Macau, SAR

From Government Policies And Infrastructure Developments 

After the bullish growth in 2007, the Macau economy and the residential market have been seeing challenges against the backdrop of the global financial turmoil.  In 4Q 2008, various gaming operators have put a brake on the construction of resort-casino developments in Cotai area, implying a significant impact on the economy that is dominated by the gaming industry. 

Meanwhile, the suspension of various construction projects has led to a decline in the number of expatriates in Macau.   The residential leasing market has been adversely affected with many units being left vacant.  In the residential sales market, there has been a correction in the average price, falling to MOP$2,000 – MOP$3,000 per sq ft, which is the lowest level since 2004.  "Due to price pressure, the achievable residential price falls below the developers' expected level," said Johnny Lai, Deputy General Manager of Colliers International Macau.  "Thus, many developers have put on hold the sales launch of their new residential developments, resulting in low sales activity in the market."

"The residential prices might see a downward adjustment of 10% to 20% in the first half of 2009.  However the prices are expected to become stable in the second half of the year, when the government measures to boost the market’s activity come into place,” noted Johnny.

In response to the faltering sentiment in the residential market, the Macau government has proposed a number of incentives to stimulate the market's activity.  In the Policy Address released in November 2008, Mr. Edmund Ho, the Chief Executive of Macao SAR, announced that permanent citizens purchasing residential property for the first time would continue to enjoy a real estate transfer stamp duty allowance for the first MOP$3 million. Besides, the government will recommend to the Legislative Assembly for further incentives offered to permanent citizens who purchase property (limited to residential property of less than MOP$3 million) for the first time.  The recommendations include provision of an interest rebate of 4% and government's guarantee of part of down payment in mortgage loans. 

While the investment demand retreats amid global financial turmoil, the upcoming buying demand will fall into local end-users due to the incentives offered by the government.   "It is expected that the building plans of some residential developments will be revised to incorporate more small units, for example, 1,000 sq ft or less," said Johnny. "Without lowering home prices, smaller residential units will cost less than MOP$3 million, which can attract local buyers who are eligible to benefit from the government's home buying incentives."

Apart from the government policies that directly raise home buying sentiment, infrastructure developments will act as the driving forces in Macau.  During the visit of Chinese Vice President Xi Jinping to Macau this month, he pointed out that the Central Government had announced different measures to support Macau, for example, the development of Hengqin Island to reinforce economic cooperation between neighbouring cities and Macau.  Another large-scale infrastructure is Hong Kong-Zhuhai-Macau Bridge, which the financing issue has been arranged and is expected to start construction in 2009.  Besides, the construction of the Light Rail system in Macau will be ready to start after the last phase of the optimised study currently undergoing.  "Once these constructions start, the professionals involved in the projects will increase the occupational demand in the residential leasing market, which will eventually acted as an additional support to the sales market," concluded Johnny.  

-end-

About Colliers International

Colliers Macaulay Nicolls Inc. (CMN) operating as Colliers International is a leading global real estate services company that provides a full range of services to real estate users, owners and investors worldwide. Colliers operates in 293 offices in 61 countries.  In Asia Pacific, Colliers has 62 offices in 15 countries.  Services include brokerage, property management, hotel investment sales and consulting, corporate services, valuation, consulting and appraisal services, mortgage banking and research.  Colliers International is a worldwide affiliation of independently owned and operated companies.  Locally, Colliers professionals serve clients in Hong Kong.

Contact Information

May Chow        
Regional Manager
Communications and PR, Hong Kong Marketing
Colliers International (Hong Kong) Ltd
Tel    852 2822 0736
Fax   852 2868 5275
Email: May.Chow@colliers.com

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