Headwinds for Brunei home improvement post-pandemic

The Brunei home improvement market has seen a drastic fall in profitability post-pandemic even as it adjusts to developments that have adversely impacted the sector. DIY International learned that industry players in the sultanate have seen profits fall by as much as 30 per cent since borders reopened in 2022 following a Covid-19-induced two-year lockdown.

Home improvement retailers enjoyed brisk sales in Brunei during the pandemic due to border closures that prevented residents from going out of the country for shopping sprees. Stay-at-home orders were also issued, pushing residents to spruce up their homes. In 2021, industry players disclosed that sales rose by as much as 40 per cent.

But data indicate that the sector has since slowed down in the southeast Asian monarchy. Calculations based on statistics from the Brunei central bank show that renovation loans shrank 25.27 per cent between 2020 and 2024 while lending for interior decoration plummeted 94.83 per cent. Loans are used as an indicator of the state of home improvement in Brunei, where spending is often financed by credit. In contrast, borrowings for home buying rose 38.22 per cent, indicating that Bruneians prefer purchasing new residences over fixing up their current ones. Prices for detached and semi-detached houses have fallen 13 to 16 per cent over the last five years, though pricing for apartments and terrace houses have risen. The soft prices for some types of residences, accounted for by a glut in supply, lends support to home buying.

An industry source explained that in Brunei, property development is driven less by demand and more by surplus raw materials. "Those materials have to go somewhere, so they are used to build more residential projects even when there is not much demand," the source said.  

The sector is also weighed down by competition from other countries. When borders reopened in August 2022, Bruneians went back to going on shopping excursions to the neighboring Malaysian cities of Miri and Kota Kinabalu, which are known to have more affordable prices than the sultanate. "Our real competition is Malaysia," David Lau, former general manager of GoodHome, admitted in a recent interview.

Brunei retailers in general have also had to contend with a small population. Brunei has 460,000 people. Being unable to meet the minimum order quantity has always been an issue for its retailers. Without economies of scale, they are hard put to justify bringing in products from international…