Macau government trying to stimulate property market
In the wake of the worsening global economic performance, Macau is no exception to slowing economy.
The negative impact is reflected by the slowing growth in real Gross Domestic Product moderating from 22.2% year-on-year (YoY) in 2Q 2008 to 11.3% YoY in 3Q 2008, and the unemployment rate rising from 2.8% (April – Jun 2008) to 3.3% (October to December 2008).
"Meanwhile, the recent turmoil in the financial market and uncertain economic outlook continued to dampen the local market sentiment which caused a number of property purchasers to put their buying decisions on hold," said Johnny Lai, Deputy General Manager, Colliers International Property Services (Macau) Limited. "Besides, the vendors were unwilling to lower their property's price to match potential buyers' expected level, resulting in the dwindling sales activity."
In 4Q 2008, the number of residential sale transactions plunged 53.3% quarter-on-quarter (QoQ) to 1,286 units, while the average residential transacted price dropped 21.5% QoQ to MOP 18,064 per sq m of usable area. Meanwhile, the average transacted price of residential units in Taipa and Macau Peninsula was MOP 24,863 per sq m and MOP 15,517 per sq m respectively in 4Q 2008. This represented a 60.2% premium attached to the residential prices in Taipa, but it narrowed from 83.0% since their peak in 4Q 2007. "This was mainly due to the decline in investment demand. Also, the standstill of construction work in Taipa has also dragged down the speculative activities in the sub-market." said Johnny.
Similarly, the residential leasing market in Macau saw signs of slowing. The size of Macau's foreign labour pool edged down, with the number of imported employees in Macau falling from its peak at September 2008 by 8.3% to 95,574 in November 2008. This softened the accommodation demand by expatriate, and eventually caused the residential rentals to fall.
In an attempt to stimulate property transactions, the Macau SAR Government announced that the 4% Interest Rate Subsidy Scheme would begin in early 2009 for permanent residents who buy their first home priced at MOP 3 million or less. Property buyers may concurrently apply for the Government's 20% guarantee for mortgage loans if those buyers make at least 10% down payment of the purchase.
Meanwhile, the construction works and forthcoming new launches of a number of casino hotels have also been put on hold. One notable example is the suspension of construction work of Venetian Macau in Cotai Strip. In contrast, SJM Holdings' new project, the 430-room hotel tower attached to Grand Lisboa, proceeded as scheduled, with its grand opening held in December 2008. Besides, City of Dreams in Cotai Strip is likely to complete during the first half of 2009, providing 2,000 hotel rooms.
Despite the prevailing global financial turbulence, and a 8.3% YoY increase in the number of hotel rooms, the average hotel occupancy rate sustained at a high level of 79% as at the end of December 2008. The figures reflected the solid support in the hotel industry. "The government plans to turn Macau into a major MIC destination. Also, the gradual completion of various hotel-casino complexes will build a strong platform in the long run for business travelers and family-oriented visitors coming for vacation. These are positive that will support the growth of the hotel industry." concluded Johnny.