Real estate firm Jones Lang LaSalle (JLL) is expecting local properties to face pressure this year due to slower economic growth and various regulatory measures in the region’s property market.
JLL predicts that capital values of high-end residential properties will drop 5 to 10 percent, while rental values will remain stable.
Capital values of mass-to-medium residential and retail properties could also drop by 5 percent.
In JLL’s Macau Year-end Property Review 2018 which took place on Wednesday, the firm expressed the belief that the government should further relax the mortgage lending ratios for residents.
Currently, only properties valued below MOP8 million are eligible to apply for a higher ratio of mortgage lending.
“If they can move the bar to MOP12 million, it can facilitate residents to change their homes,” said managing director of JLL Macau, Gregory Ku, explaining that a two to three- bedroom apartment in Taipa already costs up to MOP12 million.
Residents who wish to upgrade to a bigger home are subject to a higher initial payment requirement, as they can only apply for mortgage lending of up to 40 percent and are required to pay an additional stamp duty of 5 percent.
“This has created difficulties for end-users to upgrade, and at the same time has significantly reduced residential supply in the secondary market. In fact, the existing mortgage guideline has been in use since 2012 when the price levels were much lower than now,” Ku explained.
“We hope the government will review the guideline and adjust the set property value so as to alleviate the problem of supply shortage in the secondary market,” he added.
Meanwhile, due to the launch of a series of corrective measures in 2018 including the imposition of a new stamp duty on buyers acquiring more than one residential property, the firm saw a significant decrease in speculative activities in the residential market due to the increased investment costs.
Jeff Wong, senior director of Capital Markets at JLL Macau said that with the current volatility in the external economic environment, end-users and investors have generally adopted a “wait-and-see” attitude.
Coupled with the government’s announcement that 4,000 public housing units will be made available in 2019, Wong said that residential transaction volume may stay at the low level in the near term while transaction value may fall slightly.
Meanwhile for office properties, Gregory Ku called for more spaces that could accommodate offices.
According to Ku, Grade A offices in the city are scarce and the government should also increase plans for such premises.
During the first 11 months of 2018, a total of 5,569 new incorporations were registered in Macau, up 15.4 percent year-
on-year, thus office rentals prices increased as Grade A office leasing supply reduced.
“I think for Macau to become international city, Grade A new offices are a must and should be planned rather than [just] talking all about residential [properties]. Co-working should be something in their minds. This is our future,” Ku told the press.
According to the firm, it has recently been receiving enquiries on co-working spaces from overseas and China-based operators.
“We don’t have supply for offices. […] People will need to go to Hengqin, because it has a lot of these and Macau has none,” Ku added.
In the sales market, the number of retail units transacted in the first 11 months of 2018 totaled 595, up 12.7 percent year-
Notable sales transactions recorded in 2018 were mostly in the tourist areas, including two shop units in Praça de D. Afonso Henriques and Avenida do Infante D. Henrique which were sold for approximately HKD300 million and HKD200 million respectively.
Further, JLL also called on the government to carefully plan on building more residential properties, citing the city’s integration in the Greater Bay Area.
“It’s important for the next Chief Executive to think about it because this whole big agenda [GBA] needs to be rethought, because in the old times, we were isolated, but now we are integrated with other cities, which means we think much bigger in terms of planning and housing demand and supply,” said Wong.