Property

Attention Shifts in Macao Retail Property Market



Only 93 retail property transactions were recorded in Macao in 1Q2016, falling 13.1% y-o-y while total transaction volume dropped 22.4% to MOP 1.43 billion, according to the city’s Statistics and Census Service. As the market picks up in recent months, 126 transactions were seen in April and May. Transactions have been pushed up in April while the rise of transaction volume was hindered because of the large-scale transaction seen in the month, where a large number of shops were sold at lower prices. Yet, transaction volume grew 38% from April’s less than MOP 400 billion to May’s MOP 550 million and totaled up to MOP 950 million in the 2 months.

Macao’s GDP has fallen for the 7th consecutive quarter in 1Q2016, dropping another 13.3% y-o-y to MOP 79.95 billion, with the extent of the fall gradually narrowing. Similarly, Macao’s gambling revenue is also falling at a slower rate, dropping only 9.2% y-o-y in Q2, much gentler than the average over 30% y-o-y fall recorded in 2015. The market expects the contraction of Macao’s gambling industry, as well as its overall economy, to continue to ease following the intense economic adjustment in the past 2 years.

Although the number of visitors recorded in Q1 has only fallen 0.6% y-o-y, tourist expenditure has fallen 13.6% in the period to around MOP 11.54 billion. Meanwhile, the city’s total retail sales value has also dipped 11.2% y-o-y to MOP 14.73 billion, with the sales of jewelleries and watches still remaining the biggest part of total retail sales, accounting for 20.8% of it. The sales of cars have declined the most in the period, dropping 48.4% while that of jewelleries and watches fell 8.3%. On the other hand, the sales of cosmetics and sanitary items have climbed 8.4% y-o-y while adult clothing grew 5.6%. The sales of supermarket items and daily necessities have also seen rises ranging from 5% to 8% in the period.

The pattern of change in the retail sales values has reflected the fact that the recent economic change in Macao has a relatively small effect on citizen’s demand for everyday items, and compared to fast-growing brands in the city’s boom cycle, the negative effect on local brands and the food and beverage industry was also quite small. Some of the fast-food restaurants and local tea houses are even seeing growths in revenue and are seeking expansion, and are even moving on to Tier-one streets, as rents fall. Shops in residential districts are also far less affected by the slowdown of the gambling industry and have therefore been popular amongst investors recently, with shops in the Areia Preta and Ouvidor Arriaga areas selling for over MOP 10 million each.