The gaming industry, China-US trade, and Brexit have all had an impact on the Macau housing market.

 

The Macau government is reviewing mortgage rules to make it easier for residents to upgrade their homes. doha property

According to JLL's recently published Macau Year-end Property Review 2018, Macau's property sector weakened and saw a slowdown in investment sentiment, owing to various regulatory measures on the property market and external economic uncertainty.

 

According to the DICJ, Macau's gaming revenue continued to rise in 2018, reaching MOP 302.85 billion, up 14% year on year. In reality, since August 2016, the city's gaming revenue has grown monthly y-o-y for 29 consecutive months, surpassing MOP 300 billion for the first time since 2014. In the first three quarters of 2018, the VIP and mass markets saw y-o-y sales increases of 12.8 percent and 20.0 percent, respectively, with the VIP segment accounting for 55.4 percent of overall gaming revenue, down 1.5 percent y-o-y.

 

In the first three quarters of 2018, Macau's GDP reached MOP 306.08 billion, up 5.6 percent year on year. The gaming-related export of services increased by 11.0 percent year on year and accounted for 85.3 percent of Macau's total GDP, according to the expenditure-based GDP. Private consumption expenditure and government consumption expenditure both increased by 5.1 percent and 4.0 percent y-o-y in the first three quarters, respectively, while fixed capital formation dropped by 11.2 percent y-o-y due to a lower number of construction projects.

 

In the first 11 months of 2018, Macau's total tourist arrivals reached 32,233,000, up 9.1% year on year. Mainland Chinese visitors continued to dominate, accounting for 70.8 percent of all visitors, with 48.7% of those visiting Macau under the Individual Traveller Scheme (ITS). Mainland visitors increased 13.3 percent year over year, continuing to be the most important growth factor for Macau's visitor arrivals. As of November 2018, Macau had a total supply of 38,100 hotel rooms, with 24,500 of them being five-star hotel rooms. The overall occupancy rate of hotel rooms in Macau increased to 91.3 percent, with visitors staying an average of 1.5 nights.

 

In 2018, Macau's labor market remained relatively stable. As of the end of the third quarter, the unemployment rate had dropped to 1.7 percent, while the total median monthly income remained at MOP 16,000, according to DSEC statistics. As of the end of November, the number of imported workers in Macau had reached a new high of 188,854, up 5.2 percent from the same time last year. The total resident deposit in Macau increased by 5.5 percent to MOP 608.10 billion at the end of October 2018, compared to the same period last year.

 

"Macau's economic indicators in general grew in 2018, owing to the completion of major gaming facilities during the year. In the first half of 2018, the real estate market was fairly active. However, due to the escalating trade war between China and the United States, the Brexit impasse, and the possibility of interest rate rises, investment sentiment became cautious in 2H18. A few analytic institutions have predicted that Macau's gaming revenue will rise at a slower pace due to China's slowing economy. In 2019, we expect Macau's property to be under pressure "JLL Macau's Senior Manager, Valuation Advisory Services, Mark Wong.

 

Highlights of the Macau Residential Market

 

In 2018, the total number of residential sales transactions in Macau increased. According to DSEC data, there were 10,405 residential sales transactions in the first 11 months of 2018, up 6.3 percent year over year. In the first half of 2018, the number of transactions drove the rise. Due to external economic instability, the number of transactions decreased in 2H18.

On the supply side, pre-sale consents were released for 28 projects in 2018, totaling 2,747 residential units or approximately 322,055 sqm gross floor area. Several presale or completed designs were put up for sale throughout the year. According to DSF data, there were approximately 2,956 presale transactions registered as of early December 2018, accounting for approximately 28.5 percent of all residential transactions. When compared to the same time in 2017, both the number and the ratio increased dramatically.

In 2018, the capital prices of high-end and mass-to-medium residential assets increased by 3.5 percent and 7.8 percent year over year, respectively, with yields of 1.6 percent and 1.7 percent. The first half of 2018 saw the most development, while the second half was reasonably steady.

Residential rentals increased in response to strong demand, and the number of imported workers reached a new high in 2018. Rental prices for high-end and mass-to-medium residential properties increased by 17.2% and 12.2%, respectively, year over year.

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In 2018, the government enacted a slew of reforms, including the implementation of a new stamp duty on buyers of multiple residential properties, which resulted in a sharp drop in speculative activity in the residential sector due to higher investment costs. Furthermore, when the government loosened mortgage lending ratios for young, first-time homebuyers, the number of residential loans worth less than MOP 8 million increased. However, by the end of 2018, the sector had absorbed the potential demand from this community of first-time homebuyers. End-users and investors have adopted a wait-and-see approach as a result of the current uncertainty in the external economic climate. With the government's announcement that 4,000 affordable housing units will be available in 2019, residential transaction volume is expected to remain low in the near term, although transaction value is expected to decline slightly. Nonetheless, given the strong economic fundamentals and the over MOP 600 billion resident deposit, a significant price correction in the residential sector is unlikely ", says Jeff Wong, JLL Macau's Senior Director of Capital Markets.