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Early 2008 saw a buoyant property market with a series of high-priced land sales, a green light for the Hong Kong-Zhuhai-Macau Bridge and repeated interest rate cuts. New properties marketed in the first quarter sold like hot cakes. But by the second quarter, the global investment sentiment turned bearish, and new restrictions on the gaming industry and the Mainland’s Individual Travel Scheme sent Macau’s property market on a downward trend. The transaction volume slumped by 30-40% year-on-year in the first half of the year. However, the property market is likely to climb up again for the following solid reasons: new hotel projects are expected to go into operation, the government’s home starter funding scheme and the newlyweds leasing loan scheme.
Sek Po Tak, Regional Director, Centaline (Macau)
Property Market Likely to Rebound in Fourth Quarter
The housing projects marketed in the first quarter, including the Residencia and the second phase of the Praia, pushed transaction volume and housing prices higher. Take the La Cite for example. After the home occupation started, its price per square foot has been on the rise since early 2008. An approximately 13% surge was registered in May against that of January. The price per square foot has been as high as MOP3,200-3,500. Since the adjustment befell the second quarter, one or two housing projects recorded an 8-10% drop in price. Even though after adjustment, the continuous inflation and the mounting labour and materials cost forced developers to sell their properties at nearly cost prices, with little room for a further drop in price. During the adjustment period, those affected were mainly overseas investors who were anxious to cash their property after suffering losses on the stock market or those who owned properties in two places. Local investors, most of whom had maintained a wait-and-see attitude, were not much affected. Macau’s economy is likely to keep on growing in the second half of the year and the property outlook is good. If large housing projects are coming on the market in the second half of the year, the adjustment period may end in September. Properties in the Areia Preta are particularly promising.
Nelson Tsui, Regional Director, Centaline (Macau), Taipa
Leasing Price Escalates – Better Buying Than Renting
Property transactions in Taipa registered a marginal fall in the first half of the year, except where a few new projects were launched in the first quarter. Property dealing generally remained inactive over recent months. Approximately 4,800 transactions were registered in the first six months in Taipa, about 6% down year-on-year. Fluctuating external factors and government control of the gaming industry have affected the investment sentiment, resulting in a continuous slowdown of real estate and a fall in housing prices. Compared with the housing prices recorded at the end of last year, the average price in Taipa dropped slightly, by 6-8% in the first half of 2008. The price per square foot for high-end properties was also down by 5%. While transactions are slowing down, leasing prices are going up. At present, it seems to cost less to buy a property than to rent as the mortgage rate remains low and the housing prices have dropped. The continuous inflation and the fickle stock market also suggest that property investment may be the best way out for capital. In the first quarter, GDP reached MOP44.17 billion this year, up 31.6% than 2007. The unemployment rate remained at 2.9%. Macau residents’ monthly median salary topped MOP9,500 and their deposit amount totalled as much as MOP268.2 billion by the end of 2007. All of these statistics indicate a very optimistic, economic growth in Macau. Buying good-value-for-money properties during the current adjustment seems the right thing to do against inflation.
