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JLL: Government should help people get on property ladder to address housing problems/macau/en-gb/news/307/government_should_help_people_get_on_property_ladder_to_address_housing_problemsJLL: Government should help people get on property ladder to address housing problems<p>​</p><div><strong>Macau and Hong Kong, 16th January 2018</strong> – Macau’s economy and gaming sector rebounded in 2017 amid the active investment sentiment and robust primary residential sales, according to JLL in its <strong><em>Macau Year-end Property Review 2017</em></strong>.</div><div><br></div><div>According to the statistics released by the DICJ, Macau’s gaming revenue recorded at MOP 265.74 billion in 2017, up 19.1% y-o-y, putting an end to the negative yearly y-o-y growth that seen in the past three years.  In fact, the city’s gaming revenue had seen monthly y-o-y growth for 17 consecutive months since August 2016.  Both the VIP and mass markets saw y-o-y growth in their revenues in the first three quarters of 2017. As the key driver for the growth of the gaming revenue, the VIP market, which accounted for 56.9% of the total gaming revenue, grew 28.5% y-o-y. </div><div><br></div><div>Macau’s GDP recorded at MOP 284.33 billion, registering a y-o-y growth of 9.3% in the first three quarters of 2017.  The expenditure-based GDP showed that the growth was mainly driven by the gaming-related export of services that grew by 15.3% y-o-y and made up 78.0% of Macau’s total GDP.  During the same period, the performance of other components of the city’s GDP varied.  Private consumption expenditure rose by 1.1% y-o-y, while Government consumption expenditure and fixed capital formation fell 1.1% and 8.0% y-o-y respectively.</div><div><br></div><div>During the first 11 months of 2017, Macau’s total visitor arrivals reached 29,557,000, up 5.1% y-o-y.  The majority of the visitors were from Mainland China, making up 68.1% of the total visitor arrivals.  Out of which, 47.9% visited Macau under the Individual Traveller Scheme (ITS).  Visitors from Korea saw a strong y-o-y growth of 34.7%.  The supply of hotel rooms in Macau totalled 36,400, with five-star hotel rooms making up 22,300.  As of November 2017, the cumulative occupancy rate of hotel rooms in Macau rose to 86.9%, while the average length of stay of guests edged up to 1.5 nights. </div><div><br></div><div>The labour market in Macau remained broadly stable in 2017.  According to the DSEC statistics, the unemployment rate stayed low at 1.9%, while the overall median monthly income remained at MOP 15,000 as of the end of the third quarter.  The number of imported labour in Macau increased slightly to 178,492 as of end November, up 0.5% from end 2016. The total resident deposit in Macau rose to MOP 566.41 billion as of October 2017, up 9.2% comparing with end 2016.  </div><div><br></div><div>“Macau’s overall economy and gaming sector recovered in 2017, amid the active investment sentiment driven by the launch of several new residential projects.  A few notable sales transactions of private sites and hotels were recorded in 2017.  The economic fundamentals in Macau remained positive, with some major entertainment facilities scheduled for completion in the year.  The market was also expecting the benefits that the completion of the Hong Kong-Zhuhai-Macau Bridge would bring to the property market.  However, the government recently announced that further cooling measures would be implemented to adjust the overheated property market.  Moreover, the Federal Reserve also revealed the plan for interest rate hike and contraction of balance sheet. We expect Macau’s property market will remain stable in 2018, though the volume of property transactions may contract,” says <strong>Mark Wong, Senior Manager, Valuation Advisory Services at JLL Macau</strong>.</div><div><br></div><div></div><div style="text-decoration:underline;"><strong>Residential</strong></div><div>The total residential sales transaction volume in Macau continued to grow in 2H17.  According to the DSEC statistics, a total of 9,789 residential sales transactions were registered in the first 11 months of 2017, up 9.8% y-o-y.</div><div><br></div><div>On the supply side, 13 new projects providing a total of 3,266 units or gross floor area of 229,763 sqm were granted with presale consent in 2017.  