The Macau real estate market is getting more fragile due to recent fluctuations in US interest rates and stock market performances, Oliver Tong Wai Lok, general manager at JLL in Macau and Zhuhai said yesterday, urging the local government to “consider lifting its cooling measures entirely to salvage the fragile housing market”.

Commercial real-estate services company Jones Lang LaSalle Limited (JLL Macau) announced during a press conference at its local office in the Finance and IT Centre (FIT) in Nam Van about the agency’s Macau Year-End Property Review 2023.

According to Tong, the total number of residential property sales in Macau dropped 1.3 percent year-on-year to 2,913 last year, with only 71 pre-sale transactions recorded, accounting for 4.3 percent of the overall residential transaction volume.

The government has announced the exemption of 5 percent stamp duty on the purchase of a second home from this year and a unified cap of 70 percent loan-to-value ratio for residential properties, as well as the cancellation of the mortgage scheme for first-time young homebuyers from this year, the agency representatives pointed out during the press conference.

Tong pointed out that due to the reduced loan-to-value ratio, such measures put pressure on residential flats with transaction prices of 8 million patacas or below, resulting in the accelerated fall in the prices of small- and medium-sized residential flats and tenement buildings, and the indirect reduction in the number of funds available to residents to purchase new properties after selling their own.

With the aims of improving investors’ confidence in the local property market, lowering the development risk and facilitating Macau’s urban renewal, Tong also urged the government to “consider relaxing investment thresholds for Macau’s property market from the surrounding areas”, while also reviewing the parameters of the land premium.

When asked if all the cooling measures were removed, the price of property would drop, Tong said he believed that the price would definitely decrease for a certain period of time, which, in his opinion, was actually a good thing as it would naturally reach a point where the price is accepted by both buyer and seller more freely. Tong added: “The overall problem in Macau is not price, is not transaction, but is confidence. If Macau can be a 100 percent free market, the confidence will be regained, which will be beneficial for the market.”

JLL Macau forecast that the values of high-end residential and mass-to-medium residential buildings would grow between 0.0 and 5.0 percent this year in terms of their rental value. Tong said that the rental value of residential flats had increased “a lot already in the past year”, adding he believed that the price increase would be moderate for residential flats this year in consideration of their increase in both supply and demand.

With the return of expatriates to the Macau labour market, a rise was seen in the city’s rental properties in 2023, Tong said, noting that the rental values of high-end and mass-to-medium residential properties increased by 16.3 percent and 19.4 percent year-on-year respectively last year.

JLL Macau also forecast that the capital values for high-end homes and small- and medium-sized homes for this year will remain stable and drop within 5 percent respectively.

Meanwhile, Macau’s retail property market recorded 248 transactions in the first 11 months of last year, indicating a year-on-year drop of 27.1 percent, according to Tong, who pointed out: “The outflow of domestic spending due to outbound travel overseas and to mainland cities had an impact on retail establishments in residential areas” in Macau. 

JLL Macau Director of Valuation Advisory Services Mark Wong Choi Si (right), Senior Manager of Leasing Matt Kou Ieng Kit (left) and JLL Macau & Zhuhai General Manager Oliver Tong Wai Lok pose yesterday before the US real-estate agency’s Macau year-end Property Review press conference at its office in the Finance and IT Centre of Macau (FIT) in Nam Van. – Photo: Yuki Lei