Centaline Macau: Industrial units up 20 pct in 2015

The leasing business of the city’s industrial units has been the only segment to see an uptrend last year when the leasing and transactions of other types of commercial properties saw a downturn, concluded estate broker Centaline (Macau) Property Agency Ltd. in its property review. The average leasing cost for an industrial unit here amounted to around HK$9 (US$1.16) per square foot for the full year of 2015, up 20 per cent compared to the previous year, Centaline Macau’s director Roy Ho Siu Hang said in a review briefing held yesterday. While the city experienced a downtrend in leasing and transaction cost for shops and offices last year, the leasing of industrial units has been an exception as a growing number of such units has been renovated and turned into offices for rent, Mr. Ho explained. “Although industrial units have seen a higher leasing cost [last year], it is still cheaper by half than the cost of renting offices,” Mr. Ho said. “That has been an attractive advantage for tenants engaged in cultural businesses like art, photography and entertainment production.” Transaction number fell But unlike leasing, the transaction of industrial units was largely moribund last year: the estate agency estimated that only about 75 transactions of industrial units were completed in 2015, which would represent a staggering fall of about 75 per cent year-on-year. According to official data from the Statistics and Census Service (DSEC), only 55 industrial units were transacted for the first three quarters of last year, representing an annual fall of 80 per cent. “The threshold for purchasing an industrial unit is still high, and the area of such units is usually very big,” Mr. Ho said. “So only very few people were interested in buying them for renovating and investment; there were more cases of people [wanting] to lease them only.” The average transaction cost of an industrial unit here was around HK$3,300 per square foot by the fourth quarter of last year, down 28 per cent compared to the peak level of HK$4,600 per square foot in 2014, according to the estate broker. The estate agency director believes that the cost of leasing industrial units would follow that of offices. The average leasing cost of an office in Macau dropped 15 per cent last year; while the average transaction cost of an office throughout the city has dropped by 9 per cent to 24 per cent, according to Centaline Macau’s data. For shops, which generally have a shorter lease period than offices, the average leasing cost has fallen 37 per cent to 58 per cent year-on-year in what the agency terms the ‘tourism area’ in Macau Peninsula last year, with the biggest fall seen in the west side of ZAPE district (near casino L’Arc and StarWorld); the average leasing cost of shops in residential areas in Macau Peninsula and Taipa has also seen a fall in the range of 23 per cent to 33 per cent. Meanwhile, the average selling cost of shops in the tourism area in downtown Macau Peninsula fell 27 per cent to 30 per cent last year, while that in residential neighbourhoods dropped 3 per cent to 11 per cent, the agency said. Downtrend for homes persists Jacky Shek Po Tak, senior director of Centaline Macau, expressed a bearish outlook on home sales for 2016 after the segment experienced a downtrend in price last year. The agency has observed an over 30 per cent year-on-year fall in some of the city’s high-end homes. As at November last year, the average home price had dropped 18 per cent year-on-year to MOP74,771 per square metre, latest available data from the Financial Services Bureau (DSF) shows. The estate broker also estimated that less than 6,000 home transactions were completed last year, representing a fall of nearly 20 per cent. “By mid-2015, we saw the decline in home prices here somewhat stabilise,” Mr. Shek remarked. “But then later, in December, we saw the Federal Reserve interest rate hike cycle has kick started, and then we have also seen the case of Pearl Horizon. These are the factors that affect buyers’ confidence and make them hesitate in purchasing flats.” The Pearl Horzion case Mr. Shek refers to was the government’s action in taking back the 68,000 square metre site for the upscale residential project Pearl Horizon in Areia Preta last month, as the developer Polytex Corporation Ltd. had failed to complete the land use before the land concession expired on December 25. The government’s decision has culminated in a lawsuit filed by the developer, and bouts of protests from homebuyers who purchased the Pearl Horizon units off-plan. Mr. Shek expects that the average home price here could drop by up to 20 per cent this year. “In the local market for home sales, we cannot see any conditions for reversing the downtrend as the external economic factors we are facing this year are more complex than 2015 – for instance, this year has already begun with a rough start in the stock market,” he said, adding that his company was not confident in a major recovery in the city’s casino and tourism businesses.