By the number of units, 71.2% of the total new supply are studio or one-bedroom flats.  Some of the new projects that had obtained presale consent were launched during the year, including Nova Grand, Windsor Arch, Sky Oasis – The Lux Mansions, YOHO Twins, The Trust Legend and La Marina.</div><div><br></div><div>The capital values for high-end and mass-to-medium residential properties rose by 8.8% and 5.7% y-o-y respectively in 2017, with growth mainly seen in 1H17, while yields were recorded at 1.4% and 1.6% respectively as of end 2017.</div><div><br></div><div>For the leasing market, due to the slight increase in the number of imported labour in 2017 and the improved performance of the gaming sector’s VIP market, the rental values for high-end and mass-to-medium residential properties grew by 8.4% and 8.1% y-o-y respectively.</div><div><br></div><div>“The primary residential sales market performed well in 2017, with both the residential sales value and volume recorded growth amid the robust investment sentiment.  In view of this, the government is planning to implement new cooling measures from the tax and mortgage ratio perspectives to cool down the property market.  However, the mortgage ratio tightening measures targeting at non first-time home buyers that the government implemented earlier has not been proved highly effective.  In fact, the key issue for Macau is the shortage of housing supply amid the strong demand from the growing population.  Though in end 2016 the government announced the initiative to put up for sale some sites by means of public auction in 2017, unfortunately it was not successful.  To address the problem of housing shortage, perhaps the government can consider setting up regular land sales programmes, promoting urban renewal and refining the procedures and timeline requirements on construction work” comments <strong>Jeff Wong, Head of Residential at JLL Macau</strong>.</div><div><br></div><div style="text-decoration:underline;"><strong>Office</strong></div><div>The office market in Macau remained broadly stable in 2017.  During the first 11 months of 2017, the total number of new incorporations registered in Macau was 4,825, up 19.4% y-o-y.  Growth was seen in most of the industries.</div><div><br></div><div>The leasing market saw a mild slowdown in 1H17 but recovered in 2H17 with the improved economic conditions and business sentiment.  According to JLL Macau Office Index, the rental values for the overall office market and Grade A office market grew by 1.9% and 4.5% y-o-y respectively in 2017.</div><div><br></div><div>For the sales market, a total of 272 office transactions were registered in the first 11 months of 2017 as shown by the DSEC statistics, up 54.5% y-o-y.  The capital values for the overall office market and Grade A offices rose by 7.4% and 5.7% y-o-y respectively, underpinned by the robust investment sentiment.  Office supply remained low, with the overall office vacancy rate maintained at 8% as of end-2017.  The yields for the overall office market and Grade A office market both recorded at 2.7%.</div><div><br></div><div>“It was announced earlier that the Hong Kong-Zhuhai-Macau Bridge would start services in mid-2018.  As the opening of the bridge will help promote the cooperation between Macau and the nearby cities, with industries like tourism and logistics being benefited, we expect to see an increasing number of corporations setting up their offices in Macau.  However, as major corporations’ requirements on office hardware and specifications are in general relatively high, demand for Grade A offices in Macau is expected to increase in the future, while supply is extremely limited,” says <strong>Oliver Tong, Head of Retail at JLL Macau</strong>.</div><div><br></div><div style="text-decoration:underline;"><strong>Retail</strong></div><div>According to the DSEC statistics, the total retail sales grew by 11.3% y-o-y in the first three quarter of 2017 to MOP 47.24 billion.  Most of the retail categories registered growth.  The retail sales of leather goods and watches, clocks and jewellery recorded y-o-y growth of 21.2% and 19.0% respectively, while cosmetics grew by 15.7% y-o-y.