Transaction volume in the residential market climbed 9.9% y-o-y to 1,793 as of June, according to the data from DSEC. Only 36 pre-sale transactions were recorded in the first half due to the absence of major residential projects, and the transaction of pre-sale projects accounted for only 2.0% of the overall residential transaction volume. 

In the first half of 2023, a total of nine projects with 302 flats received pre-sale permits. All of the projects are located on the Macau Peninsula and provide a total of gross floor area of 22,405.6 sqm. Macau New Neighbourhood (MNN) project in Hengqin is expected to be launched in September. It provides about 4,000 units and will absorb some of the housing demand in Macau.

Benefiting from the increasing expatriate employees, the residential rents have remained strong. Rents of luxury flats surged 13.7% in the first half of 2023, while the rents of mass residential flats grew 8.2%. Capital values of luxury residential climbed 1.3% during the same period, while capital values of mass residential rebounded 4.0%. The investment yields of luxury and mass residential are 1.7% and 1.5%, respectively.

Oliver Tong, General Manager at JLL Macau and Zhuhai, said: "The residential leasing market benefited from the return of expatriate employees after the reopening of borders early this year. However, it failed to revive Macau's property market with home sales remaining at a historic low level. Although home prices recorded moderate growth in the first half of 2023, the current market indicators are not favourable to the housing market and the housing price has dropped over 10% from the levels prior to the pandemic. Even though the market has suggested the government remove the cooling measures in the housing market many times, the government believes the housing prices will rise after the removal. But in Hong Kong, it failed to stimulate market activities after the government relaxed the cooling measures recently. As such, we believe it could help to stabilise the economy and develop a healthier market if the Macau government withdrew the restrictions to a certain extent. Under the current market condition, housing prices will be under pressure due to the interest rate hikes, fluctuating stock market, weak global economy and lower-than-expected economic recovery of mainland China, which will affect the economic recovery of Macau as a result."

Macau Residential Index – % Change

Macau's office market remained subdued, even though the number of new incorporations registered in the first five months of 2023 increased by 20.0% y-o-y to 2,166. Leasing demand is mainly driven by financial services and insurance industries, which were actively looking for the premium office for upgrading or relocation. JLL Macau Office Index shows the rental values for the overall offices and Grade A offices dropped 0.7% and 4.3%, respectively, from the levels at the end of 2022. According to the DSEC statistics, the vacancy rate for the overall office market was about 12.0% by the end of the first quarter of 2023.

In the sales market, only 30 office units changed hands by the end of May based on the DSEC statistics. The transaction volume dropped 37.5% y-o-y. JLL Macau Office Index shows the capital values of the overall offices and Grade A offices are similar to the levels at the end of 2022. The yields for the overall office market and Grade A office market were 2.7% and 3.0%, respectively.

Matt Kou, Senior Manager, Leasing at JLL Macau, said: "The exit of several government departments from private offices continued to affect the leasing market, which has put upward pressure on vacancy rates. The rents stayed at low levels. Some landlords are willing to offer flexible leasing terms to lure tenants with better affordability to engage in long-term partnership solutions. As such, tenants have a higher bargaining power. For the market outlook, we believe office sales will remain subdued in the rising interest rate environment. In the long term, the government should introduce more measures to attract talent in order to grow the diversified financial services industries, which could help to support the office leasing demand."

JLL Macau Retail Index – % Change

We have started to see Macau's property and asset management industry advancing at a rapid pace, with landlords and developers growing increasingly aware of the importance of quality property management services.

Ben Tse, Head of Property and Asset Management at JLL in Macau and Zhuhai, said: "The development of property management services in Macau is lagging behind the other property sectors. Many landlords have the wrong perception of this industry and believe property management service is limited to security, maintenance and cleaning only. This is the reason Macau's properties have a higher depreciation rate compared to other cities in the region. In fact, the property management industry is providing professional services and has adopted advanced technology and introduced ESG to add value to the properties. In the post-pandemic era, more landlords are aware of the importance of property and asset management and want to introduce the international property management model as they believe that quality property management services could maintain and enhance the value of their properties. JLL is one of the few international property management teams in the city and our appointments for property management services have increased by 40% from three years ago, which is a sign that more landlords have an increasingly higher expectation regarding the services." 

_{(Left to right) Ben Tse, Head of Property and Asset Management, Mark Wong, Director of Value and Risk Advisory, Oliver Tong, General Manager, Matt Kou, Senior Manager of Leasing}