The economy continues to accelerate and the property market is still attractive, but new investors must be selective, writes Mary Luk
Macau's robust economy is growing at a phenomenal rate and the property market continues to bring lucrative returns to astute investors. But new players in the property market should be selective because they now have 'more choices' and they must look for 'quality, facilities, service and location', says Jeff Wong Chi-wan, head of residential, Jones Lang LaSalle, Macau. 'Properties in prime sites such as Cotai Strip or near the future Hong Kong-Zhuhai-Macau bridge will increase in value.'
'It's not too late to join the market but newcomers should not expect to reap [big] profits as those who invested three years ago. Macau's residential market is growing steadily and healthily but no longer as fast as it used to be.'
International property consultant Vigers, in its first quarter report this year, says the enclave's economic performance remains strong, with gaming and tourism bringing in massive revenues. The annual gross gambling revenue hit 83.4billion patacas last year, up 45.8 per cent from 2006, making it the world's most dynamic gambling city, outstripping Las Vegas. Tourist arrivals to Macau jumped 22.8 per cent from last year, reaching more than 27million visitors, a little less than Hong Kong.
Mr Wong is optimistic about the city's property market, pointing out that Macau's GDP has increased by an average of 20 per cent a year, higher than Hong Kong, which was 6.3 per cent. In the third quarter of last year, the GDP growth rate was 30.9 per cent, compared with just 10.7 per cent in the same quarter of 2006.
He says Macau's tourism growth this year is also strong as evidenced by the scheduled opening of the luxury Four Seasons Hotel Macao at the Cotai Strip in the middle of this year, and the Venetian Macao last year. Renowned performers such as Cirque du Soleil will perform at the Venetian in July, while Celine Dion sang at the Venetian Arena last month as part of her world tour. Last month, the Venetian Macao announced that it would play host to the annual Miss International Pageant in November.
'Apart from gambling, Macau has continued to attract more visitors by hosting these world-class performances to boost its economy,' Mr Wong says.
He estimates that 17,000 housing units will be established over the coming three years, but the supply will be insufficient to accommodate the 96,000 imported labourers, including senior executives looking for luxury homes.
With better income, Macau residents are also moving to bigger flats to improve their living standards, he points out.
The Macau property market restructured and rebounded after former secretary for transport and public works Ao Man-long was jailed in January for accepting bribes. Mr Wong says the scandal has affected and delayed some individual projects, but he does not think this has significantly disrupted the market, although the number of units started and completed last year dropped several hundred compared with those in 2006 when Ao's case was first exposed.
Vigers believes another reason for the fall is that the Macau government is attempting to regulate the overheated luxury residential sector. 'Some projects were being delayed or being put on hold, or having problems obtaining the necessary planning permission and construction permits, leading to a tight supply in the market.
'Because of the limited prime supply in the market investors became more aggressive in snapping up luxury properties,' its report says, adding that a total of 3,480 luxury residential units are expected to be in the pipeline this year.
New top-end developments include Sai Kei Hou Yuen (Kuok Chai) Real Estate Development's One Grantai in Taipa; Empresa De Desenvolvimento Predial Vitoria's Windsor Arch also in Taipa; San You Development's Residencia Macau in the Macau peninsula; and Tenacity Real Estate Group's Nam Van Lake C5C6 project.
Chic serviced apartments will also be available when the Four Seasons Hotel Macao complex, which consists of a casino and shopping centre, is in operation, offering investors more options.
Already in service are the contemporary serviced apartments in Ocean Gardens, which is owned by Keck Seng Group in Taipa. Offering breathtaking waterfront views of the bridges across Macau and Taipa, the apartments cater to the elite.
The Marriott Vacation Club International, a subsidiary of the Marriott Group, has bought 30 units in the high-end property Buckingham in Taipa to operate the first time-sharing vacation club in Macau.
The Marriott Hotel in Macau Studio City will tentatively be completed in 2009-2010. Mr Wong says those who bought property in Macau in 2004 and 2005 and have not sold their units, will see their apartments double in value.
'There is no urgency to sell them as property prices have still not peaked,' he advises.
Mr Wong expects prices for luxury property to rise by an average of 20 per cent. Quality apartments may reach up to HK$9,000 per sqft.
Also predicting the same growth rate, Franco Liu, director and head of Macau office, Savills, says some property projects last year were delayed for six to nine months because of the Ao case.
This has led to a shortage of units and prompted people to buy completed flats. He says Macau will need 2,000 new units per year.
However, he adds that luxury unit supply will normalise this year. Together with those quality flats held up last year, there will be some exciting projects on sale in the second and third quarter of this year. Depending on their quality, average luxury property prices range from HK$4,000 to HK$9,000 per sqft.
Properties with good locations and unique quality may achieve a substantial rise of 30 to 40 per cent. Internal sales of Residencia Macau, which will be near the recently announced Hong Kong-Zhuhai-Macau bridge, have been good, Mr Liu says.