</div><div><br></div><div>With gaming revenues resuming growth and the recovery of the retail market, the leasing of retail properties became more stable. The leasing market in the residential areas remained broadly stable but stalemated in the traditional tourist areas like the area along Rua de S. Domingos, with more shop units becoming available for lease.  For 2017 as a whole, the overall retail rental values fell by 8.3% y-o-y.</div><div><br></div><div>In the sales market, the number of retail units transacted in the first 11 months of 2017 totalled 528, up 5.6% y-o-y.  Although the total transaction volume remained low, a few notable transactions were recorded in the year.  Two shop units in Rua de S. Paulo were sold for about HKD 120 million and HKD 130 million respectively.  According to JLL Macau Retail Index, the overall retail capital values dropped by 1.6% y-o-y in 2017 while the yields for the overall retail market fell to 1.8% as of end 2017.</div><div><br></div><div>“The retail market has improved a bit, however, the leasing of retail spaces in the traditional tourist areas is still weak.  The rental values of retail properties in the core areas are expected to continue to fall, but at a slower rate.  We expect the overall retail rental values to be gradually back to the growth track and see a 5% growth in 2018.  The opening of MGM Cotai, which delayed its opening to January this year due to the disaster caused by Typhoon Hato last year, is expected to bring to the local people and tourists in Macau a new retail experience,” says <strong>Oliver Tong</strong>.</div><div><br></div><div style="text-decoration:underline;"><strong>Investment</strong></div><div>The investment market was active in 2017.  Land and hotel properties became the focus of the investors.  During the year, two site transactions were recorded in Taipa North District.  The accommodation values of both sites are in excess of HKD 6,700 per sq ft, based on their respective developable floor areas.  In the meantime, Hotel Lan Kwai Fong Macau and The Landmark Macau in ZAPE District were sold for HKD 2 billion and HKD 4.6 billion respectively.  Both hotels come with gaming facilities and the analysed unit rate of their guest rooms is over HKD 10 million per key, based on their transacted prices. </div><div><br></div><div>“The combined value of the above four major transactions totalled over HKD 11.1 billion.  The active sentiment reflected local and overseas investors’ confidence about the outlook of Macau.  We believe the investment sentiment in Macau will remain positive and investors will continue to look for real estate investment opportunities in the city,  with Macau further improving its infrastructure, policies and the other related aspects,” comments <strong>Gregory Ku, Managing Director at JLL Macau</strong>.</div><div><br></div><div>“In view of the overheated property market, the Macau government has expressed its intention to implement new cooling measures to adjust the market.  The measures are expected to be able to reduce the transaction volume in the short term, but unable to solve the core problems of the housing market.  The government revealed earlier a research report on the city’s public housing demand.  The market in general considered the report not being able to reflect the actual situation and having overlooked the relation between the public and private housing markets.  In the long run, we recommend the government to focus mainly on social housing and take economic housing as supplementary when formulating the public housing policies.  Bearing in mind the shortage of land supply in Macau, there may be no sites for building new public housing properties to cater to the ongoing demand in the future when the planned public housing units have been fully absorbed by the market.  The government should explore to solve the housing problems on the basis of sustainable development by re-examining the existing allocation ratio between social housing and economic housing, forbidding economic housing units to be traded in the private market, and at the same time, setting up a property ladder that provides opportunities for home upgrading from the public to private housing segment,” concludes <strong>Gregory Ku</strong>.