JLL: Rising non-performing assets in 1H 2026 put pressure on Macau office prices

• Residential: Home sales slowed after the rebound in Q1, with mass and high-end home prices down 1.2% and 0.4% respectively. The housing market is expected to remain stable in 2H 2026.
• Office: Financial sector demand supported Grade A office market, with rents down only 0.1%. But capital values fell 4.2%. Prices will remain under pressure in 2H 2026.
• Retail: Visitor arrivals rose 9.0%, but prime street shop rents and capital values still declined 3.9% and 9.2% respectively. JLL expects retail rents to stabilise while asset prices continue to adjust in 2H 2026.

MACAU and HONG KONG, 2 September 2026 – JLL's "Macau Mid-Year 2026 Market Review" released today points out that except for the gaming and tourism industries which performed well, all other industries in Macau still lacked growth momentum. With residential and commercial property demand remaining weak, residential transactions had been sluggish during the first half of the year, and the capital values of various commercial properties recorded declines. Along with the release of more non-performing assets onto the market this year, the consolidation is expected to continue, creating opportunities to acquire premium properties.

JLL releases its "Macau Mid-Year 2006 Market Review" today, noting that despite continued improvements in Macau's gaming revenue, visitor numbers and economic performance, the momentum for property market recovery failed to linger. After a brief market rebound in the first quarter of this year, the residential market saw a significant slowdown in transactions during the second quarter. JLL expects the market to remain cautious in the second half of the year, with office and retail prices remaining under pressure of consolidation.

According to figures released by Macau Gaming Inspection and Coordination Bureau, Macau's gaming revenue saw a strong growth of 35.4% in the first quarter of 2026. However, the growth narrowed in the second quarter as affected by the World Cup, with the total revenue for the period reaching approximately MOP126.9 billion, a year-on-year (y-o-y) increase of 6.8%. VIP market revenue in the first half of 2026 was approximately MOP35.48 billion, rising 15.2% y-o-y, accounting for 28.0% of the overall market.

In the first quarter of 2026, Macau's Gross Domestic Product (GDP) reached approximately MOP106.06 billion, up 7.2% y-o-y. GDP calculated based on expenditure indicated that net exports and private consumption expenditure rose by 20.7% and 3.4% y-o-y respectively, while fixed capital formation and government final consumption expenditure decreased by 19.9% and 2.8% y-o-y respectively.

According to data from Macao Government Tourism Office, visitor arrivals to Macau reached approximately 20.944 million in the first half of 2026, an increase of 9.0% y-o-y. Data from Macau Statistics and Census Service (DSEC) show that the number of mainland Chinese visitors continued to rise, accounting for 73.0% of the total visitor arrivals. Mainland Chinese visitors grew 11.0% y-o-y, among them those through Individual Visit Scheme (IVS) saw a y-o-y increase of 13.6%. Visitors from Taiwan also recorded a significant increase of 24.7% y-o-y to 575,895. As of mid-2026, Macau's hotel supply reached 45,016 rooms, similar to the level as of the end of last year. The cumulative hotel occupancy rate was 90.4%, and the average length of stay remained at 1.7 nights.

Macau's local employment situation remained stable in the first half of 2026. According to data from DSEC, the overall unemployment rate and median total income remained at 1.9% and MOP18,000 respectively. As of the first quarter of 2026, the number of foreign workers in Macau dropped slightly by 0.3% or 1,137 from the end of last year to 183,179. Local wealth continued to expand. As of the end of May 2026, local residents' deposits totalled approximately MOP839.8 billion, up 2.5% from the end of last year.

Mark Wong, Senior Director of Value and Risk Advisory at JLL in Macau, pointed out: "Constrained by local purchasing power with a lack of rigid demand, the pace of transactions in Macau's property market slowed down in the second quarter of this year. Looking ahead to the second half of the year, the market will continue to take a wait-and-see attitude with the property market remaining stable and transaction levels remaining low. Banks will remain very cautious about commercial property financing, while the uncertainty of interest rate trends will continue to suppress investment sentiment. We have seen a gradual increase in the number of non-performing assets in the sales market, including premium properties located in traditional core business districts. Facing competitions from overseas properties, only very attractive Macau properties can draw attention from investors."

Figures from Macau's Financial Service Bureau show that 2,280 residential property transactions were recorded in the first half of 2026, a y-o-y increase of 65.2%. Only 82 pre-sale units were sold, a y-o-y decrease of 27.4%. Sentiment in the sales market during the first quarter was primarily driven by Trust Cosmopolitan in the Mong Ha and Reservoir areas, of which 193 residential units were sold in the first half of the year. Other developments launched sales schemes subsequently, resulting in a brief recovery in the property market. However, purchasing power had been exhausted during this period of active trading. Residential transactions became relatively quiet in the second quarter, with 217 related transactions recorded in The Pearl Metropolitan and Praia Peninsula.

