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Residential rents in Macau fell by 12.8% in 2022

Housing rents in Macau fell 12.8% last year, mainly due to unemployment in the Chinese territory, but are expected to rise again, between 5% and 10% in 2023, said JLL real estate today.

The director general of JLL for Macau and Zhuhai, Oliver Tong, pointed to rising unemployment and the departure of thousands of workers without resident status, “major contributors” to the rental market, as factors in the fall in rents.

According to official data, the Chinese region lost almost 16,200 non-resident workers throughout 2022, while the unemployment rate between October and December stood at 3.5%, 0.4 percentage points more than at the end of 2021.

The drop in rents is a “big reason for alarm”, Tong said at a press conference, warning of “the high risk” of non-payment of real estate mortgages for Macau’s banking system.

Overdue loans in Macau banks reached a new record in December, 19.4 billion patacas (2.25 billion euros), 32.8% more than in the previous month, according to official data.

“Macao’s real estate market should recover with more residential lease transactions in view of the reopening of borders”, said Oliver Tong.

Like mainland China, Macau, whose economy depends on tourism, abandoned in mid-December, after three years, the ‘zero covid’ policy, with the imposition of quarantines and massive testing.

However, Tong warned that the employment situation “will not improve overnight” and that interest rates “should remain at a high level in the short term”.

On February 5, the Monetary Authority of Macau announced a new increase in the main reference interest rate to 5%, the highest level since December 2007.

The JLL report estimates, on the other hand, that the value of housing in Macau fell by 10.1% in 2022, because “investors and potential buyers tended to be cautious in the face of the economic crisis”.

“Housing prices will only return to a growth trend in the next year or later”, said Oliver Tong, who predicts a shortage of new private residential supply “in the short and medium term”.

The analyst added that the housing supply will be “dominated by public housing”, giving as an example the so-called New Neighborhood of Macau, in Hengqin (Mountain Island), which should be put up for sale this year.

Store rents in Macau also fell by 15% in 2022, due to the impact of the covid-19 pandemic, “a weak economy and a drop in consumer demand”, said the JLL report.

However, Oliver Tong said he expected a recovery of between 10% and 15% in store rents, as tourists have returned to Macau “faster and in greater numbers than expected”.

More than one million tourists visited the city in January, an increase of 101.3% in annual terms and 259% in monthly terms, according to official data released on Monday.

JLL reports, released twice a year, are the only credible source of information on real estate rent prices in Macao, an area on which the Directorate of Statistics and Census Service does not collect data.

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