When the average price for a square metre of residential property in Macau reached MOP 98,187 (US$ 12,293) - the highest ever - many foreign owners sold. Yet housing prices are still rising. Why? Because Macau's economy is booming, and local buyers have taken over where foreign investors left off.
According to the Monetary Authority of Macao, non-residents sold property worth MOP 8.88 billion (US$1.10 billion) in the first half of this year, draining MOP 6.6 billion (US$0.83 billion) from the territory's real estate market.
But Macau's gaming revenue reached MOP 148.7 billion (US$18.62 billion) during the first half of 2013, far exceeding expectations, according to Jones Lang LaSalle (JLLS). The profits and wages are driving Macanese property higher.
“We expect Macau's property market will maintain steady growth in 2H13, benefited by the better-than-expected gaming revenue, low interest rate environment, stronger capital flows in the market, and limited supply,” said Alvin Mak, JLLS' Associate Director for Research.
Most new units are already pre-sold. So supply isn't likely to increase much any time soon, ensuring not only that the prices remain high but also driving rentals up. From January to June high-end residential rents rose 9.6%, while mass and medium residential rents increased 10.3%, according to JLL.
Housing demand is boosted by foreign labor working on the Macau Light Rail Transit, the Taipa Ferry Terminal, and several casino-resorts at Cotai. There were 118,600 foreign workers in Macau in May 2013, up 8,000 from December 2012. When Cotai's gaming complexes open in 2015, more foreign labour will pour in to man the new casinos and hotels.
Macau's government has instituted measures to prevent the property market from overheating, similar to Hong Kong. In addition, new laws and regulations to bring Macau's real estate industry practices to international standards came into effect in July.
Once foreign investors see that these new laws and regulations really do protect their interests, they may return.