JLL: Macau property prices to see another downturn
The property market in Macau will enter a new downward cycle, considering factors such as crackdowns on illegal gambling, an international commercial property agency has forecast.
International commercial realty firm JLL pointed out that, despite signs of revival in mid-2021, several new outbreaks of Covid-19 in Macau and Hong Kong have hampered the recovery.
The firm attributed the cause of the slowdown not just to the pandemic, but also to economic and security operations.
“The global economic and political uncertainties, coupled with the recent government crackdowns on illegal gambling and money laundering, are expected to cast a shadow over the outlook of the property market,” JLL noted.
“In 2021, the total property transaction value in Macau recorded [was] about MOP49.77 billion, down 2.6% year-on-year. Both the total number and value of transactions reached a record low since the subprime mortgage lending crisis,” wrote Mark Wong, director of valuation advisory services at JLL Macau.
He revealed that his company has recently received more enquiries for valuations of hotel properties. Operators sought valuations for reasons of investment and business strategy review and planning, because of “the current weak tourism [levels] and the crackdowns on illicit gaming operations.”
Worryingly, dropouts are also on the rise.
“Some institutional investors are considering selling the hotel assets in their portfolios to raise funds for investing in the higher quality projects in the peripheral areas,” Wong revealed. “We expect hotels to become the focus among investors in 2022,” he added.
Combining data from the government’s Statistics and Census Service, the realtor saw decreases in both residential property demand and the number of new projects. Transactions therefore mainly occurred in the secondary market.
In 2021, the majority of vacant residential units were larger-sized units. With non-resident workers continuing to leave Macau, there was a fall in the rental of residential properties.
However, the commercial property market is seeing better days.
“As tourists have generally adapted to the new way of travel, some retailers have taken up new space for expansion, taking advantage of the significant fall in rentals,” said Oliver Tong, general manager at JLL Macau. “[But] some landlords hedging mortgage repayments with rental income have left their properties vacant,” Tong said, since offering their properties at low rents may lead to decreased valuations.