In the first half of 2026, four construction projects received pre-sale permits, providing a total of 138 residential units for sale, covering a total gross floor area of 6,893 sq m. They were mainly mass residential projects located on Macau Peninsula. The largest project among them was The Mid-Levels, providing around 100 residential units.

Although the number of foreign workers has decreased slightly, the number of foreign students studying in Macau has continued to increase in recent years, so the residential rental market remained generally stable. According to data from Macau’s Education and Youth Development Bureau, there are currently 51,769 foreign students receiving higher education in Macau, up 9.7% from the previous academic year, a significant growth of 51.5% from three years ago. According to JLL Macau Property Index, the rental values of high-end and mass residential properties remained flat in the first half of 2026 compared to the end of last year. Asset performance deteriorated slightly, but the deterioration began to narrow and stabilize. In 2026, the prices of high-end residential assets dipped 0.4% from the end of last year, while those of mass residential assets lost 1.2% y-o-y. Their investment yields were 2.3% and 2.5% respectively.

Macau's property market enjoyed a brief recovery at the beginning of the year, supported by low interest rate, stamp duty concessions and relaxed LTV ratio. Stable rental demand and an improving overall economic environment also contributed to the market growth. However, limited rigid demand from local residents for residential properties led to a slowdown in transaction volume in the second quarter. Looking ahead to the second half of the year, rising inflationary pressure and external economic instability may dampen buying sentiment. The property market is expected to remain flat in the second half of the year.

Macau Residential Index – Change from the end of last year (%)

In the first half of 2026, 2,726 new companies were registered in Macau, a y-o-y increase of 35.0%. According to JLL Macau Office Index, overall office rental value in the first half of 2026 decreased by 1.1% compared to the end of last year, while Grade A office rental values decreased by 0.1%. According to statistics from DSEC, as of the first quarter of 2026, Macau’s office vacancy rate was approximately 13.9%.

In the sales market, office transaction prices continued to consolidate. According to JLL Macau Office Index, the overall office capital value in the first half of 2026 fell by 8.7% compared to the end of last year, while Grade A office prices fell by 4.2%. The net yield on overall and Grade A offices rose to approximately 3.4%.

Although the office market remained challenging, rental declines started to slow with the market stabilizing, particularly in the Grade A sector. Office leasing was mainly driven by the financial industry. With Macau's new Investment Funds Law officially taking effect this year, nine investment fund management companies have already completed their establishment. Furthermore, it is understood that some international insurance companies and payment gateway companies are actively exploring the Macau market, targeting to set up their operations mainly in Grade A office buildings in core business districts. However, office capital values will remain under pressure with low investment sentiment and an increasing number of non-performing assets, making recovery unlikely in the short term.

Macau Office Index – Change from the end of last year (%)

According to figures from DSEC, the total retail sales in the first quarter of 2026 reached approximately MOP11.21 billion, up 13.7% y-o-y. Watches, Clocks & Jewellery saw a 52.1% y-o-y increase, while Cosmetics, Adults’ Clothing, Footwear and Leather Goods, as affected by seasonality, recorded growth of over 20% compared to the same period last year. Supermarkets, however, experienced a yoy decline of 5.3%.

According to JLL Macau Retail Index, retail rental values in the first half of 2026 fell 3.9% compared to the end of last year, while retail capital values dropped 9.2%, with prime retail properties yielding approximately 2.8%.

Driven by the continued growth in visitor arrivals to Macau, retail rents in tourist areas remained steady. Tenants there are now mainly retailers of jewellery, pharmacy, cosmetics and souvenirs, implying a decline in rental affordability compared with previous years when the tenant mix included mainly international brands. Retail investment remained constrained by the relatively high commercial loan delinquency rate, which was 5.6% as of the end of May 2026, according to data from the Monetary Authority of Macau, still a historically high in recent years. Some shop owners in core areas become willing to cut the prices, making rental yields close to current market levels. As influenced by the "China Chic" culture, mainland brands entering the Macau retail market become increasingly diversified recently. The newcomers have expanded into multiple categories, including jewellery, catering, cosmetics and trendy toys. We believe these retailers will continue to expand their presence in Macau, aligning with the current strategy of overseas expansion of most Chinese-funded enterprises.

Macau Retail Property Index – Change from the end of last year (%)