• Investing in Macau Real Estate: By JML Property

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    juliet-risdon

    Formerly a Portuguese colony until 1999, Macau has the 3rd highest GDP per capita in the world, it’s also the most densely populated region.

    Probably you already know that it’s famous for being a gambling mecca as well.

    Often overshadowed by news telling about the frenzy in Hong Kong’s property market, many know little about what’s going on a stone’s throw away, in Macau.

    Juliet Risdon works as a Designer and Director at JML Property, a leading real estate agency on Macau, founded in 1994. Their international team has helped many foreigners with services like buying and selling property, tenant property services, repair procedures and more.

    Macau is interesting for sure, a reason why Juliet has been interviewed by newspapers like the NY Times, Reuters and Financial Times.

    Let’s see what she has to say about the property market in Macau.

    Juliet, what are the general regulations when buying a property in Macau as a foreigner?

    The only areas where the Macau property market discriminates between foreign and local buyers is the additional 10% stamp duty that is applied to foreign buyers and the limitation on land ownership.

    Foreign individuals and legal entities can invest in as many properties- residential, industrial or commercial- as they would like.

    Most people hear about the property market in Hong Kong when reading the news, Macau is less mentioned. How has the property market performed in Macau the past decade? Have prices increased much like in Hong Kong?

    The two SARs (Special Administrative Regions) do share a number of demographic and socioeconomic similarities, given their proximity.

    However, there are notable differences between the two, such as the key economic industries and political relationship with the PRC, which should be taken into consideration when comparing the two markets.

    Generally speaking, you can think of Macau’s real estate capital market tracking Hong Kong’s market with a rough 2-month lag.

    The price difference between Macau and Hong Kong has been shrinking from a residential property perspective, but when it comes to commercial property the two markets are a world apart.

    What’s your view on Macau’s property market in the future, let’s say, in the coming 5-10 years? Is it worth buying an investment property here?

    Although it is not possible to predict exactly what will happen in the market, our general outlook for the local market is positive.

    Macau’s real estate market has surprised us time and time again in the past, more positively than negatively. With major infrastructural projects such as the Hong Kong-Zhuhai-Macau Bridge and casino projects such as the new MGM set to open in 2018.

    We can anticipate a new breath of air and both the rental and sales markets picking back up.

    Are there any areas that should be of interest to foreign investors? Close to casinos or any public communication?

    For foreign investors looking to buy either as a lifestyle property or as an investment, the central Taipa area has always been a good option.

    Extensive development has gone into the central park area and the Nova properties by Shun Tak and the government, which has spill-over effects on the overall quality of life in Taipa.

    The completion of the Light Rail Transit will lessen the strain on the current public transport system while making it easier for professionals to commute to the casino properties on the Cotai Strip.

    From an infrastructural standpoint, the properties in up-and-coming neighbourhoods near the Macau-Zhuhai border and the Hong Kong-Zhuhai-Macau Bridge also has good potential.

    In Hong Kong, Mainland Chinese pour in to grasp a share of the property market. Is it mostly Mainland Chinese who invest in Macau or are there any other nationalities that find Macau a good place to invest? Is it mostly investment properties or lifestyle properties?

    In Macau we have a good diversity of investors. We see healthy interest from Mainland investors.

    Some look to move their money out of China, but still keep it close by, and some look for a place for their children who are in university here to stay while doubling as an investment.

    Investment activity from expats and the Portuguese population has slowed somewhat given the HR climate, but many continue to see promise in the market and explore opportunities.

    Of course, the locals are the most active and continue to drive most of the demand.

    Can I become a permanent resident if I invest in one or more properties? Any minimum amount I need to invest?

    No, the investment VISA scheme was terminated since 2006 and you cannot currently become a Macau resident through residential property investments.

    How are the rental yields in Macau? Is it easy to find tenants?

    Macau is similar to Hong Kong that rental yields tend to be low, although occupancy rates tend to be pretty good given that it is such a small city.

    So most investors in Macau aim for capital gains instead of positive cash flow, unless the property was purchased a very long time ago.

    Hong Kong and Singapore have introduced an additional Buyer’s Stamp Duty of 15%, to curb the inflow of foreign property buyers. How are property taxes in Macau? Competitive compared to other places in the region?

    Macau adopts a tiered system for stamp duty payments according to the property sales price:

    • Up to MOP 2 million – 1%
    • MOP 2 – 4 million – 2%
    • Over MOP 4 million – 3%

    Like Hong Kong, there have been efforts made to ‘cool’ the market through introducing new stamp duty structures.

    Since 2011, if the property is sold within 1 year of its purchase, the seller is charged 20% of the sale price as stamp duty, and 10% if the property is sold within the second year.

    An additional 10% stamp duty is applied to non-resident individual or corporate buyers.

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