</div><div>​<br></div><div>2018 forecast:</div><div><div><table cellspacing="0" width="100%" class="ms-rteTable-default"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width:193px;">​​</td><td class="ms-rteTableOddCol-default" style="width:191px;">​<strong>資本值 </strong></td><td class="ms-rteTableEvenCol-default" style="width:192px;"><strong> 租值 </strong></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default">High-end residential</td><td class="ms-rteTableOddCol-default">Stable</td><td class="ms-rteTableEvenCol-default">Stable</td></tr><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default">Mass-to-medium residential</td><td class="ms-rteTableOddCol-default">Stable</td><td class="ms-rteTableEvenCol-default">Stable</td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default">Office</td><td class="ms-rteTableOddCol-default">▲0% to 5%</td><td class="ms-rteTableEvenCol-default">▲0% to 5%</td></tr><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default">Retail</td><td class="ms-rteTableOddCol-default">Stable</td><td class="ms-rteTableEvenCol-default">▲0% to 5%</td></tr></tbody></table><br></div><div><img src="/macau/zh-mo/PublishingImages/Lists/News/AllItems/JLL%20Macau%20Year-end%20Property%20Review%202017-group%20photo.JPG-600x380.jpg" alt="JLL Macau Year-end Property Review 2017-group photo.JPG-600x380.jpg" style="margin:5px;" /> </div><br></div>0x0100E81015D9D08198458B498FF948D658F90052B0972AFC77B94093C478C1B5B47C88
JLL facilitated the largest ever site transaction in Macau/macau/en-gb/news/306/jll_facilitated_the_largest_ever_site_transaction_in_macauJLL facilitated the largest ever site transaction in Macau<p>​</p><div><strong>Hong Kong and Macau, 14th December 2017</strong> – JLL is pleased to announce the successful sale of the 5,597-sqm development site in Taipa, Macau.  Breaking the record of transaction values of development sites in the city, the site has been sold for a total consideration of HK$3.51 billion.  It is a piece of freehold land which is extremely rare and makes up only about 5% of the overall land supply in Macau.</div><div><br></div><div>Located at Lot TN20 and Lot TN24 near Avenida Dr Sun Yat-Sen in Taipa, Macau, the site is in close proximity to the three sea-crossing bridges that connect Macau Peninsula, Zhuhai and Hengqin.  Well supported by comprehensive infrastructure as well as public and social amenities, the site is in the neighbourhood of some of the city’s most famous schools and colleges.  Facing Taipa Grande Nature Park and surrounded by top-tier hotels and shopping arcades, the site commands a superb living environment. </div><div><br></div><div>Listed in Hong Kong, the purchaser Jiayuan International Group Limited is an established property developer with over 20 years’ experience in real estate development.  It has developed a total of 21 large-scale residential complexes and 8 integrated commercial projects in different cities throughout China.  The Group successfully entered in the Pearl River Delta region and expanded its geographic coverage to the major cities in Guangdong Province in 2016.  With the acquisition of the two connected plots of land in Macau this year, Jiayuan International has extended its business footprint in the Guangdong-Hong Kong-Macau Bay Area.</div><div><br></div><div><strong>Gregory Ku, Managing Director at JLL Macau</strong>, says, “The majority of properties in Macau were developed by local developers in the past.  However, with the major infrastructure such as Hong Kong-Zhuhai-Macau Bridge and Guangzhou-Zhuhai Intercity Rail Extension entering its completion stage, and the Guangdong-Hong Kong-Macau Bay Area beginning to take shape, the developers in China have started to look for opportunities in the region.  We are highly honoured to have the chance to facilitate this significant transaction for Jiayuan International, and expect the further improved infrastructure and policies in the future to bring new impetus to Macau’s property market.”</div><div><br></div><div>​<br></div><div>​<br></div>0x0100E81015D9D08198458B498FF948D658F90052B0972AFC77B94093C478C1B5B47C88

 

 

