Macau’s economy showed signs of recovery in the first half of the year but its property market remained stagnant with no significant improvement, global commercial real estate services company JLL said in its Macau Mid-year Review 2021.

The report, which was released on Wednesday, said that “with the normal post-pandemic, the pent-up property demand will be released gradually,” adding: “We expect Macau’s property market to remain stable” in the second half of this year.

Residential space

The report quoted Gregory Ku, managing director at JLL Macau, as saying that “the overall residential transaction volume recorded in the first half of the year was similar to that in 2020, with most transactions recorded in the secondary market. Buyers were mostly local first-time homebuyers, making up more than 70 percent of the overall residential sales. The property prices in the peripheral areas have been surging as residential properties in Macau remain the most preferred option for local homebuyers. Residential units worth not more than 8 million patacas remain popular. Due to the COVID-19 pandemic, residential buyers in general have a bigger bargaining power and transaction prices are largely close to the appraised values. Coupled with the current low mortgage rate environment, it’s now a good time for homebuyers to enter the market. Though unemployment and underemployment rates remain high, we expect them to move down when the travel restrictions between Macau and the neighbouring regions are eased or lifted, and a further increase in residential demand.”

Office space

The report quoted Oliver Tong, head of Leasing at JLL Macau, as saying that “the office supply in Macau is set to increase in the future. A new office building is scheduled for completion in Taipa this year, providing a total gross floor area (GFA) of approximately 100,000 sq. ft. The government departments may also move out of the private office market before 2024 as some of the government office buildings have been completed recently. As the market is unlikely to be able to absorb all the increased office supply within a short time, office rentals potentially will face downside pressure. The government did mention its hope to attract mainland China-based companies to set up their headquarters in Macau. However, the future supply in general is not suitable for headquarters with their decentralised locations. We believe the government can try to attract major corporates to develop one or two Grade A office buildings as pilot projects through public land sale. The low tax regime is one of Macau’s advantages, however, to develop a headquarters economy it requires a combination of essential factors including industries, talents, housing, education, etc, to attract corporates to set up their headquarters in the city.”

Retail space

Tong also said that “benefiting from the reopening of the border between Macau and mainland China, the sales of luxury goods, cosmetics and sanitary articles and pharmacies rebounded significantly. However, the mass retail market and sports brands saw little improvement. The retail vacancy rates in the tourist areas remain trending upwards, reflecting the limited impact that the reopening of the border can bring to the retail trades that require a high customer flow. As the COVID-19 pandemic has not yet been fully contained on the global level, retail property landlords in the tourist areas will remain flexible and are willing to offer tenants bigger rental discounts. Retailers will remain cautious about the outlook of the retail market. Some retailers have started to set up outlets in residential neighbourhoods targeting local customers. Some major shopping malls are trying to introduce more entertainment and retail elements to attract more visitors and drive an increase in customer spending.”

A man walks past property advertisements in a building in the city centre yesterday. Photo: Maria Cheang Ut Meng