The residential market in Macau maintains its momentum.
According to JLL’s Macau Mid-Year Property Review 2017, Macau’s gaming revenue increased for the 11th month in a row, propelling the city’s economy. As a result of the strong primary sales, the residential property market has rebounded, resulting in strong price increases in some residential projects. housing
According to the DICJ, Macau’s gaming revenue was MOP 126.4 billion in the first half of 2017, up 17.2 percent year on year. Since August 2016, the city’s gaming income has increased year over year for 11 months in a row. The gaming revenue from the VIP industry, which accounted for 55.9% of total gaming revenue in the first quarter of 2017, increased by 16.8% y-o-y, thanks to the refined business strategies adopted by VIP junket operators.
In the first quarter of 2017, Macau’s GDP was MOP 92.06 billion, an increase of 10.3% year on year. The gaming-related export of services, which grew by 13.4% y-o-y and accounted for 78.7% of Macau’s total GDP, was the key driver of growth, according to the expenditure-based GDP. Other components of the city’s GDP grew at a modest pace over the same time span. Y-o-y growth in government consumption expenditure, fixed capital investment, and private consumption expenditure was 4.8 percent, 4.6 percent, and 1.6 percent, respectively.
The total number of visitors to Macau in the first five months of 2017 was 13.186 million, up 6.3 percent year on year. The bulk of tourists came from mainland China, accounting for 66.7 percent of all visitors. Of these, 49.7% visited Macau as part of the Individual Traveller Scheme (ITS). Korea’s visitors increased by 38.0 percent year over year. In Macau, there were 35,700 hotel rooms available, with 21,800 of them being five-star hotel rooms. The total occupancy rate of hotel rooms in Macau increased to 84.5 percent in May 2017, with an average length of stay of 1.4 nights.
In the first half of 2017, the labor market in Macau remained stable. As of the end of May 2017, the unemployment rate had risen marginally to 2.0 percent, while the total median monthly income stood at MOP 15,000, according to DSEC statistics.
As of May 2017, the total resident deposit in Macau was MOP 533.15 billion, up 2.7 percent from the end of 2016. In Macau, the number of foreign workers increased marginally to 178,777, up 0.6 percent from the previous quarter “”The year 2016" In the first half of 2017, Macau’s economy performed admirably, bolstered by active investment sentiment as a result of the launch of several new residential ventures. The government’s cooling steps to cool the overheated property market, which lowered the loan-to-value (LTV) ratio for non-first-time homebuyers, combined with the Federal Reserve’s interest rate hike and balance sheet contraction, are expected to reduce total residential transaction volume in the short term. However, given the positive economic fundamentals in Macau, the construction of a large-scale gaming facility this year, and the positive effects that the Hong Kong-Zhuhai-Macau Bridge will bring about, we expect Macau’s property market to remain healthy and stable in 2H17 “Gregory Ku, Managing Director of JLL Macau, says
In the first half of 2017, the overall number of residential sales transactions in Macau increased.
According to DSEC statistics, a total of 4,960 residential sales transactions were reported in the first five months of 2017, an increase of 49.1% year over year.
In the first half of 2017, eight new projects with a total of 382 units were given presale consent. Nova Grand, Star River Windsor Arch, and Sky Oasis-The Lux Mansions are just a few of the latest projects that have received presale approval.
In 1H17, investment sentiment in the overall residential market was active, owing to the successful launch of presale projects. As compared to the end of 2016, capital prices for high-end and mass-to-medium residential properties increased by 8.8% and 6.0%, respectively, in 1H17, while yields fell to 1.3 percent and 1.5 percent, respectively.
In the leasing industry, rental values for high-end residential properties increased by 3.0% in 1H17, while rental values for mass-to-medium residential properties remained flat, compared to end 2016. This was attributed to a small increase in the amount of imported labor and restricted new residential completions.
“Off the back of an active primary sales sector, the overall residential market has recently regained momentum. However, due to a demand-supply mismatch and a shortage of government land sale or housing supply details for public use, residential prices have been rising too quickly. The government declared its intention to sell some construction sites via public auction in 2017 at the end of 2016. It is feared that this would drive property prices even higher. Indeed, the government could consider including additional binding terms and conditions in the public auction, such as requiring successful bidders to set aside a portion of their floor area for community facilities such as public youth apartments. On the one hand, this will help prevent transaction prices from being driven too high, as well as mitigate the demand-supply gap in the sandwiched-class housing market, while also enabling developers to take on certain corporate social obligations “JLL Macau’s Head of Residential, Jeff Wong, comments.