Macau’s residential market regains momentum with robust primary sales/macau/en-gb/news/305/macau_residential_market_regains_momentum_with_-robust_primary_salesMacau’s residential market regains momentum with robust primary sales<p>​​</p><div><strong>Macau, 12th July 2017</strong> – 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 <strong>Macau Mid-year Property Review 2017</strong>.</div><div><br></div><div>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. </div><div><br></div><div>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.</div><div><br></div><div>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. </div><div><br></div><div>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.</div><div><br></div><div>“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 <strong>Gregory Ku, Managing Director at JLL Macau</strong>.</div><div><br></div><div style="text-decoration:underline;"><strong>Residential</strong></div><div>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.</div><div>– continued –</div><div><br></div><div>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.</div><div><br></div><div>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.</div><div><br></div><div>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.</div><div><br></div><div>“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 <strong>Jeff Wong, Head of Residential at JLL Macau</strong>.</div><div style="text-decoration:underline;"><br></div><div style="text-decoration:underline;"><strong>Office</strong></div><div>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.</div><div><br></div><div>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.</div><div><br></div><div>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%.</div><div><br></div><div>“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 <strong>Alison Yip, Associate Director, Office Leasing at JLL Macau</strong>.</div><div><br></div><div style="text-decoration:underline;"><strong>Retail</strong></div><div>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%.</div><div><br></div><div>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.</div><div><br></div><div>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. </div><div><br></div><div>“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 <strong>Oliver Tong, Head of Retail at JLL Macau</strong>.</div><div><br></div><div>​<br></div><div><br></div>0x0100E81015D9D08198458B498FF948D658F90052B0972AFC77B94093C478C1B5B47C88
JLL: Macau property market remains stable with mild corrections in 2017/macau/en-gb/news/304/jll-macau-property-market-remains-stable-with-mild-corrections-in-2017JLL: Macau property market remains stable with mild corrections in 2017<p>​​</p><div>The Macau property market fell to its bottom in 1H16 but rebounded a bit in 2H16 with the launch of several new residential projects, according to JLL in its<strong><em> Macau Year-end Property Review </em></strong>2016.</div><div><br></div><div>According to the figures released by DICJ, Macau’s gaming revenue recorded at MOP 223.2 billion in 2016, with a single-digit fall of 3.3% y-o-y.  For the city’s gaming revenue in 2H16, it registered growth when comparing with both 2H15 and 1H16.  For 2016 as a whole, the gaming revenue from the VIP market declined by 7.0% y-o-y, while the mass market remained relatively stable and accounted for about 46.7% of the total gaming revenue.</div><div><br></div><div>In the first three quarters of 2016, Macau’s overall GDP recorded at MOP 246.32 billion, down 5.4% y-o-y.  With the completion of part of the new gaming facilities in Cotai, the fixed capital formation in Macau fell by 18.1% y-o-y to MOP 54.5 billion in the first three quarters of 2016.  During the same period, private consumption expenditure recorded at MOP 66.37 billion, slightly down 1.6% y-o-y.</div><div><br></div><div>For the first 11 months in 2016, Macau’s visitor arrivals totalled 28,136,000, up slightly by 0.2% y-o-y. Visitors from Mainland China remained the dominant, accounting for 66.4% of the total visitor arrivals, while travellers under the Individual Traveller Scheme (ITS) made up 46.8% of the total number of visitors from Mainland China.  At the same time, visitors from Korea saw a growth of 18.5% y-o-y.  The total supply of hotel rooms in Macau reached 36,100 and out of which 21,600 are in the five-star hotel segment.  With the completion of new hotels in Cotai, the cumulative occupancy rate increased to 82.5% while the average length of stay of guests remained stable at 1.4 nights as of end November 2016.</div><div><br></div><div>Macau’s labour market was broadly stable in 2H16.  According to the DSEC statistics, unemployment rate remained low at 1.9% in November.  The overall median monthly income remained stable at MOP 15,000 in end 3Q16.  As of October 2016, total resident deposit grew by 7.9% y-o-y to MOP 502.77 billion.  The number of imported labour in Macau contracted by 2.4% y-o-y to 177,897 as of end November.  The decline is mainly attributable to the reduced demand for imported labour from the construction sector, which fell by 9,111 when comparing with the same period of the previous year.  In fact, the completion and opening of new gaming facilities in 2H16 helped offset part of the negative growth in the number of imported labour. </div><div><br></div><div>“Most of the economic indicators in Macau saw negative growth in 1H16, while some of which saw improvement in 2H16.  The city’s economic fundamentals remained largely stable.  However, the uncertainties in the global political and economic environment, e.g. the existence of a Black Swan or China’s stringent control over capital flows, may still cause impact on Macau’s economy.  Moreover, the government’s arrangement on repossession of land plots upon expiration of the relevant land concessions will directly influence the future setting of Macau’s real estate market.,” remarks <strong>Gregory Ku, Managing Director at JLL Macau</strong>.</div><div><br></div><div><br></div><div style="text-decoration:underline;"><strong>Residential</strong></div><div>The total transaction volume of Macau’s residential market rebounded in 2016, albeit remained at the relatively low level.  According to the DSEC figures, a total of 7,617 residential sales transactions were registered in the first 10 months of 2016, representing a significant growth of 54.2% y-o-y.  Transactions were dominated by residential units worth less than MOP 6 million which made up about 70% of the total residential sales. </div><div><br></div><div>On the supply side, 19 new projects providing a total of about 2,990 units or 290,310 sqm of saleable area were granted with presale consents in 2016.  Out of the 2,990 units, approximately 60.6% were studio or one- to two-bedroom units.  In the meantime, some of the new projects which had obtained the presale consent were launched for presale, such as Oscar Crescent, Sky Oasis by Yoo, Nova Grand and Praia Grande & Praia Peninsula. </div><div><br></div><div>The capital values for high-end and mass-to-medium residential properties rebounded by 14.6% and 12.4% y-o-y respectively in 2H16, and rose by 7.8% and 5.3% y-o-y respectively in 2016 as a whole.  The yields for high-end and mass-to-medium residential properties contracted to 1.5% and 1.6% y-o-y respectively in 2016. </div><div><br></div><div>In the leasing sector, the reduced number of expatriates in Macau coupled with the increased new supply due to the new completions in 2015 continued to exert pressure on the market.  The rental values for high-end and mass-to-medium residential properties registered negative growth of 9.0% and 7.6% y-o-y respectively in 2016 as a whole.</div><div><br></div><div>“Supported by the launch of several new residential projects in 2H16, Macau’s residential property market regained momentum with growth registered in both sales volume and value.  The mass-to-medium residential market is expected to be supported by continued demand, however, the sell-through rate will likely slow down due to the increasing competition caused by the ongoing supply,” says <strong>Jeff Wong, Head of Residential at JLL Macau</strong>.</div><div style="text-decoration:underline;"><br></div><div style="text-decoration:underline;"><br></div><div style="text-decoration:underline;"><strong>Office</strong></div><div>The office market in Macau continued to be subdued in 2016, due to the weak sentiment and cost cut policies adopted by some of the corporates.  During the first 11 months of 2016, the total number of new incorporations registered in Macau was 4,042, down 13.4% y-o-y.  In fact, most of the sectors saw decline in the number of newly registered companies. </div><div><br></div><div>The overall office leasing market saw a negative growth in 2016 due to the fall in office demand from offshore companies and gaming-related operators.  According to JLL Macau Office Index, the rental values for the overall office market and Grade A office market fell by 7.5% and 6.9% y-o-y respectively in 2016.</div><div><br></div><div>For the sales market, a total of 176 office units were transacted as of end November according to the DSEC figures, down 17.8% y-o-y.  