RMB currency policy affects local residential properties, says expert

JLL regional director Joe Zhou

The supply and price of Macau residential properties are impacted the most by China’s monetary policy, a property expert said last week.

In a joint business luncheon held yesterday by the American Chamber of Macau, British Business Association of Macau and the France Macau Business Association, Joe Zhou, regional director and head of Research for Jones Lang LaSalle Ltd (JLL) in China, said that residential properties would be impacted as a certain percentage of home-buyers in Macau are from mainland China.

Yet Zhou is not expecting the Chinese manipulation of the yuan to continue in the long term, as the Chinese government is keen on internationalizing the RMB, to encourage Chinese inventors to capitalize abroad.

“In the short term, because of the RMB depreciation, […] they stopped capital outflow but in the long term we can expect Chinese buyers being active globally,” Zhou told the press on the sidelines of the business talk.

He noted that the policy is also affecting countries and territories such as Hong Kong, the United Kingdom and the United States.

When questioned whether such a policy would attract more investment to Hengqin instead of Macau, the real estate expert suggested that most of the Chinese capital is targeted at limited assets in tier one cities.

“Zhuhai or Hengqin as tier two cities, we’re seeing that investors are trying to get away because of the risks,” explained Zhou.

“But in tier one […] because of relatively limited supply and because of the much bigger economy and much bigger market, lots of Chinese […] buyers now are still very interested,” he answered.

Zhou also considered property markets such as Zhuhai’s as a “hot topic.”

Yet he noted that buyers are looking primarily at the economic fundamentals of the city, when questioned whether such restraints could affect local buyer sentiment on units in Zhuhai or Hengqin.

“If you look at the fundamentals in Hengqin at the moment, it’s not particularly good […] because there’s no big company industries, no way to support such a big supply,” he stressed.

“I think, over time, when GDP starts to come down and people are rationalizing investment, people would look again at the fundamentals, instead of speculation based on some news and policy.”

Meanwhile, the expert expressed his belief that if the local government would open up a real estate auction, it would attract a significant number of investors and developers from the Mainland.

Although it would not benefit the local housing market, he suggested that China is keen to diversify its investment in Hong Kong, Macau and the overseas market.

“Given the size of the market, I think some amount of capital could really drive [local] rental prices,” he said.

Zhou also suggested that if the MSAR could establish a good social or public residential scheme, housing prices would not be a concern for the local residents.

During the business luncheon, Zhou presented the effects of Chinese investment on the Macau property market.

The expert recalled that the Chinese economy has been going through a structural slowdown, as the government seeks to orientate it away from dependence on investment and toward domestic consumption.

Residential prices to hold stable

Speaking on the sidelines of the event, Gregory Ku, managing director of JLL Macau said he is confident that residential prices in the territory would remain stable. He predicted that existing developers who have acquired land and stock in residential properties will hold their price. “They will not sell cheap because they don’t have other bets in Macau so I guess all the [property] launches regarding residential will hold stable in price,” Ku noted. The managing director also added that new resort openings in the region would not affect residential prices in the territory.