Tourism recovery lifts local hotel market as retail and offices struggle, says JLL

In the latest mid-year report from the real estate and investment management company Jones Lang LaSalle (JLL) Macau, the resurgence of Macau’s tourism industry is “underpinning a more optimistic outlook for hotel assets”.

Mark Wong, Senior Director of Value and Risk Advisory at JLL Macau, said the hotel industry “retain[s] its competitive edge, particularly in terms of room rates and occupancy levels.” He added that Macau’s hotel yields remain relatively stable, presenting a strategic entry point for both domestic and international investors focused on medium—to long-term asset allocation.

In contrast to the hotel segment, Macau’s residential market weakened during the first half of 2025. Transaction volume fell by 13.1% year-on-year to 1,671 units, with pre-sale transactions down 11%. According to JLL, new housing supply mainly came from nine small- to medium-sized projects on the Macau Peninsula, including Lake YOHO, which launched around 312 units and sold over 100.

“Macau’s external economic environment remains uncertain, and the local economy is still undergoing a gradual recovery. Consumer spending has yet to fully rebound, and the property market continues to recalibrate,” said Wong.

In the report, JLL Macau highlighted that the city’s gross gaming revenue (GGR) rose 4.4% year-on-year in the first half of 2025, reaching approximately MOP118.77 billion. Meanwhile, visitor arrivals also reflected a positive trend, increasing 14.9% year-on-year to about 19.2 million during the first half of 2025.

This growth was driven primarily by mainland tourists, who accounted for 71.6% of total visitors who benefited from the expansion of the Individual Visit Scheme and other visa policies.

Alongside rising visitor numbers, hotel room supply increased by 4.9% across the first two quarters to nearly 44,000 rooms. JLL highlighted that occupancy rates stood at 89.1% and the average guest stay lasted approximately 1.7 nights.

According to the JLL Macau Property Index, rental values for high-end residential flats rose 1.9% in the first half of the year, while rents for mass residential units fell 8.9%. Meanwhile, capital values dropped 9.6% and 7.9%, respectively, for the high-end and mass residential sectors.

Official statistics also reflect a subdued business climate locally: 2,020 new companies were registered in Macau during the same period, down 12% year over year.

Meanwhile, the office vacancy rate further illustrates ongoing market weakness, which climbed to around 14% by the first quarter of 2025. JLL reported a 3.4% year-over-year decline in overall office rental values.

Wong highlighted that the market will likely remain under stress amid a tight credit environment and ongoing macroeconomic uncertainty, with the transitional effect of satellite casino exits adding to the challenges.

“The phased withdrawal of satellite casinos in the second half of the year has raised concerns over potential spillover effects on adjacent properties, contributing to a more cautious and observant investment environment,” he said.

Regarding retail, JLL says the sector is under significant pressure due to northbound travel restrictions, shifts in cross-border tourism, consumption downgrades, and wealth erosion. JLL’s Retail Index reveals that total retail sales fell 9% year-on-year to approximately MOP 33.55 billion in the first half of 2025. Rental values dropped 0.3%, and capital values declined 6.6%.