Real estate market shows recovery signs in Q3

The real estate market appears cautiously optimistic, showing signs of recovery in the third quarter of 2024, according to recent reports from Centaline Macau.

During a press conference yesterday, industry experts discussed the current state of both residential and commercial properties in the region.

Stanley Poon, managing director at Centaline Macau, attributed the rebound in residential transactions to the government’s decision to lift market restrictions in mid-April. The third quarter recorded 1,028 residential sales, marking a remarkable 90% increase compared to the first quarter. However, this surge is tempered by high-interest rates that have limited the effectiveness of these stimulus measures.

The realtor revealed that sales figures for July and August showed, respectively, 356 and 200 transactions, with September expected to mirror August’s performance at around 200 sales. Overall, the estimated transaction volume for Q3 stands at approximately 760 units, reflecting a 27% decline year-on-year.

Price adjustments have also been noted, primarily due to discounts on new developments. The average price per square meter for residential properties is projected to be around MOP83,000, representing a 10% decrease from Q2.

Despite these challenges, optimism is beginning to return as such positive news emerges toward the end of Q3 and into Q4.

High-end developments like Tiffany House in Macau’s ZAPE area have seen significant interest, generating over MOP30 billion in transactions shortly after launching new units. Additionally, Poon noted, “banks are actively supporting the market by offering favorable mortgage plans following recent interest rate cuts from the Federal Reserve.”

In contrast, the commercial real estate sector faces more significant challenges. Roy Ho, senior director, provided insights into this segment, noting that only ten office transactions occurred in Q3—a staggering 75% drop from Q2. In the NAPE area, prices have fallen below MOP4,000 per square meter, down 30% from last year.

While overall vacancy rates showed slight improvements in some areas—ZAPE recorded a vacancy rate of 12.8%, while NAPE reported 12.4%—the factory building segment struggled with only six transactions recorded for Q3—a decline of 70%. Average prices dropped to MOP2,400 per square meter.

Despite these declines, Ho expressed optimism regarding a potential recovery in demand for commercial properties as interest rates decrease. He highlighted that areas near new government buildings could attract more buyers seeking quality industrial spaces.

“Looking ahead to Q4, there is anticipation for increased leasing activity and sales volume as buyers begin to re-enter the market amid favorable pricing conditions,” Ho stated. “However, high inventory levels due to previous investor withdrawals indicate that recovery may take time.”

Centaline’s experts also noted that the depreciation of the Renminbi has led to an appreciation of the pataca (MOP) and other currencies, enhancing tourists’ purchasing power in Macau. Ho noted that this increase is expected to positively impact local businesses.

Looking ahead to Q4, Centaline anticipates a resurgence in large-scale property transactions as major property owners seek to adjust their asset-liability ratios before year-end. This marks a potential turning point for a market that has faced significant challenges throughout much of 2024.

While the residential market shows signs of recovery and increased buyer confidence, the commercial sector continues to navigate hurdles as it seeks stability amidst fluctuating demand and pricing pressures. “Stakeholders remain hopeful that concerted efforts will lead to a healthier and more stable real estate market in the coming months,” said Poon. Nadia Shaw