota Kinabalu is limited.

This bodes well for Sutera Harbour Resort as it prepares to launch the first of two luxury condominiums, namely Coral Bay @ Sutera. The 460-unit Coral Bay is likely to debut in the second or third quarter. Both Coral Bay and the second condominium project, The Point @ Sutera, are on 99-year leasehold sites fronting the sea. More than 70% of the units in each project, which will have a similar number of units, will have views of the sea, with the remainder overlooking the golf course. “They will also be earthquake-proof,” says Ee.

The requirement for buildings to be earthquake-resistant was introduced in November 2015 following the earthquake in Ranau on June 5 that year. However, it will lead to higher construction costs and property prices, notes Knight Frank in its 1H2016 report.

Sutera Harbour Resort is a double-gated development, with security at the main entrance and at each of the hotel resorts as well as the marina. The condo developments will also have 24-hour security. Residents will be provided with concierge service and will also get housekeeping and in-room dining services from the hotels within the resort, says Ee.

The launch price for The Coral is expected to be in the range of RM1,400 to RM1,700 psf, or starting from RM1.5 million. This puts the project at the top end of the luxury condo market.

Coral Bay is already seeing strong expressions of interest among high-net-worth individuals in Sabah, says Ee. He is likely to launch the project in Kota Kinabalu ahead of overseas road shows. “There isn’t any luxury waterfront resort property of such a scale in Kota Kinabalu — and it’s just a 10- to 15-minute drive from the airport and five minutes to the city centre,” says Ee. “Mount Kinabalu is a two-hour drive away.”

Limited options

The latest residential sales data by the National Property Information Centre (Napic) shows that on a y-o-y basis, transactions of residential properties above RM1 million in Sabah totalled 31 units in 3Q2016, down 8.8% from 34 units in 3Q2015. However, on a q-o-q basis, it was up 14.8% from 27 units in 2Q2016.  

“The options presented to buyers of new developments are finite and, as a result, projects launched in 1H2016 achieved healthy take-up rates, signifying that consumer sentiment is gaining traction from what some considered to be a challenging 2015,” says Knight Frank. “The market is slowly but surely looking at a gentle ascent towards improving performance in 2016.”

According to figures by Napic, the total number of condo units and apartments in Kota Kinabalu was 17,105 as at 4Q2015. This is a substantial growth from just 2,357 units in 2006. Another 4,679 medium- to high-end condo units were under construction as at 1H2016, based on figures by Knight Frank.

Coral Bay is likely to set a new benchmark for luxury living in Kota Kinabalu. “This is a lifestyle property and, like Sentosa Cove, the 99-year lease is not a concern for the rich,” says GSH’s Ee.

Cecilia Chow is editor of The Edge Property Singapore.

This article first appeared in The Edge Property Singapore, a pullout of The Edge Singapore, on Jan 9, 2017.