JLL: Changing real estate landscape with a series of government measures

The implementation of regulatory measures on the residential market in February significantly curbed property speculations and the market was dominated by first-time home buyers, according to JLL in its Macau Mid-year Property Review 2018.

July 18, 2018

Macau and Hong Kong, 18th July 2018 – Macau's economy and gaming sector remained stable in 1H18.  The implementation of regulatory measures on the residential market in February significantly curbed property speculations and the market was dominated by first-time home buyers, according to JLL in its Macau Mid-year Property Review 2018.

According to the statistics released by the DICJ, Macau's gaming revenue recorded at MOP 150.22 billion in 1H18, up 18.9% y-o-y, continuing its uptrend that seen in 2017.  In fact, the city's gaming revenue have recorded monthly y-o-y growth for 23 consecutive months since August 2016.  The VIP and mass markets saw y-o-y growth of 21.0% and 19.9% respectively in their revenues in the first quarter this year, with VIP market accounting for 56.1% of the total gaming revenue, a similar ratio as in 2017.

Macau's GDP recorded at MOP 103.06 billion in the first quarter of 2018, representing a y-o-y growth of 9.2%.  The expenditure-based GDP showed that the growth was mainly driven by the gaming-related export of services that grew by 15.9% y-o-y and made up 86.1% of Macau's total GDP.  During the quarter, the performance of other components of the city's GDP varied.  Private consumption expenditure and government consumption expenditure rose by 4.8% and 2.2% y-o-y respectively, while fixed capital formation fell 1.9% y-o-y.

During the first five months of 2018, Macau's total visitor arrivals reached 14,211,000, up 7.8% y-o-y.  The growth was mainly driven by the increase in Mainland visitors, which rose by 13.2% y-o-y. Visitors from Mainland China were still the majority of Macau's visitor arrivals, making up 70.0% of the total, and out of which 50.0% visited Macau under the Individual Traveller Scheme (ITS).  The supply of hotel rooms in Macau totalled 37,900, of which 23,700 were five-star hotel rooms.  As of May 2018, the cumulative occupancy rate of hotel rooms in Macau recorded at 89.3%, while the average length of stay of guests remained unchanged at 1.5 nights.

The labour market in Macau remained broadly stable in 1H18.  According to the DSEC statistics, the unemployment rate maintained at 1.9% while the overall median monthly income rose to MOP 16,000 as of the end of the first quarter.  The number of imported labour in Macau increased slightly to 181,723 as of end May, up 1.3% from end 2017. The total resident deposit in Macau rose to MOP 588.32 billion as of end May 2018, up 2.0% comparing with end 2017. 

"Macau's overall economy performed well in 1H18, with all real estate sectors registering positive growth or showing improvement.  However, with the Monetary Authority of Macao raising the base rate in June, the investment market is expected to become cautious though mortgage rate has not been increased right after. Under the global economic uncertainty and with the potential interest rate hikes, we expect the growth of property prices in Macau will slow down a bit in 2H18," says Mark Wong, Senior Manager, Valuation Advisory Services at JLL Macau.


The total residential sales transaction volume in Macau continued to grow in 1H18, as potential buyers tried to enter the market before the implementation of the residential regulatory measures that the government announced in February.  According to the DSF statistics, a total of 6,790 residential sales transactions were registered in 1H18, up 16.0% y-o-y.  It's worth to note that the number of transactions in the single month of January reached 1,986, equivalent to a surge of 207.9% y-o-y.

Many developers launched their projects for sale before the implementation of the new regulatory measures.  During 1H18, a total of 2,513 pre-sale transactions were recorded, accounting for more than 37.0% of the total residential transaction volume.  The ratio is far higher than the yearly average of about 20% in the past few years.  In 1H18, more than eight pre-sale projects and new completions were launched.

With the launch of several new residential developments, the capital values for high-end and mass-to-medium residential properties rose by 3.5% and 7.8% respectively in 1H18 when comparing with end 2017, while yields were recorded at 1.5% and 1.7% respectively.

In the leasing market, supported by the increase in the number of imported labour in 1H18 and the improved performance of the gaming sector's VIP market, as well as the rising rentals in NAPE and Taipa areas, the rental values for high-end and mass-to-medium residential properties grew by 9.9% and 8.6% respectively comparing with end 2017.