The capital values for the overall office market and Grade A office market declined by 14.3% and 15.9% y-o-y respectively in 2016.  </div><div><br></div><div>Some multinational insurance companies considered acquiring their own office premises for business operation, in view of the tight office supply.  As of end 2016, the overall office vacancy rate maintained at about 8%, while the investment yields for the overall office market and Grade A office market rose to 2.9% and 2.7% respectively.</div><div><br></div><div>“Both the government and the general public hope to see the central government offices be built soon.  According to the information released by the DSSOPT, the construction of the Tribunal Judicial de Base tower is scheduled for completion in 2017.  Comprising eight storeys plus four levels of basement, having a total gross area of approximately 14,300 sqm, this building is expected to be able to fulfil the need for office space by the Tribunal Judicial de Base which is currently leasing its office space in The Macau Square.  The relocation of the tribunal is likely to lead to a rise in office vacancy rate,” says <strong>Alison Yip, Associate Director, Office Leasing at JLL Macau</strong>.</div><div><br></div><div><br></div><div style="text-decoration:underline;"><strong>Retail </strong></div><div>According to the statistics released by the DSEC, the total retail sales fell by 9.4% y-o-y in the first three quarters of 2016 to MOP 41.53 billion, with motor vehicles and motorcycles saw the biggest decline of 46.6% and 37.8% respectively.  The retail sales of watches, clocks and jewellery fell by 18.5% y-o-y, while cosmetics and clothing grew by 4.3% and 4.8% y-o-y respectively.</div><div><br></div><div>Retailers selling luxury items were the most badly hit.  Some landlords became softer in asking rentals and were willing to offer tenants with relatively big discounts. In 2016, the overall retail rental fell by 20.6% y-o-y.  In the short to medium term, tenants may seize this opportunity to negotiate with the landlords for best leasing terms and conditions.</div><div><br></div><div>The sales market was quiet, with the total number of retail units transacted in the first three quarters fell to its 10-year record low to 405, down 23.6% y-o-y.  According to JLL Macau Retail Index, the overall retail capital values dropped by 15.2% y-o-y in 2016. </div><div><br></div><div>“Macau’s retail sector remains weak and may face further impact as the recent depreciation of China’s Renminbi may dampen mainland Chinese tourists’ spending in Macau.  In view of the softening retail sales, high retail rental and weakening consumer spending by tourists from China, we expect Macau’s retail sector to remain under pressure and the retail property market to continue to be subdued,” says<strong> Oliver Tong, Associate Director, Retail at JLL Macau</strong>.</div><div><br></div><div><br></div><div style="text-decoration:underline;"><strong>2017 Forecast:</strong></div><div><br></div><div><table cellspacing="0" width="100%" class="ms-rteTable-9"><tbody><tr class="ms-rteTableHeaderRow-9"><th class="ms-rteTableHeaderEvenCol-9" rowspan="1" colspan="1" style="width:33.3333%;">​​</th><th class="ms-rteTableHeaderOddCol-9" rowspan="1" colspan="1" style="width:33.3333%;">Capital Value</th><th class="ms-rteTableHeaderEvenCol-9" rowspan="1" colspan="1" style="width:33.3333%;">Rental Value</th></tr><tr class="ms-rteTableOddRow-9"><td class="ms-rteTableEvenCol-9">High-end residential</td><td class="ms-rteTableOddCol-9">Remain stable</td><td class="ms-rteTableEvenCol-9">▼0% to 5%</td></tr><tr class="ms-rteTableEvenRow-9"><td class="ms-rteTableEvenCol-9">Mass-to-medium residential</td><td class="ms-rteTableOddCol-9">Remai n stable</td><td class="ms-rteTableEvenCol-9">▼0% to 5%</td></tr><tr class="ms-rteTableOddRow-9"><td class="ms-rteTableEvenCol-9">Office</td><td class="ms-rteTableOddCol-9">▼5% to 10%</td><td class="ms-rteTableEvenCol-9">▼10% to 15%</td></tr><tr class="ms-rteTableEvenRow-9"><td class="ms-rteTableEvenCol-9">Retail</td><td class="ms-rteTableOddCol-9">▼5% to 10%</td><td class="ms-rteTableEvenCol-9">▼10% to 15%</td></tr></tbody></table><br></div><div><br></div>0x0100E81015D9D08198458B498FF948D658F90052B0972AFC77B94093C478C1B5B47C88