LOFT on Location: Macau
Juliet Risdon, Director, JML Property
Tom Ashworth, Principal, Sniper Capital
Jeff Wong, Head of Residential, Jones Lang LaSalle
Part charming former Portuguese colony, part gambling Mecca, Macau is a city of contrasts. The continual boom of the tiny island has led to development on a large scale, from a never-ending stream of 6-star casino resorts to new residential developments. LOFT takes a look at the property investment opportunities available right now.
Is now a good time to invest in residential property in Macau?
JW (Jeff Wong): Yes. Jones Lang LaSalle estimates that there will be 1,000 residential units completed in 2013. That number is extremely low when compared with the average annual completions, i.e. 2,000 units, in the last 10 years. In addition, we expect that the number of expatriates will increase by around 50,000, given the number of new developments in Cotai Strip. The inflow of expatriates is expected to generate an end-user demand and lends further support to the rental market.
TA (Tom Ashworth): We believe residential properties in Macau possess great long-term potential. There has been rising demand for the city’s properties over the years and local real estate agencies estimate property prices to increase another 10-15% on average this year.
JR (Juliet Risdon): Yes, Macau has a bright future. There is limited land and demand for mid-range property is high. We can’t predict what the next six months will look like, but the long term future of Macau is very healthy.
What is the economic outlook for Macau in 2013?
JW: The number of visitor arrivals is expected to further increase on the back of the new Guangzhou–Zhuhai Railway. Visitors from most of the regions within the Pearl River Delta will need only 1 hour to reach Zhuhai. Gaming revenue is also forecast to reach a new high. The commencement of construction works for new hotel and gaming facilities on the Cotai Strip together with the Hong Kong–Zhuhai–Macau Bridge will further boost GDP.
JR: Macau’s economic growth is estimated to be 13% (the 2nd largest in the world) in 2013 according to The Economist.
For investors looking at Macau – which specific areas would you recommend?
TA: Location and quality of the development are key factors in selecting the right property in Macau. Currently the most in-demand properties in Macau are in the prime areas of NAPE, Taipa and along the Sai Van Lake on Penha Hill, where many individual houses are located.
What hidden costs should buyers be aware of in Macau?
JW: The buyer needs to pay standard stamp duty of 3.15% of the price on all transactions. In addition, the buyer must pay special stamp duty, which is 20% of the transacted price in the first year and 10% in the second year after the date of purchase.
Are there any complications for non-resident buyers?
JW: Non-resident buyers are recommended to hold the Macau property as a long-term investment to avoid the special stamp duty. Buyer stamp duty is expected to be offset in the longer term by appreciation of the properties.
Any other relevant information?
TA: Property prices in Macau have risen markedly in recent years. The annual aggregate value of property sales hit a new all-time high last year to reach US$12.6 billion, a 32.3% year-on-year increase. In the residential segment, the total value of sales reached US$9.2 billion, an increase of 26.1% over 2011. The increase in prices in recent years has consistently surpassed agency forecasts and we believe this trend is likely to continue.
JR: There are a lot of differences in tenancy laws and guidelines with HK. To maximise occupancy and minimise risk, we strongly recommend using a management company to represent your best interests.