House prices down by 2.26% y-o-y in Q1 2020

Macau’s housing market is now cooling rapidly, as slower economic growth in Mainland China, as well as the civil unrest in Hong Kong, is hitting Macau’s gaming and property sectors. The fallout from the fast-spreading COVID-19 adds another blow to Macau’s already ailing economy.

The average transaction price of residential units fell by 2.26% during the year to Q1 2020, in contrast to a y-o-y rise of 1.02% a year earlier. Quarter-on-quarter, house prices fell by 1.99% during the latest quarter.

Macau’s housing market grew strongly in the past three years, supported by robust economic growth and massive infrastructure investments. The economy was estimated to have expanded by 4.7% in 2018, down from a spectacular 9.1% in 2017, but a sharp turnaround from y-o-y declines of 0.9% in 2016, 21.6% in 2015, and 1.2% in 2014.

• The 200,000 sq. m. Taipa maritime terminal began operations in June 2017, increasing travel within Macau and its neighbouring cities, and providing direct connections to the planned light rail transit system.
• Construction of the Gongbei tunnel, the only link connecting Zhuhai with the Hong Kong-Zhuhai-Macau bridge, started in April 2017. The bridge is scheduled to open this year.
• The Shenzhen-Zhongshan tunnel, a key infrastructure development in the Greater Pearl River Delta, is also under construction. The project, scheduled for completion in 2020, will reduce the average travel time between Shenzhen and Zhongshan from two hours to less than 30 minutes.
• Beijing has also committed to a comprehensive Guangdong-Hong Kong-Macau Bay Area development plan to increase connectivity, trade and investment between the three regions.

However, the housing market is now weakening, as investor sentiment sours and developers hold off on new projects mainly due to external economic uncertainty caused by the US-China trade war, social unrest in Hong Kong, the Brexit, and now the COVID-19 outbreak.

Demand is now plummeting. In Q1 2020, residential property transactions in Macau fell by 22% to 1,061 units from a year earlier, following a 23.5% drop during 2019, according to Macau’s Financial Services Bureau. In fact, it was the lowest level since 2009.

Rents, rental yields: no yields data available for Macau.

Recent news. Macau’s economy is struggling,with real GDP contracting by a whopping 48.7% year-on-year in Q1 2020, following annual declines of 8.1% in Q4 2019, 4.4% in Q3, 2.2% in Q2 and 3.8% in Q1, according to Macau’s Statistics and Census Service (DSEC). Domestic demand dropped 17.5% y-o-y in Q1 2020. Exports of services and goods plunged 60% and 23.5%, respectively. Likewise, imports of services and goods fell by 30.3% and 30.8%.

The total number of visitor arrivals plummeted 68.9% in Q1 2020 from a year earlier, to 3.22 million, mainly due to travel restrictions implemented by various countries to mitigate the spread of the virus, according to DSEC. Likewise, visitors to Macau from Mainland China fell by 69.2% to 2.29 million over the same period.

In February 2020, the Macau government has imposed a 15-day closure of all 41 casinos in the city, as part of its effort to contain the spread of the new coronavirus. Experts estimate that the temporary suspension of casino operations could lead to gaming revenues losses of about US$900 million to US$1.5 billion.