Global property consultant JLL reports that due to repeated epidemics, economic downturns and high unemployment rate in Macau in 2021, property demand decreased as most of the potential buyers tended to wait and see.
Coupled with the lack of new projects launched for sale, residential transactions were mainly concentrated in the secondary market. The overall residential sales transaction volume shrank significantly. According to the DSEC statistics, a total of 5,970 residential sales transactions were registered in 2021, down 6.6% y-o-y. Presale transactions totaled 467, accounting for only 7.8% of the total residential sales volume, lower than the average levels recorded in the past. The similar phenomenon is expected to continue in the future.
In 2021, a total of 20 projects providing 244 new residential units with a total GFA of about 17,644.83 sqm were issued with pre-sale permits. As of end June 2021, there were a total of 16,655 vacant units in Macau, representing an overall vacancy rate of about 7.0%. The majority of the vacant units were larger size units. The vacancy rate for units with saleable area of 150 sqm or above was 17.2%.
With expatriate workers continuing to leave the Macau labor market, a fall was seen in the rental of residential leasing properties. In 2021, the rental values of high-end and mass-to-medium residential properties fell by 9.5% and 15.5% y-o-y respectively. In terms of asset value, the capital value of high-end and mass-to-medium residential properties fell by 3.4% and 0.8% y-o-y respectively, while yields recorded at 1.6% and 1.5% respectively.
"The Macau government is expected to focus on implementing the housing ladder policy, and the future residential supply will be dominated by public housing. Though setting up city master plans and increasing supply of private residential sites will help drive the long-term development of the property market, currently only 2,241 residential units are under construction or close to completion. In the short to medium term, the new supply in the private residential market will remain limited, lending support to the capital values of the mass-to-medium residential properties. However, with the uncertainties in the epidemic conditions, coupled with the economic downturn and interest rate hikes, the job outlook and income of the residents will be affected, resulting in a more cautious sentiment and weaker affordability for homebuyers. In fact, buyers should evaluate their affordability before making a decision to purchase a property, as the market will continue to be affected by many negative factors in the short run. The government introduced measures to cool down the property market in 2010 and 2018 respectively. Now, as the residential sales transaction volume has already dropped by two-thirds comparing with that in 2010, it's time to consider adjusting the relevant measures to make sure it's in line with the current economic and market conditions," comments Oliver Tong, General Manager at JLL Macau.