Real Estate Matters | All you wanted to know about property investment – Who is buying and what’s the cost of a property? (part 3 of 8)

Juliet Risdon

Juliet Risdon is a Director of JML Property and a property investor.
Having established the company in 1994, JML Property offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.

This is the third installment of an eight part series identifying the key factors in choosing the right investment property and putting your money to work.
If you have been following these articles and want to buy property in Macau, you will probably want to know about the costs associated with a purchase.
The price of properties in Macau has risen significantly since 2004. The financial crisis of 2008 caused investors to back away from property investment, which in turn hurt property development. Prices fell and new developments came to a halt. Thanks to the thriving economy, prices came back with a vengeance in 2012 and prices reached record highs before correcting slightly earlier this year.
According to recent figures, if you decided to purchase one of the new developments you will be spending upwards of HKD10,000, or approx. USD$1,290 per square foot for a standard apartment.
If you wanted to purchase an apartment in an older building, you will do very well to find any property priced at HK$ 7,000 per sq ft, with most apartments now valued above $8,000 per sq ft.
The location and age of the building will determine the price per square foot. As high as they seem now, you can expect prices to increase each year as development continues and more people and businesses come to Macau.
The light-rail system is on the horizon, and of course the bridge being built to Macau connecting Hong Kong and Zhuhai will be a massive factor. As the number of visitors and services increases, so will the demand for a larger workforce, which is likely to trigger a further shortage of property.
In the past non-residents from countries such as Australia, Canada, and Britain (excluding China) accounted for about 20 percent of the property buyers in Macau. The number of buyers from the mainland is difficult to track, but estimates put the mainland buyers between 10% – 20% behind all property transactions here.
In general Western investors prefer small and medium size apartment apartments rather than the big condos. Conversely, buyers from China prefer the larger, more luxurious properties.
Stamp duty starts at 1% for the first $2 million, then increases to 2% for up to $4 million before finally settling on 3% for anything over $4 million.
Whilst there are no ‘restrictions’ on who can buy and who can’t in Macau, the government has levied an additional stamp duty of 10% of the purchase price on both non-residents of Macau and companies buying properties here in an effort to slow down the growth.
You will also pay notary fees and deed registration fees. These fees can be as much as 2% of the value of the property, dependent on the size and price of the apartment or house.
All properties are priced in Hong Kong dollars, and the fixed exchange rate for Macau Patacas to Hong Kong is 1.03 Patacas to each Hong Kong dollar.
Buying property in Macau is not for everyone. You are aware that there is a very limited supply whilst demand remains high. Hence the dramatic price increases.
As supply increases and more apartments open up, pricing may stabilize somewhat. Until then, it still makes sense to buy property in Macau provided we take a long term / 5 year view of the investment.

Join us next week for Part 4 of All you wanted to know about property investment – Property purchase step by step.

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