In response to the increasing downward pressure on Macau’s housing market, JLL (Jones Lang LaSalle) Macau and Zhuhai General Manager Oliver Tong Wai Lok urged the government yesterday to “adapt to times” by adjusting its demand-side management measures targeting the property market, such as by “appropriately” relaxing both its special stamp duty (SSD) and buyer’s stamp duty (BSD) on residential properties.
Tong said considering that Macau’s current housing environment was very different from a decade ago when the existing management measures were introduced, he believed that the relaxation of the existing restrictions would have no impact on housing prices.
On the mortgage front, Tong said, in view of the fact that local banks have their own effective review and supervision mechanisms, the government should allow them to decide the amount of money they’re ready to lend to their clients, in line with each client’s individual financial situation.
Tong insisted that the easing of the curbs would not lead to a rise in the prices on the local residential property market, under “such a high-interest rate”, adding he expected residential capital value in Macau to continue to fall by about 5 percent in the second half of this year.
The local branch of the US-based real estate consultancy firm held a press conference at its Finance and IT Center of Macau (FIT) office in Nam Van, where its four senior representatives released a mid-year review of the local real estate landscape.
According to Tong, although Macau’s economy recovered steadily after the relaxation of the city’s travel restriction in the first half of the year, “it failed to revive the local property market with home sales remaining at a historic low level”, due to various impacts such as the US interest rate hikes, fluctuating stock market, weak global economy, the Chinese mainland’s lower-than-expected economic recovery and Macau’s declining birth rate, resulting in a “non-significant” increase in transaction volume, totalling just 1,793 transactions in the first half of the year, a year-on-year growth of only about 10 percent.
In terms of home prices, Tong said: “Due to the low volume of residential real estate transactions, which are mainly concentrated in mass and medium units, the price per square foot has recovered slightly from the end of last year, but it is still down over 10 percent from the pre-pandemic level.”
Concerning residential rental values, according to Tong, benefitting from the return of non-resident workers (NRWs) to Macau after the COVID-19 pandemic, the local residential leasing market performed well in the first six months of this year, with rents of luxury flats and mass residential flats surging 13.7 percent and 8.2 percent, respectively, year on year.
Meanwhile, yesterday’s press conference also released data on the total number of retail property sales in the first five months of this year, when the market merely recorded 115 transactions, down 14.8 percent year on year.
Tong pointed out that although the rental values of prime street shops rebounded 9.5 percent in the first half of this year, with their capital value remaining stable, the rental increase rate was expected to drop in the next two quarters. However, Tong was quick to add he believed that the transaction volume of shops would not increase significantly as long as interest rate hikes remain high.
Tong stressed: “Rising outbound travel to mainland cities or Hong Kong led to the leakage of domestic spending, which would dampen the recovery of Macau’s retail market.”
According to Investopedia, leakage refers to capital or income that diverges from some kind of iterative system.
He also added that with the depreciation of the yuan, both Macau residents and mainlanders were more willing to splash out in the mainland.
“Although Macau’s economy is recovering, investors remain on the sidelines due to the impact of interest rate hikes, the global economic slowdown and the slowing economic recovery in the mainland weigh on Macau’s property market”, said JLL Macau Director of Valuation Advisory Services Mark Wong Choi Si, who pointed out that Macau’s overall investment property market was forecast to remain subdued in the second half of this year, due to the increase in the rates of land premiums by the government, in conjunction with the heightened interest rates.
JLL Macau Director of Valuation Advisory Services Mark Wong Choi Si (second from left) and Senior Manager of Leasing Matt Kou Ieng Kit (right), as well as JLL Macau & Zhuhai General Manager Oliver Tong Wai Lok (second from right) and Property and Asset Management Head Ben Tse Man Pan pose yesterday before the US real-estate agency’s Macau Mid-year Property Review press conference at its office in the Finance and IT Center of Macau (FIT) in Nam Van. – Photo: Yuki Lei
