Macau receives first COVID vaccines, fuelling hopes of economic recovery, property market rebound
The first batch of 100,000 doses of Sinopharm COVID-19 vaccines arrived in Macau on 6 February. It is believed that following the implementation of the vaccination programme, the health of local residents will be better protected and that society and the economy will recover in an orderly manner.
Macau residents were able to make appointments for vaccinations starting on 22 February. Measures such as the government’s purchase of insurance for vaccinators will help strengthen residents’ confidence in the inoculations, and in terms of controlling the pandemic, the higher the inoculation rate among residents, the better the security of Macau’s society.
It will take time for Macau’s population to be vaccinated, and it is expected that the territory’s economy will remain somewhat sluggish during the first quarter. It will be the end of the second quarter, at the earliest, before a recovery in the territory’s property market can begin to gain momentum.
The sudden outbreak of the pandemic last year resulted in unprecedented shocks to the global economy, from which Macau’s society and economy were not spared. Gambling revenue in the territory plummeted, and the unemployment rate has risen to a 10-year high. However, property prices in Macau have fallen only marginally, despite the fact that since the liberalisation of the gaming industry in Macau in 2002, property prices in the territory have mirrored rises and falls in gross gaming revenue.
One impact of the pandemic last year was a sharp drop in the numbers of inbound tourists, with the gaming, hotel, tourism and retail industries all suffering setbacks accordingly. However, property prices remained stable, breaking out of their customary lockstep with gambling revenues.
According to Macau’s Financial Services Bureau, the total number of residential transactions across the territory in 2020 was 6,394, a slump of 17.44% year on year. There were 4,674 in Macau itself, accounting for 73.1% of all transactions; 1,386 in Taipa, 21.68% of the total; and 334 in Coloane, accounting for 5.22% .
Territory-wide, the average property price per square foot of saleable area was MOP9,489, down 6.35% year on year. In Macau itself, the average property price was MOP 9,244, 5.82% lower; in Taipa it was MOP 9,807, down 5.83%; and in Coloane it was MOP10,553, a 12.11% drop.
Five factors underpin the stability of the territory’s property market. The first is a government starter-home plan designed to help people to buy their first apartments. The second is tight housing policy; all homebuyers apart from for first-time entrants to the market are required to make 50%-60% downpayments for property purchases – and generally, the loan ratio is not high, reflecting the health of the real estate market. The third stabilising factor is an insufficient supply of private properties in the market; at present, there are only uncompleted units available for sale, and no large uncompleted units will come to market this year or next. The fourth factor is high construction costs – arising from high land prices, high construction material costs and the like – which are certain to persist. The fifth and final factor is optimism about Macau’s prospects; the territory is very safe and liveable, and property owners and developers are reluctant to sell their assets at a discount.
Taken together, these market dynamics ensure that price reductions even for uncompleted units are unusual, and that only a few developers are willing to offer incentives to attract buyers.
At present, property owners are waiting for the market to recover, and would rather hold their assets than sell them at reduced prices. Buyers are awaiting apartments offered at below-market prices. The property market is therefore relatively inactive. Local residents have a certain level of purchasing power and will enter the market immediately once property values begin to rise.
After a year of the pandemic, many investors have witnessed the robust stability of Macau’s property market, which, after weathering the pandemic rather well, appears to have bottomed out. It is expected that investment activity in the territory’s real estate market this year will only increase.
Bela Vista Property Services Company Ltd. continues to track all market trends from the perspectives of both owners and buyers, safeguarding the interests of both sides, and providing Macau’s most professional and reliable property services.