Carlyle Group Injects MOP2 Billion into Macau’s Property Market

Bullish about Macau’s real estate prospects, the Carlyle Group, one of the premier global private equity funds, recently bought two residential buildings at the Areia Preta, which are expected to be inaugurated in the middle of 2009, for an estimated sum of MOP2 billion. The two buildings, comprising of a total of 372 flats, will be high-end residences catering to the demand for quality accommodation by foreign employees and local residents. These flats are expected to be priced around MOP 3,500 per square foot.

Property dealers indicate that while real estate sentiments were lower in Q2, Macau’s properties are still sought-after by foreign investors. Several investment deals were registered during the first six months of this year. The property market might turn for the better during Q4 with a rising trend expected to set again the following year.

Some local bankers think that the fact that two buildings are being converted into high-end residences clearly indicates the buyer’s optimism regarding Macau’s property market, not to mention a few property agents also have this view. However, the Subprime Mortgage Crisis remains unsolved and oil prices as well as the inflation rate are still high causing the overall optimism to be limited. The expected market upturn in Q3 may have to wait until Q4.

According to Gregory Ku, Managing Director of Jones Lang LaSalle Macau which is the broker for the deal, and provides property management consultation service, this transaction reflects international investors’ confidence in Macau’s prospects after 2009. With the Cotai Strip development projects being completed, Macau is in for an even more optimistic outlook. As a matter of fact, overseas investors have traditionally not been interested in Macau’s property market. But in recent years, many international funds have been looking for potential projects in the city.

He added that there might be a 10% drop in property prices during the second half of the year, but that this is just an adjustment of the market. The Jones Lang LaSalle Macau views the city’s real estate sector in a favorable light not just because of the Hong Kong-Zhuhai-Macau Bridge project where financing has been committed to by the related governments, but also because of the completion of Macau’s new infrastructure and hotel projects. The property market is expected to pick up again the following year.