Sands setback deals blow to luxury home rents in Macau
Las Vegas Sands Corp's decision to suspend all construction in Macau will deal another blow to the luxury residential leasing market already reeling from the global financial crisis, real estate agency Ricacorp Properties says.
Dennis Wong Chun-lam, Ricacorp's executive director in Macau, expects rents at luxury homes to drop a further 7 to 15 per cent next year.
'More expatriates will leave Macau if work stops at the remaining five phases planned for the Cotai Strip,' Mr Wong said. 'They are one of the biggest supports for the top-end residential leasing market.'
Up to 30 per cent of the 100,000 foreign workers in Macau were under expatriate contracts, according to Mr Wong's estimate. Rents at top-end homes had dropped 8 per cent this year to HK$10 per square foot, he said.
'In the worst scenario, rents will continue to fall if sentiment doesn't improve,' Mr Wong said.
Nova City and Manhattan in Taipa would be the first to be hit by the suspension because they were among the most popular for Las Vegas Sands' expatriate staff, he said.
Rents at Nova City recently dropped to HK$9 per square foot from HK$10 and HK$11 early this year, he said.
However, Ronald Cheung Yat-fai, chief executive of Midland Realty (Macau), said the delay in the remaining phases by Las Vegas Sands could cushion the impact of the global financial crisis.
'Demand for hotel rooms will be lower at a time of economic slowdown,' he said, but added the negative news would have a psychological impact on the luxury residential market, in which transaction prices have tumbled 50 per cent this year.
Transaction prices for One Central Residences plunged to about HK$4,000 per square foot from HK$8,000.
'Prices for new deluxe residential projects, particularly those pre-sold, had dropped to the 2005 level,' he said.
