Macau's Housing Market to Remain Subdued in 2020

Macau's Housing Market to Remain Subdued in 2020

Residential News » Macau Edition | By Michael Gerrity | January 13, 2020 9:00 AM ET

According to JLL in its Macau Year-end Property Review 2019, impacted by the cautious investment sentiment caused by the global economic uncertainty, all property sectors in Macau experienced a significant fall in transaction volume last year.

According to the DICJ statistics, Macau's gaming revenue recorded at MOP 292.455 billion in 2019, a fall of 3.4% y-o-y.  The VIP market was under pressure and saw a 17.1% y-o-y fall in its revenue in the first three quarters of 2019, leading to a y-o-y fall of 8.7% in its contribution to the city's total gaming revenue at 46.7%.  The mass market recorded a y-o-y growth of 17.4% in its revenue, offsetting part of the loss in the VIP market.

Macau's GDP totalled MOP 304.27 billion in the first three quarters of 2019, down 3.5% y-o-y.  The expenditure-based GDP showed that the fall was mainly due to the contraction of fixed capital formation and balance of trade, which reduced by 22.1% and 1.9%% y-o-y respectively, together accounting for approx. 64.6% of Macau's total GDP.

The contraction was mainly caused by the decrease in the number of major construction projects and the fall in gaming revenue.  During the same period, the other GDP components generally recorded moderate growth.  Government consumption expenditure and private consumption expenditure rose by 4.9% and 2.9% y-o-y respectively.

Macau's total visitor arrivals totalled approx. 39.4 million in 2019, up 10% y-o-y. According to the DSEC statistics, the majority of Macau's visitor arrivals remained from Mainland China, equivalent to 71.1% of the total as of November 2019, while 46.8% out of which visited Macau under the Individual Traveller Scheme (ITS).  Mainland visitors remained the key growth driver for Macau's visitor arrivals; it increased by 13.2% y-o-y.  The number of visitors from Hong Kong also grew significantly by 18.6% y-o-y.  As of end November 2019, the total supply of hotel rooms in Macau recorded at 37,200, out of which 24,400 were five-star hotel rooms. The cumulative occupancy rate of hotel rooms in Macau recorded at 91.3%, while the average length of stay of guests was about 1.5 nights.

The labour market in Macau was broadly stable in 2019.  According to the DSEC statistics, the unemployment rate maintained at around 1.7% while the overall median monthly income stayed at MOP 17,000 as of November 2019.  The number of imported labour in Macau hit a new peak at 196,080 as of end November, up 4.0% from end 2018. The total resident deposit in Macau increased to MOP 657.26 billion as of end October 2019, up 3.4% from end 2018.

"Macau's gaming revenue contracted in 2019, experiencing a negative y-o-y growth in the last three months of the year.  It is mainly attributable to the tightened entry visa issuance policy and heightened security measures carried out by the Macau government due to the 20th handover anniversary.  Macau's gaming revenue is expected to be back to the normal track and the overall economy to remain stable this year after the temporary measures have been removed.  However, we expect a similar outlook as in 2019 for Macau's property market in 2020, in view of the ongoing US-China trade war," says Mark Wong, Director of Valuation Advisory Services at JLL Macau.

The total residential sales transaction volume in Macau contracted significantly in 2019.  According to the DSEC statistics, a total of 7,547 residential sales transactions were registered as of mid-November, a fall of 27.2% y-o-y.  We expect the total number of residential sales transactions will be less than 8,000 for 2019 as a whole.

On the supply side, only six projects providing a total of 63 residential units with a total GFA of approx. 3,579.34 sqm were issued with pre-sale permits.  According to DSF figures, a total of 1,147 presale transactions were recorded as of mid-November in 2019, accounting for about 15.2% of the total number of residential transactions.  Presale residential transactions saw a y-o-y fall in both its volume and its percentage of the overall market total.

In 2019, the capital values of high-end and mass-to-medium residential properties fell by 5.3% and 3.6% respectively, while yields recorded at 1.6% and 1.8% respectively as of end 2019.  The number of imported labour in Macau saw a moderate growth in the year, however, the supply of residential units available for lease also increased.  The leasing market was broadly stable in 2019.  The rental values of high-end residential properties dropped by 2.7% y-o-y while mass-to-medium residential rental values rose by 1.0% y-o-y.

"Macau's residential property sector experienced a fall in its transaction volume in 2019 due to the external economic uncertainty.  Transactions were mainly originated from first-time homebuyers, while developers needed to offer various incentives to boost sales.  Though residential supply from the private sector is expected to be extremely limited in the future, the easing of home purchase policy in Zhuhai, Macau's economic housing units re-opened for application, and the proposed neighbourhood residential projects in Hengqin, will provide a range of homebuying options for Macau people.  This is expected to affect the residential demand in the short to medium term," comments Jeff Wong, Senior Director of Capital Markets at JLL Macau.


Real Estate Listings Showcase

This website uses cookies to improve user experience. By using our website you consent in accordance with our Cookie Policy. Read More