Property bubble drives home seekers out of Macau
As Macau, the world’s gambling capital, races to open more than 17,000 new hotel rooms over the next three years to keep pace with a flood of visitors from the mainland, only about 4,000 affordable homes for locals are expected to be built in the same period.
With an average flat costing more than US$500,000, the city has emerged as one of the world’s costliest places to buy property, outranking Hong Kong, where prices are already among the most expensive in the world.
Prices in Macau are forecast to rise 10-20 per cent this year, and the situation looks set to worsen as the new crop of mega resorts open.
For residents like taxi driver Xian Dengbao, 50, soaring property prices mean the chances of owning a home look impossible.
“Buying a flat? Not a chance, even if you work for your entire life,” Deng lamented as he drove past the glitzy front of MGM’s metallic-hued casino tower.
The population in the tiny city is expected to jump 20 per cent to 700,000 by 2016, according to government estimates.
“Four years ago, you could buy a flat with 1 million patacas. Now you can’t even buy a parking space,” Cherrie Choi, a sales director at Centaline Property Agency, said.
Some residents are choosing to buy in Hong Kong, where investment returns are twice those of Macau. Others are buying in neighbouring Chinese provinces, and some, many of them retirees, are giving up and moving as far away as Thailand.
Last month, more than 40,000 people competed for 1,900 affordable housing units, with locals lining up outside Macau’s public housing bureau at 4am, local media reported.
“It’s really the biggest problem in Macau. Right now, the rents and prices of flats have shot up way beyond people’s financial capabilities,” said lawmaker Jose Coutinho, who accuses the government of not doing enough to reverse the situation, because of its ties with tycoon developers.
Property prices have more than tripled since 2009, according to data from the Macau government. The rise is in tandem with Macau’s gaming revenues, which last year totalled US$45 billion, nearly three times greater than those of Las Vegas, Australia and Singapore combined.
Macau’s economy relies on the gaming industry, and gaming taxes account for more than 80 per cent of government revenues.
With unemployment at 1.7 per cent, an estimated 40,000 new workers will be required as new properties open over the next three years, increasing demand for housing and exacerbating tension among protectionist labour unions worried about job security.
Macau laws dictate only locals can work as dealers, and the government is under pressure from residents who regularly take to the streets to ensure these restrictions remain.
Analysts estimate new casinos opening in 2015-2017 will require 12,600 new dealers, yet only about 700 are available per year.
A lack of a long-term plan for affordable housing is widening inequality, lawmakers and property consultants say, to such a degree that even well-paid foreign executives in the casino industry are finding Macau prohibitively expensive.
“I have great empathy for the local Macau residents,” said Linda Switzer, vice-president of retail at MGM Macau, who said her monthly rent has jumped from 8,000 patacas to 33,000 patacas in the seven years she has lived in Macau.
Macau’s government said it will continue to “be mindful” of outside economic changes affecting the local property market and deploy timely measures, such as increasing land supply and launching public housing, depending on the situation.
Two of Macau’s largest property developers, Shun Tak and Polytec Asset, declined to comment.
For now, new housing developments are limited to the luxury segment, with projects such as the Fountainside, featuring 3,000 square foot villas and landscaped gardens, springing up across Macau’s crammed peninsula to cater to wealthy buyers looking for a convenient place to park their gambling winnings.
With the majority of properties lying idle once purchased and a lack of affordable housing projects in the pipeline, locals are feeling increasingly marginalised.
Meanwhile, traffic is becoming increasingly congested.
“One of the sayings in Macau is that since I can’t afford to buy a house, I might as well buy a car,” said Macau-based political analyst Larry So.