Kota Kinabalu, the Pearl of South China Sea: a city poised for Adventure, Tourism Growth

and Property Investment

Emilio Salgari and Sabah: a bit of history

Located along the northwest coast of Borneo and facing the South China Sea, Kota Kinabalu was

already famous at the end of the eighteen century thanks to the work of a

famous Italian writer: Emilio Salgari (1862-1911). For over a century, his

novels were mandatory reading for

generations of youth eager for exotic

adventures. In Italy, his extensive

body of work was more widely read

than that of Dante Alighieri (the

father of modern Italian language).

Today he is still among the 40 most

translated Italian authors and many

of his most popular novels have been

adapted as comics, animated series and feature films. He is

considered the father of Italian adventure fiction and Italian

pop culture. During those years of exploration and discovery

Salgari brought Malaysia, East Malaysia and the city that

today is known as Sabah capital, Kota Kinabalu, to the eyes of

the Europeans first and the Americans later. His adventure

books action packed with Pirates, Corsairs, invaluable

treasures, the British Empire, duels and naval battles inspired many to leave and come over to

discover the secrets of the Far East Pearl.

Kota Kinabalu and the Modern Times

Nowadays modernity allows us to plan a scuba diving holiday in Rome on Friday, catch a flight on

Saturday and enjoy the pleasure of warm tropical waters with unequable colors and wild submarine

life since Sunday for as long as our wallet will enable us. Kota Kinabalu and Sabah have so much to

offer in terms of natural touristic attractions that is no surprise how many people can they attract

every year out of the almost 26 million visitors who are landing to Malaysia every year. Kota

Kinabalu and Penang have spread the name of Malaysia everywhere around the globe as since

several years Penang has been one of the preferred touristic destinations in Malaysia and has gained

the 8th ranking on a world basis as preferred place for retiring while Kota Kinabalu has been since

many years one of the best destination for diving and water sports attracting millions of tourists

every year.

Just to mention two out of the many touristic spots that Malaysia offers to connect and understand

how both these touristic paradises have also been gaining a top ranking position as Hot Property

Investment Locations. The last 6-8 years have seen property values there multiplied two or even

three times.

The Federal Government has set 2014 as the Visit Malaysia Year and this will further contribute to

spread the fame of these two touristic/property hot spots worldwide dragging a targeted 30 million

tourist to hit the Malaysian shores and keep on maintaining the Malaysian Tourism as third earner of

foreign exchange and the Tourism industry to contribute for and estimate 12.5% to the Nation GDP.

In other words it is very clear how the Touristic Industry, when properly developed, becomes a

strategic and multiple layers economic driver. It is surely interesting to compare the trend of tourist

arrivals between 1998 and 2012 with their “quantitative spending” habits to fully understand the

high potential of a flourishing touristic industry.

The growing pace of tourist arrivals with a YoY average up-trend of 10.55% has generate a touristic

spending which shows a YoY rise of almost 14%. Flourishing touristic industry is surely a strong driver

for further development of the State and Country Economies as it allows further expansion of many

correlated sectors with Real Estate following as a logic consequence and not as main cause. Tourism,

when properly promoted, gets the world and multinational corporations’ attention to focus on the

Country and this, in the middle term, will result in FDI inflow.

Tourism is one of the best “by mean of mouth” form of advertisement and till now Kota Kinabalu in

East Malaysia has been smart enough to profit out of it.

Changes in the “holiday habits” worldwide and a different way of looking at retirement in the

western countries have been the booster for our local Property Market as we have seen it growing in

the last few years. Nowadays tourists are looking more for short term rental of private houses where

they can have the much liked “I’m living here” feeling compared to the “all included hotel packages”.

How Property relates to Tourism

Compared to Europe, US and Australia, Malaysia is a country where a foreigner can afford a high

standard of life-style at very affordable dollar and cents with the added value of all the appealing

places and attractions available to satisfy the most demanding ones while guaranteeing attractive

ROI (more than double if compared to long term rental rates) for those smart investors that have

listed their house/s in one of the existing circuit for short term rental. Last minute booking and smart

travelling websites and apps where one can register as house owner and offer his property/ies for

short term rental are easily available to everybody and once listed the only thing one will need to do

is to check the balance of his bank account at the end of each month and feeling very happy.

If we give a look at how much has changed the “skyline” of Kota Kinabalu in the last 10 years thanks

to high-raise eye-catching buildings we can fully understand the positive impact of tourism on

property developments. Outlook wise, the estimate of arrivals during the Visit Malaysia Year 2014 is

very positive and optimistic and, not to be forgotten, next year will be The year of festival all around

Malaysia…..up to the Tourism Board in Kota Kinabalu to do its best and promote Sabah and all the

great localities there.

Sustainable future

Investors have been keep on asking me if there might be a forthcoming property bubble in Kota

Kinabalu as it looks like sky is not the limit for Property Values there. My personal take, looking at

the current and estimate touristic achievements for the next few years, is that we are still in quite

safe waters and there is still a lot that can be done to increase the foreigners inflow by becoming

more a worldwide recognized touristic destination instead of a mostly regional one.

As a matter of fact less than 10% of the total tourist arrivals in 2012 and 2013 in Malaysia have been

from countries outside the SEA region. By looking at these numbers through the eyes of the “Visit

Malaysia Year 2014” and the “2015

Year of Festivals” that the Federal

Government through its Ministry of

Tourism is promoting worldwide

since the end of the last year we can

surely see the long term

sustainability of the Tourism

centered economic cluster and

related Real Estate market.

“REI Group of Companies CEO and co-founder Dr. Daniele Gambero gives presentations on the

Property Market and welcomes feed-back at daniele.g@reigroup.com.my “

Sources: Ministry of Tourism, Statistic Department, Sabah Tourism and REI Group archives