The real estate market of Macau entered the adjustment stage

Sources: the Xinghua News Website

At the beginning of the year, the price of Macau real estate market was so unstable that people couldn’t even have the same price for the short consecutive two days. During May and June 2005, the market was finally into some adjustment period. According to some professional personnel, if the heating market can somehow cool down at the appropriate time, it can actually prevent real estate bubbles with too many available real estate products turning up at the same time.

There used to be numerous reports on the media on the over-heated Macau real estate market. According to statistics, in the last season of 2004, the trading price per square meter of the residential buildings and housing units accomplished after the year 2000 witnessed an irrational growth of 70%. At the same period of time, the price of all sorts of real estate assets all experienced obvious growth. During January and April this year, the growing trend was continuously heated up with unbelievable increase on business-based real estate prices.

The main reasons of the rapid growth on the housing price in the real estate market can be concluded as follows. Firstly, after the Macau jurisdiction was returned to China, the Macau residents gradually built up the confidence and responsibility as SAR residents with great faith of the perspective of Macau’s development.

The general growing situation of the local economy also greatly encouraged the growth of the real estate market. Famous foreign realty agencies above designated size were largely interested in the local real estate market by opening up their blanch companies in Macau. The total number of realty agencies reached as many as 50,000. The government policies launched years ago with the purpose of decreasing stocking realties to some extent promoted the growth on realty pricing. Due to the reality of limited space and land resources, there used to be blind belief in the continuously growing housing prices.

However, right after May 2005, the heated real estate market gradually cooled down with more rational sellers and more cautious buyers. The trading sharply diminished with the general situation of observation. According to some experts, the market situation is the result of complicated factors, appropriate adjustment can be helpful for the Macau real estate market.

According to professional analysis, though the municipal government hasn’t directly intervene the real estate market, some of the policies launched in the past few months have been in effect on cooling down the over-heated local real estate market. According to the previous resident regulations, people can obtain the permanent residency simply by purchasing realty valued at no less than 1 million Macau dollars. The condition of obtaining the Macau Permanent Residency was further adjusted with the added conditions of having no less than half a million deposits in Macau banks and the condition on university or above degrees. Not long ago, the policies on off-shore enterprises and companies were also further restricted by narrowing the number of qualified enterprises and companies from 10 to 8. The adjustment above also contributed to the growth on real estate pricing.

Meanwhile, it is declared by the municipal government that in the coming 3 years, there will be around 30,000 new housing units released into the market, among which 5000 will be released in the second half of this year. As the transparency of the market improved, the consumer confidence also increased accordingly without the fear of blind purchasing or trading.

The development of the finance industry also has big influence on the local real estate market. In order to avoid the real estate bubbles and some unforeseen risks, the Bank of Macau lowered down the release on loans for real estate trading. As the interests of the US currency continued to grow, the interest of the Macau dollars was accordingly adjusted to a higher level, which also caused heavier pressure on the interest rise in the real estate market. This adjustment forced a lot of speculators to seize instead of dreaming being hugely benefited from the growth of housing prices.

Meanwhile, as it is pointed out by exports, in the long run, there will still be enough space for the price growth of the real estate market in Macau because of a lot of encouraging news and policies, which include the construction of the Hong Kong-Macau-Zhuhai Bridge Project, the big construction on tourism industry and related infrastructure, the introduction of labor force out of the region, etc. Necessary and appropriate adjustment for the real estate market will not only be helpful for the market’s development, but also will be of great significance for the local economy development.