Real Estate | JLL: Property market expected to stabilize

Jeff Wong (2nd left) pictured with other JLL executives

Jones Lang LaSalle (JLL) Macau believes that the city’s property market will move forward as part of the current economic transformation.
The real estate agency held a press conference yesterday at the FIT building to give a mid-year property review in which they forecasted the market conditions for the coming year.
According to the company’s representatives, the volume of transactions within Macau’s residential market rebounded slightly in the first quarter of 2016, with transactions being dominated by residential units valued at less than six million patacas, which accounted for roughly 80 percent of total residential sales.
With respect to the leasing market, high-end residential rental values saw a significant decline of 29 percent. In turn, rental values for mass-to-medium residential properties fell by 24.6 percent during the same period due to the conclusion of several residential conglomerates in 2015 that increased the market’s supply.
“Given the low unemployment rate in Macau and the new gaming facilities scheduled for completion in 2016, we expect residential prices in the second quarter of 2016 to remain stable around current levels with only minor fluctuations,” said Jeff Wong, the Head of Residential at JLL Macau.
Wong added that the mass-medium residential market will continue to be sustained by the demand from end-users, however “the lack of new supply in the mass-medium sector may lead to a future mismatch between demand and supply.”
According to data released by the Statistics and Census Service (DSEC), the total number of new incorporations registered in Macau during the first four months of 2016 was only 1,476, down 29.3 percent year-on-year. The overall office leasing market also saw a decline. Nonetheless, according to Alison Yip, the Associate Director of Capital Markets at JLL Macau, some international insurance companies were willing to commit to larger office spaces in order to carry their expansion.
As of the end of June 2016, the overall office vacancy rate edged up to about 8 percent, while office supply remained at a low level. The investment yields for the overall office market and for the Grade A office market rose to 2.7 percent and 2.6 percent, respectively.
“We expect to see some gaming operators relocating their operations from the existing offices to the new projects. This may lead to a rise in office vacancy rate,” explained Yip.
The DSEC statistics show that total retail sales fell by 11.2 percent. According to the JLL Macau Retail Index, overall retail capital values dropped by 23.6 percent. Local consumption accounts for 63.5 percent of Macau’s total retail sales.
Oliver Tong, the Associate Director of Retail at JLL Macau, considers that “some gaming operators and developers have already changed their strategies and have started to explore the development of retail projects targeting local residents and families visiting Macau.”
Overall, JLL takes a positive stance in regards to Macau’s property market in the near future. In particular, Wong believes that the Macau government is putting efforts into the city’s economic transformation, which he considers to be a good sign for the city’s property market. Staff reporter