Realtor foretells decline in property values over satellite casino closure

Realtor Jones Lang LaSalle (JLL) has predicted that the closure of satellite casinos at the end of this year will negatively impact property values in ZAPE and commercial real estate in the area, with effects continuing into early next year.

Mark Wong, senior manager of the agency’s valuation and advisory services, told the Macao Daily News, as reported earlier this week, that following the announcement of the satellite casinos’ closure by year-end, property valuations for the relevant venues and surrounding commercial premises are expected to decline.

“The casino area constitutes about 50% of the total valuation, with rental rates per square foot based on casino revenue. If the satellite venues cannot engage in gambling activities and can only offer other commercial facilities, the rental income per square foot will significantly drop, resulting in a corresponding decrease in property valuation,” he stated.

11 satellite venues will cease operations by the end of the year, with Secretary for Economy and Finance Anton Tai acknowledging that such venues are primarily concentrated in ZAPE.

Reportedly, the latest information has not yet been reflected in market transactions and valuations in the area. However, Wong estimates that “as the year draws to a close, the withdrawal of satellite casinos will impact the prices and valuations of commercial properties in the area.”

Referring to past market records, he noted that commercial properties in the area valued at HKD80 million to HKD100 million before the pandemic fell to HKD50 million at the onset of the Covid-19 pandemic. Following the implementation of the city’s new gaming law, some satellite casinos exited the market, causing prices to decline further to HKD30 million.

The realtor spokesman indicated that after all satellite casinos exit by the end of this year, commercial property prices are expected to drop even more, likely comparable to the declines observed when some satellite casinos closed in 2022 and 2023.

Wong also expressed concern about the sharp decline in rental income resulting from the significant drop in commercial property values.

He stated that “some property owners’ ability to repay loans has been affected, and some have even become negative-equity assets, facing the risk of loan recovery by banks. Ultimately, these properties may become bank-owned, potentially triggering a domino effect.”