Despite being Asia’s worst-performing property market at the moment, there is hope for a turnaround as more people have started returning to the region’s famed casinos. Experts believe the success of the city’s property market is connected to its gaming industry and both look like they could be on the rise.
Jeff Wong, head of Jones Lang LaSalle Macau, told Bloomberg that he believes the worst times for Macau’s property market are now over with stronger domestic demand leading the way. In 2014, the government implemented cooling measures to end property speculation in Macau and these, along with a dwindling number of visitors, hurt the property market.
“We are at the bottom already,” Wong said. “Many undervalued properties are being absorbed by end users or long-term investors.”
The gaming industry is the main driver of Macau’s economy and as it goes, so too does the city’s property market. According to Bloomberg, this sector accounts for half of gross domestic product and a large chunk of employment. Gaming took a massive hit as China’s anti-corruption measures drove wealthy individuals away from Macau in 2014, which ended up causing a massive economic slump.
“There is almost a direct correlation between the decline in gross gaming revenues and pricing in the mass residential market,” Tom Ashworth, principal of Sniper Capital, said. “There are signs of a pick up, with the market potentially at a bottom.”
Sales at Oscar Crescent, a luxury development in Macau’s Taipa district, have been strong and highlight signs of a real estate turnaround in the city. Nearly 90 percent of the units offered on the first day of sales were taken up by local buyers, a stark contrast from other recent launches.
Sheldon Adelson, owner of Macau’s largest casino operator, and JPMorgan Chase & Co. also believe Macau’s gaming industry is showing signs of life again with more tourists expected to visit. It was noted that this recovery is not going to be quick and might take months or even years before it is fully realized.