"The residential market in Macau has long been facing the problem of undersupply.  During the past five years, on average about 3,946 cases of marriage registration were recorded each year while only about 2,576 residential units were completed.  From the perspective of demand from the newly married couples, supply is inadequate.  In fact, the government has been trying to curb investment demand in the residential market by implementing a series of regulatory policies, e.g. the spicy measure that was announced in February this year has already led to a contraction in the ratio of speculative transactions (applicable to those buyers who are already holding at least one residential unit) from about 30% in 2017 to currently not more than 4%.  The transactions recorded in the residential market was dominated by first-time home buyers. The policy has effectively curbed the speculative trend in the market, however, it's hard to lead to a fall in property prices due to the significant demand-supply imbalance," comments Jeff Wong, Head of Residential at JLL Macau.


The office market in Macau remained broadly stable in 1H18.  During the first five months of 2018, the total number of new incorporations registered in Macau was 2,582, up 14.5% y-o-y.  Growth was seen in most of the industries.

The leasing market recovered a bit in 1H18 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 5.4% and 5.3% y-o-y respectively in 1H18.

For the sales market, a total of 169 office transactions were registered in the first five months of 2018 as shown by the DSEC statistics, up 17.4% y-o-y.  The capital values for the overall office market and Grade A offices rose by 5.9% and 7.3% y-o-y respectively, underpinned by the active investment sentiment.  Office supply remained low, with the overall office vacancy rate maintained at 8% throughout 1H18.  The yields for the overall office market and Grade A office market recorded at 2.7% and 2.6% respectively.

"Macau's economy performed well in 1H18.  As supply of office properties continued to be limited, while some landlords decided to take back their premises for self-use upon expiry of the existing tenancies, we expect to see an increasing number of office relocation activities.  It will be particularly the case for those Grade A offices located on the periphery of Nam Van District," says Oliver Tong, Head of Retail and Markets at JLL Macau.


According to the DSEC statistics, the total retail sales grew by 25.7% y-o-y in the first quarter of 2018 to MOP 20.74 billion.  All of the retail categories in general registered growth.  The retail sales of communication equipment soared by 119.2% while other trades mostly recorded y-o-y growth of over 30%.

In the sales market, the number of retail units transacted in the first five months of 2018 totalled 334, up 20.6% y-o-y.  A few notable real estate transactions were recorded in 1H18 and mostly were from the retail market.  For example, a retail centre redevelopment in Rua da Sé and the shops in the commercial podium of The Carat were sold for about HK$800 million and HK$1.4 billion respectively.  According to JLL Macau Retail Index, the overall retail capital values remained stable when comparing with end 2017 while overall retail rental values fell slightly by 2.7%.  The yields for the overall retail market stood at 1.8% as of June 2018.

"The outlook of the overall retail market is positive. Some of the shop units in Centro which were vacant in 2017 have been occupied by tenants from different trades including sportswear and accessories, shoes and cosmetics.  The number of enquiries about high street shops and retail space in shopping centres in prime locations have increased significantly.  In the past most of the enquiries were from the active retailers operating within the same areas.  However, recently we received an increasing number of enquiries from new entrants from different countries like Malaysia, Singapore and Korea, mainly from the F&B and experiential entertainment sectors," says Oliver Tong.

"The market is expected to see new retail supply, as a major shopping centre in Taipa will be launched for lease shortly while some of the retail malls in Cotai will be repositioned.  The completion of Grand Lisboa Palace, Galaxy Entertainment Group's Phases 3&4 and Phase 2 of Studio City in the future will also add new supply to the city.  We expect retail rentals in Macau will remain stable in the short term," adds Oliver.


"The government implemented a series of real estate regulatory measures in 1H18, including the introduction of a new stamp duty rule on acquisitions of second properties and above, relaxation of mortgage lending ratio for young Macau residents who are first-time buyers, and cancellation of the exemption status of leased housing with reference to vacant residential property tax.  At the same time, the ordinance on real estate leasing has also become effective.  The government is now actively working on its urban planning process, and the tender for the urban renewal research consultancy project is also in progress.  All of these measures will help promote a healthy long-term development of the real estate market in Macau," comments Gregory Ku, Managing Director at JLL Macau.

"In the latest JLL Global Real Estate Transparency Index report that published this year, Macau was among the top 10 movers and appeared in the Semi-Transparent tier for the first time. The progress in Macau's ranking is mainly attributable to the government's crackdown on money laundering as well as efforts in releasing detailed residential transaction statistics on a monthly basis, and enforcement of new leasing regulations.  We look forward to increased availability of real estate information to the public in the future," adds Gregory Ku.

From left to right:

Jeff Wong, Head of Residential Macau; Oliver Tong, Head of Retail and Markets Macau; Gregory Ku, Managing Director, Macau; and Mark Wong, Senior Manager, Valuation Advisory Services Macau

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 90,000 as of December 31, 2018. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit