Skip Ribbon Commands
Skip to main content

News Release


Macau’s residential market regains momentum with robust primary sales


Macau, 12th July 2017 – Macau’s gaming revenue recorded y-o-y growth for the 11th month in a row.  The residential property market rebounded amid the robust primary sales, leading to strong price growth in some of the residential projects, according to JLL in its Macau Mid-year Property Review 2017.

According to the statistics released by the DICJ, Macau’s gaming revenue recorded at MOP 126.4 billion in 1H17, up 17.2% y-o-y.  In fact, the city’s gaming revenue had seen y-o-y growth for 11 consecutive months since August 2016.  Benefited by the refined business strategies adopted by the VIP junket operators, the gaming revenue from the VIP market which accounted for 55.9% of the total gaming revenue, grew by 16.8% y-o-y in the first quarter of 2017. 

Macau’s GDP recorded at MOP 92.06 billion, registering a y-o-y growth of 10.3% in the first quarter of 2017.  The expenditure-based GDP showed that the growth was mainly driven by the gaming-related export of services that grew by 13.4% y-o-y and made up 78.7% of Macau’s total GDP.  During the same period, the other components of the city’s GDP also recorded moderate growth.  Government consumption expenditure, fixed capital formation and private consumption expenditure experienced y-o-y growth of 4.8%, 4.6% and 1.6% respectively.

During the first five months of 2017, Macau’s total visitor arrivals reached 13.186 million, up 6.3% y-o-y.  The majority of the visitors were from Mainland China, making up 66.7% of the total visitor arrivals.  Out of which, 49.7% visited Macau under the Individual Traveller Scheme (ITS).  Visitors from Korea saw a strong y-o-y growth of 38.0%.  The supply of hotel rooms in Macau totalled 35,700, with five-star hotel rooms making up 21,800.  As of May 2017, the cumulative occupancy rate of hotel rooms in Macau rose to 84.5%, while the average length of stay of guests maintained at 1.4 nights. 

The labour market in Macau remained stable in 1H17.  According to the DSEC statistics, the unemployment rate rose slightly to 2.0%, while the overall median monthly income remained at MOP 15,000 as of the end of May 2017.  The total resident deposit in Macau rose to MOP 533.15 billion as of May 2017, up 2.7% comparing with end 2016.  The number of imported labour in Macau increased slightly to 178,777, up 0.6% comparing with end 2016.

“The overall economy in Macau performed quite well in 1H17, underpinned by the active investment sentiment with the launch of several new residential projects.  The government’s implementation of cooling measures to curb the overheated property market, which lowered the loan-to-value (LTV) ratio for borrowers who are not first-time homebuyers, coupled with the Federal Reserve’s interest rate hike and contraction of balance sheet, the total residential transaction volume is expected to reduce in the short term.  However, with the economic fundamentals in Macau remain optimistic, the completion of a large-scale gaming facility within the year and the positive effects that will bring about by the completion of the Hong Kong-Zhuhai-Macau Bridge, we expect Macau’s property market will remain healthy and stable in 2H17,” remarks Gregory Ku, Managing Director at JLL Macau.

The total residential sales transaction volume in Macau continued to grow in 1H17.  According to the DSEC statistics, a total of 4,960 residential sales transactions were registered in the first five months of 2017, representing a significant growth of 49.1% y-o-y.
– continued –

On the supply side, eight new projects providing a total of about 382 units were granted with presale consent in 1H17.  Several new projects that had obtained presale consent were launched for presale, including Nova Grand, Star River‧Windsor Arch and Sky Oasis-The Lux Mansions.

Investment sentiment in the overall residential market was active in 1H17, driven by the launch of presale projects which were well responded.  The capital values for high-end and mass-to-medium residential properties rose by 8.8% and 6.0% respectively in 1H17, comparing with end 2016, while yields down to 1.3% and 1.5% respectively.

For the leasing market, due to the slight increase in the number of imported labour and the limited new residential completions in 1H17, the rental values for high-end residential properties grew by 3.0% and remained stable for mass-to-medium residential properties, comparing with end 2016.

“The overall residential market has regained momentum recently on the back of the active primary sales sector.  However, the residential prices have been growing too fast due to the demand-supply imbalance and the lack of government land sale or housing supply information for public’s reference.  In end 2016, the government announced its plan to sell some development sites via public auction in 2017.  It is worried that this will further push the property prices upward.  In fact, the government may explore the possibility of adding additional binding terms and conditions to the public auction, e.g. requiring the successful bidders to reserve part of floor area for building community facilities like public youth apartments.  This can help prevent the transaction prices from being pushed too high on the one hand, and alleviate the demand-supply imbalance in the sandwiched-class housing sector while encouraging the developers to bear some corporate social responsibilities on the other,” comments Jeff Wong, Head of Residential at JLL Macau.

