Macau Property Market to Endure Mild Corrections
According to JLL in its Macau Year-end Property Review 2016, the Macau property market fell to its bottom in 1H16 but rebounded a bit in 2H16 with the launch of several new residential projects. According to the figures released by DICJ, Macau's gaming revenue recorded at MOP 223.2 billion in 2016, with a single-digit fall of 3.3% y-o-y. For the city's gaming revenue in 2H16, it registered growth when comparing with both 2H15 and 1H16. For 2016 as a whole, the gaming revenue from the VIP market declined by 7.0% y-o-y, while the mass market remained relatively stable and accounted for about 46.7% of the total gaming revenue. In the first three quarters of 2016, Macau's overall GDP recorded at MOP 246.32 billion, down 5.4% y-o-y. With the completion of part of the new gaming facilities in Cotai, the fixed capital formation in Macau fell by 18.1% y-o-y to MOP 54.5 billion in the first three quarters of 2016. During the same period, private consumption expenditure recorded at MOP 66.37 billion, slightly down 1.6% y-o-y. For the first 11 months in 2016, Macau's visitor arrivals totaled 28,136,000, up slightly by 0.2% y-o-y. Visitors from Mainland China remained the dominant, accounting for 66.4% of the total visitor arrivals, while travellers under the Individual Traveller Scheme (ITS) made up 46.8% of the total number of visitors from Mainland China. At the same time, visitors from Korea saw a growth of 18.5% y-o-y. The total supply of hotel rooms in Macau reached 36,100 and out of which 21,600 are in the five-star hotel segment. With the completion of new hotels in Cotai, the cumulative occupancy rate increased to 82.5% while the average length of stay of guests remained stable at 1.4 nights as of end November 2016. Macau's labour market was broadly stable in 2H16. According to the DSEC statistics, unemployment rate remained low at 1.9% in November. The overall median monthly income remained stable at MOP 15,000 in end 3Q16. As of October 2016, total resident deposit grew by 7.9% y-o-y to MOP 502.77 billion. The number of imported labor in Macau contracted by 2.4% y-o-y to 177,897 as of end November. The decline is mainly attributable to the reduced demand for imported labour from the construction sector, which fell by 9,111 when comparing with the same period of the previous year. In fact, the completion and opening of new gaming facilities in 2H16 helped offset part of the negative growth in the number of imported labour. "Most of the economic indicators in Macau saw negative growth in 1H16, while some of which saw improvement in 2H16. The city's economic fundamentals remained largely stable. However, the uncertainties in the global political and economic environment, e.g. the existence of a Black Swan or China's stringent control over capital flows, may still cause impact on Macau's economy. Moreover, the government's arrangement on repossession of land plots upon expiration of the relevant land concessions will directly influence the future setting of Macau's real estate market.," remarks Gregory Ku, Managing Director at JLL Macau.
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