Financial disadvantages to still impact property market

High business operational costs and interest expenditure, among other factors, will likely hinder the recovery of the real property market in Macau, a regional realtor told a press conference yesterday.

Looking at the residential property market, the past season saw the return of external students and workers who sought leased residences, with a HKD2,600 rise in monthly rental for a studio apartment in Cotai, as well as a duplex apartment having been rented out for over HKD100,000 per month as evidence of the increases, John Ng, principal regional sales director at Centaline Property Macau, told the press conference.

While forward-looking, the realtor expects residential prices to further drop, despite the gradual recovery of the tourism industry. His explanation is that the unsettled external environment and high interest rates are deterring people to buy new properties, fearing that property prices will continue to fall.

This lack of confidence will create a loop that will function to push prices down, with strong supply but weak demand. Ng highlighted that this will affect the overall economy for apartment owners, who will consider their assets value as having dropped, further tightening their consumption expenditure.

For the market of office space, Roy Ho, principal director of the realty agency in Macau and Hengqin, said that the demand in Macau has been satisfied for the time being. It relied mainly on spaces released by government offices.

He pointed out that although prices have dropped from about HKD10,000 per square foot to about HKD7,000 per square foot in the past few years, a further drop is being seen, which he described as “irrational.”

However, he is confident that demand will grow for office spaces in Macau, as the realtor expects many mainland companies that want to explore foreign markets shall take Macau as a gangplank. They will thus need office space here.

As for retail spaces, Ho does not expect the market will be heated. A main reason is that the return on investment (ROI) rate for retail space is about 2.5% on average, which is much lower than that for time-savings – at about 4.5% on average. People will find time-saving a more promising means of investment than buying retail space.

On the other hand, year-end is usually a low season for shop openings because decorations and other matters take time. Existing operators will be concentrated on the year-end festive season as well.

Nonetheless, the realtor finds retail spaces in Pearl of the Orient, Taipa and ZAPE Districts having strong potential. The former district enjoys closeness to the Hong Kong-Zhuhai-Macau Bridge and New Urban Zone A, as well as is expectant on new properties in the future. Meanwhile, Taipa and ZAPE are traditional tourist districts, which make them sound promising.

The realtor added that industrial spaces may see pressure from demand in the future as he expects some new operators will need such spaces in Macau amid the government’s “1+4” diversification strategy.

In the past quarter, the demands on Hengqin mainly focused on smaller units and primarily attracted buyers from Macau. The realty agency also noted that the reheating measures implemented by Beijing have started to yield effects.

Realtor: Updated northbound vehicle scheme may help with shop prices

The updated Northbound Travel for Macau Vehicle scheme may provide support to the retail space market, a local realtor said yesterday.

People who are more comfortable with making consumptions in mainland China will still do so, regardless of how many times in a month that they can drive across the border, Stanley Poon, managing director of Centaline Property in Macau and Hengqin, said yesterday on the sidelines of a press conference.

Despite this, he believed the new arrangements for the Northbound Travel for Macau Vehicle scheme will help retain more people in Macau, which will eventually benefit local businesses.

If the new arrangements are strong enough to retain sufficient people in Macau, rental and sale prices for retail spaces will stabilize and, in better scenarios, may even rise with growing demand.

Poon also forecast that residential property prices will further down for at least 3%. He explained that buyers and sellers are having a tug of war, with buyers not wanting to lower their prices while sellers calculating their affordability under the impact of a high interest rate environment. Unless they have urgent or imminent needs, buyers will tend to wait a little longer for supportive news or policies, he added. AL