According to global real estate consultant JLL's Macau Mid-year Property Review 2017, Macau's gaming revenue recorded y-o-y growth for the 11th month in a row, driving A residential property market rebounded amid the robust primary sales, leading to strong price growth in some of the residential projects.
According to the statistics released by the DICJ, Macau's gaming revenue recorded at MOP 126.4 billion in 1H17, up 17.2% y-o-y. In fact, the city's gaming revenue had seen y-o-y growth for 11 consecutive months since August 2016. Benefited by the refined business strategies adopted by the VIP junket operators, the gaming revenue from the VIP market which accounted for 55.9% of the total gaming revenue, grew by 16.8% y-o-y in the first quarter of 2017.
Macau's GDP recorded at MOP 92.06 billion, registering a y-o-y growth of 10.3% in the first quarter of 2017. The expenditure-based GDP showed that the growth was mainly driven by the gaming-related export of services that grew by 13.4% y-o-y and made up 78.7% of Macau's total GDP. During the same period, the other components of the city's GDP also recorded moderate growth. Government consumption expenditure, fixed capital formation and private consumption expenditure experienced y-o-y growth of 4.8%, 4.6% and 1.6% respectively.
During the first five months of 2017, Macau's total visitor arrivals reached 13.186 million, up 6.3% y-o-y. The majority of the visitors were from Mainland China, making up 66.7% of the total visitor arrivals. Out of which, 49.7% visited Macau under the Individual Traveller Scheme (ITS). Visitors from Korea saw a strong y-o-y growth of 38.0%. The supply of hotel rooms in Macau totalled 35,700, with five-star hotel rooms making up 21,800. As of May 2017, the cumulative occupancy rate of hotel rooms in Macau rose to 84.5%, while the average length of stay of guests maintained at 1.4 nights.
The labour market in Macau remained stable in 1H17. According to the DSEC statistics, the unemployment rate rose slightly to 2.0%, while the overall median monthly income remained at MOP 15,000 as of the end of May 2017. The total resident deposit in Macau rose to MOP 533.15 billion as of May 2017, up 2.7% comparing with end 2016. The number of imported labour in Macau increased slightly to 178,777, up 0.6% comparing with end 2016.
"The overall economy in Macau performed quite well in 1H17, underpinned by the active investment sentiment with the launch of several new residential projects. The government's implementation of cooling measures to curb the overheated property market, which lowered the loan-to-value (LTV) ratio for borrowers who are not first-time homebuyers, coupled with the Federal Reserve's interest rate hike and contraction of balance sheet, the total residential transaction volume is expected to reduce in the short term. However, with the economic fundamentals in Macau remain optimistic, the completion of a large-scale gaming facility within the year and the positive effects that will bring about by the completion of the Hong Kong-Zhuhai-Macau Bridge, we expect Macau's property market will remain healthy and stable in 2H17," remarks Gregory Ku, Managing Director at JLL Macau.
The total residential sales transaction volume in Macau continued to grow in 1H17. According to the DSEC statistics, a total of 4,960 residential sales transactions were registered in the first five months of 2017, representing a significant growth of 49.1% y-o-y.
On the supply side, eight new projects providing a total of about 382 units were granted with presale consent in 1H17. Several new projects that had obtained presale consent were launched for presale, including Nova Grand, Star River‧Windsor Arch and Sky Oasis-The Lux Mansions.
Investment sentiment in the overall residential market was active in 1H17, driven by the launch of presale projects which were well responded. The capital values for high-end and mass-to-medium residential properties rose by 8.8% and 6.0％ respectively in 1H17, comparing with end 2016, while yields down to 1.3% and 1.5% respectively.
For the leasing market, due to the slight increase in the number of imported labour and the limited new residential completions in 1H17, the rental values for high-end residential properties grew by 3.0% and remained stable for mass-to-medium residential properties, comparing with end 2016.
"The overall residential market has regained momentum recently on the back of the active primary sales sector. However, the residential prices have been growing too fast due to the demand-supply imbalance and the lack of government land sale or housing supply information for public's reference. In end 2016, the government announced its plan to sell some development sites via public auction in 2017. It is worried that this will further push the property prices upward. In fact, the government may explore the possibility of adding additional binding terms and conditions to the public auction, e.g. requiring the successful bidders to reserve part of floor area for building community facilities like public youth apartments. This can help prevent the transaction prices from being pushed too high on the one hand, and alleviate the demand-supply imbalance in the sandwiched-class housing sector while encouraging the developers to bear some corporate social responsibilities on the other," comments Jeff Wong, Head of Residential at JLL Macau.