New life for Sabah’s PacifiCity

THE once-ambitious, billion-ringgit waterfront development on the coast of Kota Kinabalu, Sabah – abandoned since 2017 – may finally be edging closer to resolution.

Known as PacifiCity, the project was meant to be an integrated development in Likas, Kota Kinabalu. The project was to be a mixed development, consisting of shop units, office spaces, residential units, hotels and a mall.

It was originally slated for completion in 2018.

The project attracted significant attention due to its prime location along the scenic waterfront of Kota Kinabalu, a gateway city to Sabah’s growing tourism and commercial sectors, as well as the wider Borneo region.

There were also early indications that international hotels could be included as part of the broader waterfront offering, which would have appealed to both tourists and business travellers.

Sabah is a well-known tourist destination with many flights coming from China and South Korea.

However, soon after its launch, the project ran into problems. Despite this, the project was only “officially” declared an abandoned housing project by the Sabah State Local Government and Housing Ministry in May 2024, according to news reports.

But prior to that, vandalism escalated amid disputes over who should bear the cost of site security during the prolonged abandonment.

The situation also led to financial losses for the state-owned Sabah Development Bank (SDB), which had extended substantial loans to the developer.

Last October, Pacific Sanctuary Holdings Sdn Bhd, the developer of the PacifiCity project, was wound up by the High Court.

RKN & Co was appointed by a court order as the liquidator to oversee the project’s insolvency proceedings.

The boutique corporate recovery and insolvency firm has been working to assess the site’s current condition and has called on purchasers of the PacifiCity units to submit proof of their legal ownership interests.

Efforts are also underway to rehabilitate the development, with potential white knight investors actively being sought.

Sources indicate that at least six parties attended a briefing aimed at identifying potential white knight investors and two have been shortlisted.

An interesting aspect of the project is the presence of Majlis Kebajikan dan Rekreasi Kakitangan Kerajaan Negeri Sabah (Maksak) , which is the landowner.

The government agency’s primary functions are related to staff welfare and recreational facilities. It is understood that Maksak made the land available for development as a commercial venture to build long-term assets that support its welfare mandate.

It is likely that proposals which prioritise the long-term interests of Maksak will be viewed more favourably by the authorities.

“Any successful rehabilitation or eventual commercial return from the project could translate into financial gains that support civil servant welfare programmes, recreational facilities, or housing initiatives,” one source says.

Given that the land is owned by a civil service agency, a resolution is vital not only to unlock the site’s potential, but also to ensure that the civil servants it was meant to serve can finally see some return on what was once a promising state-backed initiative.

Last July, buyers of PacifiCity units urged the relevant authorities to appoint security guards for the premises after a spate of vandalism and thefts.

In a Borneo Post article, their spokesperson Datuk Seri Winston Liaw claimed that the unlawful actions have persisted despite police apprehending around 40 illegal immigrants committing the offences.

Liaw added that following the declaration by the Sabah State Local Government and Housing Ministry that it was an abandoned project, two white knights, one local and the other foreign, had expressed interest in rescuing PacifiCity.

A final decision on the white knight is expected in the coming months, pending regulatory approvals and financial negotiations.

Sources say the liquidator will also need to engage with affected purchasers as part of the resolution process.

If successful, the process could mark a turning point for one of Sabah’s high-profile stalled developments, offering another chance to realise its potential.

Meanwhile, unit buyers are still seeking compensation.

Earlier this month, the High Court dismissed a suit by PacifiCity condominium buyers against SDB, ruling the bank owed no duty of care.

The purchasers, represented by Messrs Ronnie Cham & Co, had alleged negligence after the troubled development was abandoned despite a 2020 completion certificate.

SDB’s lawyers argued the claims were baseless and a broad attempt to target all parties. The court agreed and dismissed the case.