MACAU and HONG KONG, 17 September 2025 – Macau's tourism rebound is underpinning a more optimistic outlook for hotel assets, with sustained investor interest anticipated in this segment, according to JLL's Macau mid-year 2025 market review released today. However, rising cross-border consumer spending is weighing on the retail sector's performance. Meanwhile, an uptick in distressed assets and the increasing prevalence of office properties trading at significant discounts continue to pose challenges to the broader recovery of the commercial property market.

According to figures released by the Macau Gaming Inspection and Coordination Bureau (DICJ), Macau's gaming revenue in the first half of 2025 grew 4.4% year-on-year (y-o-y) to approximately MOP 118.77 billion. The gross revenue generated from VIP junkets during the first two quarters of 2025 increased by 11.2% y-o-y to approximately MOP 30.79 billion, accounting for approximately 25.9% of the overall market.

The Gross Domestic Product (GDP) of Macau in the first two quarters of 2025 grew by 1.8% y-o-y to approximately MOP 202.09 billion. According to the GDP calculated based on expenditure, modest growth was seen across all components, including net trade exports, fixed capital formation, government final consumption expenditure and private consumption expenditure, which rose by 3.1%, 1.4%, 1.1% and 0.3%, respectively.

Data from the Macao Government Tourism Office showed that visitor arrivals to Macau in the first half of 2025 reached approximately 19.219 million, up 14.9% y-o-y. According to the Macau Statistics and Census Service (DSEC), mainland Chinese visitors accounted for 71.6% of the total visitor arrivals, marking a strong y-o-y increase of 19.3%. Among these, visitors through the Individual Visit Scheme (IVS) also grew by 24.6% y-o-y. As of mid-2025, Macau had a hotel room supply of 43,886, a 4.9% increase from the end of last year. The cumulative hotel occupancy rate was 89.1%, with an average length of stay of approximately 1.7 nights.

Macau's employment market weakened in the first half of 2025. According to the DSEC, the overall unemployment rate and underemployment rate edged up to 1.9% and 1.6%, respectively, despite remaining relatively low. The growth in expatriate employees eased, with the number reaching approximately 182,583 as of end-June 2025 — only 41 more than at the end of 2024 — leaving overall growth broadly unchanged. In terms of income and savings, the median total income reached MOP 17,800 as of mid-2025, down 1.1% from the end of last year. As at the end of June 2025, local residents' deposits amounted to approximately MOP 803.76 billion, up by 5.5% compared to the end of 2024.

Mark Wong, Senior Director of Value and Risk Advisory at JLL in Macau, said: "Macau's external economic environment remains uncertain, and the local economy is still undergoing a gradual recovery. Consumer spending has yet to fully rebound, and the property market continues to recalibrate. The phased withdrawal of satellite casinos in the second half of the year has raised concerns over potential spillover effects on adjacent properties, contributing to a more cautious and observant investment environment. Nonetheless, the strong performance of Macau's gaming and tourism sectors has enabled the hotel industry retain its competitive edge, particularly in terms of room rates and occupancy levels. This has reinforced the appeal of hotel assets as a compelling investment proposition. A notable example is JLL's successful brokerage of The 13 Hotel transaction in the first half of the year, which underscores investor confidence in the sector. At present, hotel yields in Macau remain relatively stable. Both domestic and international investors may view this adjustment period as a strategic entry point for medium- to long-term asset allocation."

Transaction volume in the residential market fell by 13.1% y-o-y to 1,671 units in the first half of the year, according to data from Macau's Financial Services Bureau (DSF). Pre-sale transactions continued their downward trend, declining by 11.0% y-o-y to 170 units.

In the first half of 2025, nine projects were issued pre-sale permits, offering a total of 462 new homes with a combined gross floor area of approximately 32,249 sq m. The majority of the new supply came from small- to medium-sized developments on the Macau Peninsula. The largest of these, Lake YOHO, launched sales during this period, offering around 312 units and selling over 100.

Rental activity in parts of Macau's residential leasing market has softened due to a slowdown in the growth of expatriate employees. According to the JLL Macau Property Index, rental values of high-end residential flats rose by 1.9% in the first half of 2025 compared to the end of 2024, while the rental values of mass residential flats declined by 8.9% compared to the end of 2024. Capital values continued to fall in 2025 compared with the end of last year, with high-end residential properties dropping by 9.6% and mass residential properties by 7.9%, yielding investment returns of 2.2% and 2.3%, respectively.

In the first half of 2025, the primary residential market in Nam Van District performed strongly, underpinned by pricing strategies closely aligned with the secondary market. This not only supported robust sales absorption but also contributed to a recovery in transactions for adjacent developments. However, broader market sentiment remains subdued, with limited deal volumes insufficient to sustain a meaningful rebound. As a result, residential prices have continued to trend downward. On the supply side, both pre-sales and new private-sector housing starts have declined sharply in recent years — conditions which, in theory, could support a future market rebound. However, on the demand side, growth remains constrained by Macau's population policy ceiling, which has effectively capped the expansion of housing demand. This subdued sentiment in the private residential market has also extended to the public housing sector. In response, some developers are expected to continue offering price incentives to accelerate cash flow, potentially prolonging the current adjustment cycle.

In the first half of 2025, a total of 2,020 new companies were registered in Macau, representing a y-o-y decline of 12.0%, reflecting a subdued business environment. According to the JLL Macau Office Index, overall office rental values fell 3.4% y-o-y, while rental values of Grade A office buildings declined by 0.9% compared to the end of 2024. Data from the DSEC indicates that, as of the first quarter of 2025, the vacancy rate of Macau office buildings rose to approximately 14.0%, underscoring continued market softness.

In the office investment market, pricing remained under downward pressure. According to the JLL Macau Office Index, overall office capital values declined by 4.1% in the first half of 2025, while the capital values of Grade A offices fell by 0.7% compared to the end of 2024. Yields stood at 3.0% for the overall office sector and 3.2% for Grade A assets.

Most businesses continue to prioritise cost control, with office leasing activity largely driven by lease renewals, particularly among financial institutions and Mainland Chinese law firms. Meanwhile, some international firms are downsizing, relocating back-office operations to frontline retail premises, and actively divesting self-owned office assets to release capital. Against the dual pressures of softening demand and increasing supply, the overall office market is expected to remain in a downward cycle, underperforming relative to other property sectors.

Impacted by Northbound travel and cross-border tourism, consumption downgrades and wealth erosion, the total retail sales value for the first half of 2025 stood at approximately MOP 33.55 billion, representing a 9.0% y-o-y decline. Data from the DSEC show that most retail categories experienced significant sales declines, with the exception of pharmaceutical products and motor vehicles.

The JLL Macau Retail Index shows that, in the first half of 2025, rental values declined by 0.3% compared to the end of last year, while capital values fell by 6.6% y-o-y. First-tier street shops recorded yields of approximately 2.6%. The delinquency rate on commercial real estate loans rose to 5.4% at the end of June 2025. An increasing number of distressed retail assets were released to the market, offering yields in excess of 4.0%.

Retail properties in key tourist districts have benefited from the rebound in visitor arrivals, driving active leasing momentum. Some investors, optimistic about the market outlook, have acquired prime retail units at discounts exceeding 50% from previous peak levels. In contrast, retail spaces in residential neighbourhoods continue to face headwinds, with rising vacancy rates. Amid a tight credit environment and ongoing macroeconomic uncertainty, the volume of distressed retail assets is expected to rise. Coupled with the transitional impact following the exit of satellite casinos, the retail market is likely to remain under pressure.