Capital flowing to shops, offices and overseas, estate agency predicts

2014-4-11

From：Macau Daily Times

With sluggishness in both sales and leases of residential properties in Q1, a real estate agency foresees that in Q2 funds will be flowing into other types of properties (namely shops and offices) and that local buying power will remain strong in overseas properties.
Disparities will occur in local housing prices during the next quarter with an accentuated slow down in the low and medium-
end markets, while the high-end segment remains active, according to HK-based property agency Centaline Property.
After reviewing the residential housing trading and leasing volumes in Q1, Senior Regional Sales Director Ms. Cheong Lai Va deems that the future increase of housing prices will largely be reflected in the performance of high-
end housing. This sector has advantages in terms of quality and price when compared to neighboring regions such as Hong Kong and the mainland.
Elite housing is defined as residential estates that sell for a total of HKD20million or over, or for more than HKD13,000 per square foot. In addition, properties located close to the casinos could also be included in this definition.
On the other hand, an increase in housing prices in the low and medium-end markets (prices between HKDm and HKD13m) will possibly narrow in the second quarter or even throughout the rest of the year, with buyers failing to afford these prices.
The trade volume of residential flats was recorded as 1,215 in January and February, a 38-percent decrease year-on-year. Taking into consideration the as yet unreleased March volume (around 580 transactions), the agency anticipated that Q1 sales would drop by nearly 50 percent.
Director Jacky Shek has predicted that the yearly trade volume of residential housing would continue to decline and would ultimately total less than 8,000 deals.
As for the coming quarter, the agency is keeping an eye on shops, offices and industrial buildings. Roy Ho, Centaline’s Senior Regional Sales Director, believes that the rental prices of shops will continue to rise due to a boost to the retail and sales market, as a result of the booming tourism industry. However, shop sales would be difficult to reach in Q2 because owners set high prices after CNY.
It has been predicted that offices will continue a stable growth both in sales and leases. According to Mr. Ho, sales prices and rents may both increase by 20 percent by the middle of the year.
Ho regards the industrial buildings as having the “most potential” in the property market. These transactions involve over HKD1billion in total, a growth of 78 percent year-on-year.
Thanks to the government’s plan for industrial building revitalization, Ho has revealed that some investors intend to purchase the whole building before rejuvenating it. He predicted that sale prices could increase to as much as HKD4,200- HKD4,600 per square foot, based on the HKD3,800 average registered during Q1. Furthermore, rent might reach HKD per square foot, compared to the current HKD6.5.
Centaline gave a quarterly review of the property market in Macau at its office yesterday. The trade volume of shops increased by some 39 percent in Q1, as total trading values reached more than HKD5.6billion.
Office estates suffered a decrease of 27 percent in transactions, but the trading value increased by 54 percent, reaching HKD900million. Rental prices saw a 10-percent growth in the first three months.
Industrial buildings witnessed a 51 percent trade volume increase and a 78 percent trading value growth.
Mr Jacky Shek has expressed the opinion that speculation on property prices has been controlled with government policies such as pre-sale law and special stamp duty. He believes that there is little chance that large increase in property prices can continue in the future’. “The government should not launch adjustment policies at this moment,” he advised. Instead, the Centaline executive argues that more public housing units should be built to increase the supply.

Copyright@Macau Daily Times