Article by Ambiente Properties Managing Director Suzanne Watkinson; looking back on the changes in Macau’s real estate market over the past 15 years
———————————————————–
Over the past 15 years, nothing short of a revolution has taken place in Macau’s property market.
And in these virus-stricken times with a world in topsy turvy, I find myself reflecting on how things have changed so much in Macau since 2004 when I bought my first property here.
In the ‘good ol’ days’ the real estate landscape was very different
Any man and his dog could be an agent. Few spoke English and few shared information with other agents, so from the buyer’s perspective, property options presented to them, and information about those options was limited.
There was no One Central, Royal Arc, no Manhattan, Buckingham, One Oasis, no Residencia, Riviera – developments providing much needed accommodation and investment opportunities for locals and all the good folks that came to help build Macau to what it is today.
With such a lack of supply and lots of hot money from the new casinos, investors would buy almost anything – they put their trust in their agent and often bought sight unseen. We’d get calls late at night asking if we could collect a cash deposit on a property without the need to view it. Buyers from overpriced Hong Kong and from across the border flooded to Macau to get their hands on the more spacious apartments in developments like Hellene Garden, Hoi Fu Garden, Nova City and the lovely old properties along Nam Wan and Sai Wan. Contractors had never been so busy with all the renovations needed!
Ladies Who Lunch
Then there were the ‘chopsticks ladies’; ladies who lunch. They’d team up in little investor groups to buy several properties (no hit then of additional taxes for more than 1 property) and before they closed on their purchases would sell them on to an eager next buyer at a good profit, making several hundred thousand in any one transaction.
It was a paradise for international investors too with no special buyer stamp duty imposed for non-Macau ID holders. Scooping up multiple properties at cheap, cheap prices, they contributed to price inflation and soon those locals who were too slow to get on the band wagon, suffered. As is so often the case in one’s own home territory, most locals couldn’t imagine what lay ahead under their very noses – the incredible hotel and casino projects that would jettison Macau into becoming the gaming capital of the world. Risk averse and with home prices then so low that buying or renting were equally viable options, they failed to get on the ownership ladder in time before prices started to sky-rocket, and by then they were priced out.
Ownership – no longer a ‘nice to have’
Today, the mind-set and household income allocation has changed. To keep in line with Macau’s growth and one’s head above the financial waters, owning a property in Macau has become a life-saving necessity, no longer a nice-to-have.
Thankfully also with the explosion of social media in recent years, information on properties has become much more transparent, efficient and easy to access. With a click of a button a buyer has access to details on hundreds of options; no more pouring over the tiny text of newspaper adverts!
The buying process has evolved and become less cumbersome too. Another click of a button and everything is quicker and more efficient; no need now to queue in person at the government administration building for a registration document, then fax this to the bank manager, request the valuation, and wait several days for it to arrive.
The agency business has changed from a concentration of just a few major corporate players, mostly from Hong Kong, to a more dispersed market of single agents going out on their own. They now need to be licensed so there’s a modicum of professionalism plus there’s a far higher level of language skills, both English and Mandarin.
Government policies
And there’s been a revolution in product too, dictated primarily by government policies. Developers have reduced their unit sizes so as to fit within the MOP8M ceiling for the first time buyer benefit scheme. Today, 60% of new builds are studios; more expensive in terms of price per square foot but still affordable because they’re so tiny. And these new developments come with smart clubhouses and all the mod-cons like fingerprint front door access!
More flexible payment terms are now offered by developers but more strict policies are imposed by the government. Public housing has seen big changes – there’s no longer a queuing system when applicants would need to wait 10, sometimes 15 years. In Macau it’s a one off lucky draw system based on application scoring that takes into account 1/ Cross generation application / Core family application, 2/ Non core – married couple and 3/ Adult single application.
Lets say there’d be 30,000 applications for 3,000 units. With preference given to the first group, the chances are slim or non existent for the second and third group. This leads to frustration and desperation among a growing generation of young, middle class locals, unable to pay market rates for housing, yet also being unable to qualify for a public housing home. Think Hong Kong and the recent protests there. The Macau government empathizes only too well that enabling youngsters to buy their own home is the best way support for them to gain a sense of belonging, of ownership of the Macau success story. National pride and a desire to contribute to this success soon follow. Public consultation is underway at the moment on how best to protect this group, perhaps a new classification for the late 20’s to help them get a home for HKD3-4million, but when they come to sell, they may only do so to a buyer within the same category. No big profits to be made, but they have a roof over their heads that they can call their own.
And then there’s car parks – from as little as HKD30,000 back in the day, they can now be as much as HKD3million – and explosive investment driven, excuse the pun, by a growingly affluent society of 2-car families. Offices and retail too, big changes in product and prices …. but that’s for another story, another day.
