Real estate | JLL optimistic about 2021 market despite unemployment rate

(From left) Mark Wong, Oliver Tong, Gregory Ku, Aggie Lam

International real property management firm and agency JLL’s Macau office announced at a press conference yesterday that its outlook for the city’s recovery is positive, despite estimating that about half a year will be needed to return to full throttle after the pandemic is under control.
In the meantime, Mark Wong, director of Valuation Advisory Services at JLL Macau, added that the market outlook for 2021 should be optimistic, for two main reasons.
First, Wong sees the emergence of the Covid-19 vaccinations as shot in the arm to not only contain the spread of the virus, but also to save the real estate market. He predicts the vaccine will stabilize the Covid-19 pandemic.
Second, the interest rate in Macau remains low. For example, the prime lending interest rate from the Bank of China Macau Branch, which was last updated in March 2020, is 5.25%. Meanwhile, HSBC’s Macau branch is offering the same prime interest rate on loans.
“Impacted by the Covid-19 pandemic, all property sectors experienced an adjustment in their price levels. If the pandemic can be kept under control globally in 2021 and the low interest rate environment persists, Macau’s property market will hopefully see a recovery in 2021,” said Wong.
“However, the unemployment rate and underemployment rate will continue to cast a shadow on the outlook of the city in the short term, as a number of livelihood issues may occur when the government’s anti-pandemic relief measures and subsidies are no longer available.”
Commenting on the underemployment rate, Oliver Tong, JLL’s head of Leasing, noted, “The employment rate is another area where, compared to other cities, it is not very high. But in terms of Macau, it is already very high. Underemployment is also very high [in Macau], it’s over 4% already. This will definitely influence the real state market if this continues in 2021. […] Rentals might also be impacted if these elementary factors continue.”
Although government data has shown no significant fluctuations in property prices in the previous year, Gregory Ku, managing director of the JLL Macau, has pointed out that large, premium residential properties have been massively impacted.
He cited a freestanding house on the Penha Hill as example. The 4000+ sq. ft. property was first put on sale in 2019 with a price tag of HKD120 million. The transaction was not cleared by 2020 so, due to the pandemic and other factors, the seller lowered the price to HKD80 million.
Ku listed several policies responsible for this phenomenon and called for the suspension of them.
Currently, repeated property purchases will incur a special stamp duty. Moreover, first-time property buyers of property less than MOP3 million can enjoy a 90% loan from banks, with the government backing up. First time buyers purchasing a property between MOP3 million and MOP6 million can enjoy an 80% loan with government backing.
Ku said that the policies imply that high-end or large properties will have no market, as individuals need to pay about half of the price upfront.
Meanwhile, Tong said that although leasing has decreased, brands and companies from Japan and Korea are showing interest in opening or expanding in Macau.
Last year a new megastore from Japanese fast-fashion brand Uniqlo opened at St Paul’s Square. In addition, Japanese brand Don Quijote’s debut in Macau was announced.