The office market in Macau remained broadly stable in 1H17.  During the first five months of 2017, the total number of new incorporations registered in Macau was 2,256, up 22.0% y-o-y.  The number of new incorporations from the real estate related industries grew significantly by 121.0% y-o-y to 358.  The growth is believed to be driven by the recent brisk transactions in the local property market and the launch of overseas properties in the city as well.  As it has been a common practice for developers to set up a sales office or show room in an office building for launch of new projects, the projects in the pipeline is anticipated to create a boost to the office demand.

For the leasing market, most of the Grade-A office tenants renewed their existing leases, taking advantages of the stable or lower rentals.  Some companies made use of this opportunity to upgrade to Grade A offices for business expansion.  Under such circumstances, the overall office leasing market fell a bit in 1H17.  According to JLL Macau Office Index, the rental values for the overall office market and Grade A office market fell by 1.7% and 2.2% respectively in 1H17, comparing with end 2016.

For the sales market, the capital values for Grade A offices fell by 1.2% in 1H17 due to the reduced Grade A office rentals.  However, at the same time, some office transactions saw price growth of about 10% comparing with end 2016.  Therefore, the capital values for the overall office market grew by 3.4% in 1H17, comparing with end 2016.  Office supply remained low, with the overall office vacancy rate maintained at 8% as of end-June 2017.  The yields for the overall office market and Grade A office market both recorded at 2.7%.

“The Tribunais da RAEM of Macau SAR announced the relocation of the Tribunal Judicial de Base from Macau Square to O Edifício Provisório dos Juízos Criminais do Tribunal Judicial de Base in the third quarter of 2017.  This building has a site area of 1,640 sqm and a total height of 35 m.  Comprising eight floors plus a basement, it has a total gross floor area of 14,300 sqm.  The move-out of the Tribunal da RAEM is expected to exert upward pressure on the office vacancy in Nam Van,” says Alison Yip, Associate Director, Office Leasing at JLL Macau.

According to the DSEC statistics, the total retail sales grew by 12.0% y-o-y in the first quarter of 2017 to MOP 16.59 billion.  The retail sales of watches, clocks and jewellery and leather goods recorded y-o-y growth of 23.2% and 18.6% respectively, while cosmetics grew by 22%.

In the sales market, the number of retail units transacted in the first quarter of 2017 totalled 170, up 32.8% y-o-y.  Although the total transaction volume remained low, one notable transaction was recorded in 1H17.  A local company acquired a standalone commercial property in Rua de S. Dominagos for approximately HKD 150 million.  According to JLL Macau Retail Index, the overall retail capital values dropped by 1.4% in 1H17 while the overall retail rental values fell by 6.4%, comparing with end 2016.  The yields for the overall retail market fell to 1.8% as of June 2017.

The new, major gaming facility MGM Cotai is scheduled for completion in the fourth quarter of 2017, which is expected to further enhance Macau’s retail landscape.  MGM Cotai is being developed to drive greater product diversification and bring more advanced and innovative forms of entertainment to Macau.  Costing over HKD 26 billion, MGM Cotai offers a total retail space of 50,000 sq ft.  A highlight of MGM Cotai is the Spectacle, while the key entertainment feature is the versatile, transformable Theatre space with over 10 seating configurations and a 180-degree immersive stage backdrop that is capable of reproducing 4K resolution content.  Knowing that F&B has become a crucial element for retail development, MGM Cotai will offer nine dining options including restaurants and bars, with celebrated chefs from the global culinary scene, including Mauro Colagreco, Mitsuharu Tsumura, Graham Elliot and Janice Wong, aiming to create unique dining experiences for visitors. 

“The Legislative Assembly has voted through the new bill Alteração do regime jurídico de arrendamento previsto no Código Civil recently, trying to exert control on the real estate leasing market by means of administrative measures.  The bill is applicable to commercial properties, aiming to provide support to the small-to-medium enterprises and protect the interest of the commercial real estate tenants.  Under the new bill, commercial real estate tenants are allowed to terminate a tenancy anytime within the contract term by serving the landlord 90 days’ notice, while the compensation payable to the landlord is capped at two months’ rentals.  Though all the terms and conditions in a commercial real estate tenancy should be considered, if a tenant is allowed to terminate a tenancy as per the terms mentioned above, the landlords are at risk of bearing unnecessary losses caused by the offering of rent-free period, property tax and capital expenditure,” says Oliver Tong, Head of Retail at JLL Macau.