Economist predicts continued growth in residential rents

The divergence between private residential rents and property prices in Macau is ongoing, with a local economist predicting this trend will persist unless the region experiences a new phase of economic growth.

The latest data from the Macau Statistics and Census Bureau (DSEC) shows that the average monthly rent for residential units in the first quarter of this year reached MOP138.4 per square meter, reflecting a year-on-year increase of 4.5% and a slight quarter-on-quarter rise of 0.4%, the highest level since the first quarter of 2022.

However, current rental rates remain 15% lower than the pre–Covid-19 level of MOP163.5 per square meter recorded in the fourth quarter of 2019.

In central Taipa, the average rental rate increased by 1.1% quarter-on-quarter to MOP140, while Zape rose to MOP120, up 0.8%, and NAPE and Aterros da Baía da Praia Grande increased to MOP144, up 0.7%.

Conversely, the average rental rate in the NATAP area decreased by 1.5% to MOP163. By usable floor area, the average rental rate for units ranging from 50–99.9 square meters rose by 0.5% quarter-on-quarter to MOP138, whereas those under 50 square meters fell by 0.9% to MOP166.

Speaking to the Times, Henry Lei, associate head of the Faculty of Business Administration at the University of Macau and vice president of the board of directors of the Macau Economic Association, attributed this trend to lower rents negotiated by many tenants during the pandemic amid challenging economic conditions.

“As the economy gradually recovers, rents in the rental market are likely to increase. With these agreements coming to an end, a natural rise in rents is anticipated,” he said.

He further noted that while rents rose in the first three quarters, he views the increase as “not particularly significant.”

To support his perspective, he cited data from the DSEC, which began publishing actual floor-area rent per square meter for residential units in the first quarter of 2019, starting at about MOP159.6 per square meter.

During the pandemic, this figure continued to rise until it began declining in the second quarter of 2020, reaching its lowest point in the first quarter of 2021 at MOP129.8. This decline from MOP159.6 to MOP129.8 represented a drop of MOP30, which he described as “a significant amount.”

Since the first quarter of 2023, as the economy has gradually returned to normal, rents rebounded to MOP138.4 in the first quarter of 2025, according to Lei’s remarks.

He pointed out that rents began to rise immediately after the easing of Covid-19–related travel curbs; however, the increase during this period did not exceed MOP10. The actual increase was MOP8.6, which translates to about 6.63% when calculated proportionally.

Lei emphasized that “the current rise in rents is merely a rebound.” Considering the overall unfavorable environment this year, along with declining tourist spending to less than MOP2,000 per capita, he estimated that rents may not continue to rise significantly but will likely stabilize around MOP140.

“It is not easy for rents to fall, as those who do not buy property still need to rent, and Macau has a large population base, ensuring strong demand,” Lei pointed out. He acknowledged that while rental returns have increased, they have not reached 2% due to sample issues, which makes them unattractive to investors. The market continues to be concerned about the potential extent of future adjustments.

Rising rents amid falling property prices

According to the government’s Residential Property Price Index, Macau’s overall residential property prices exhibited a significant downward trend in 2024. The average residential property price index for the year was 215.8, reflecting a year-on-year decline of 11.7%. The existing residential property index was 232.7, down 11.3%, while the pre-sold residential property index was 268.7, down 6.1%.

On a quarterly basis, the overall residential property price index for the fourth quarter of 2024 decreased by 2% compared to the third quarter. This trend continued into the first three months of 2025, with the overall residential property price index dropping by 2.1% from the fourth quarter of 2024. The existing property index decreased by 0.7%, while the pre-sold property index saw a significant decline of 21.7%.

Earlier, realtor Centaline Property predicted that property prices would undergo another round of declines, potentially falling by 10–20%, with both prices and transactions decreasing, marking the entry of the property market into an “ice age.” It is estimated that the average monthly transaction volume in the second quarter will hover around a low level of 200 units.

The latest DSEC data indicates that the first quarter of this year experienced a “double decline in both volume and price” in residential property transactions. During this period, only 754 residential units were transacted, a decrease of 130 units quarter-on-quarter. The average price per square meter of usable floor area for all residential units was MOP71859, recording a 5.5% quarter-on-quarter decline and a sharp 15.5% year-on-year drop, down 36% from the peak of MOP112304 during the same period in 2018.

Looking at property market trends in Macau, Lei expressed limited confidence in a future recovery, stating: “This year has seen more uncertainties and negative factors than positive news.”

He noted that the international trade environment post–“trade war” is filled with uncertainties, fostering a cautious outlook that hinders the stability and recovery of the property market. Moreover, Macau’s interest rates, linked to U.S. dollar rates, are unlikely to see significant cuts, meaning the interest burden on residents is expected to remain high in the short term.

Addressing concerns about Macau’s property market trends, Roy Ho, director of Centaline Macau and Zhuhai Hengqin Property, pointed out that while cities across the country, including Hong Kong, have implemented numerous supportive policies for real estate, Macau has mainly relied on strict measures.

“The Macau government’s policies may affect the market, but no effective measures have been introduced to stimulate it. In contrast, mainland cities have already launched multiple initiatives to support their real estate sectors,” he said.

He believed the government has many options available and should study and learn from policies implemented in other provinces and cities.