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Stalled expectations

Rather than taking a shuttle bus across the Lotus Bridge link- ing Macau to nearby Hengqin some people have been per- mitted to drive their Macau-registered cars directly to the island. Expectations of such convenience in transportation have been one of the major reasons fuelling property prices on Hengqin over the past few years. But […]

Rather than taking a shuttle bus across the Lotus Bridge link- ing Macau to nearby Hengqin some people have been per- mitted to drive their Macau-registered cars directly to the island.
Expectations of such convenience in transportation have been one of the major reasons fuelling property prices on Hengqin over the past few years. But the implementation of the scheme starting last month is not expected to
breathe new life into the stagnant real estate market on the island at the mo- ment, given the high threshold for ap- plication, say industry figures.
Following the visit of Premier Li Keqiang to Macau in October giving the green light to the scheme, some vehicles with car plates licensed in the city have been allowed to drive across the border since December 20. Cur- rently, Macau-registered cars cannot enter Mainland China unless they have
an additional cross-border car plate, which can be acquired when a Macau applicant has invested US$400,000 (MOP3.2 million) or more in Guang- dong Province.
According to Hengqin authorities, the first phase of the scheme is only open to two types of Macau appli- cant: individuals who own at least one company incorporated on the island with their tax payable being among the top 100 companies in Hengqin; and applicants who have acquired land on the island. Macau residents with real estate investments there – such as flats, shops and office spaces – are not eligible for the scheme.
Lok Wai Tak, president of the Macau Real Estate Development Chamber of Commerce, believes resi- dential prices in Hengqin will be sub- ject to downward pressure in the near future. “Many Macau investors and end-users in the Hengqin property
market had high hopes of the scheme allowing most Macau-registered cars onto the island but [the first phase] fails to entertain their wishes,” he notes.
Without “innovative” clearance procedures between the city and Heng- qin, including the vehicle scheme, the real estate market on the island offers no advantages over other parts of Zhu- hai, he maintains. “In the short run, some investments will flow into the real estate market in [other parts of]
Zhuhai from Hengqin,” he said, as it is now expected that the scheme will only be open to more Macau residents in a slow and gradual process.
Property curbs
Permitting Macau-registered cars to enter Hengqin is one of the measures both the mainland and Macau authori- ties have tabled since 2009 in view of the integration of the Pearl River Delta region. This anticipation spiked the sales of Hengqin homes since Sea of Dreams – developed by state-run Huarong Real Estate Co. Ltd. – launched pre-sales in 2013 as the first residential project in Hengqin to do so.
According to Centaline (Macau) Property Agency Ltd., operating on the island, pre-sales prices of new projects
on Hengqin have risen 80 per cent from about RMB25,000 (US$3,599.97) a square metre in 2013 to a current RMB45,000 a square metre.
However, the Hengqin home mar- ket had lost some momentum in recent months prior to the implementation of the vehicle scheme. Jane Liu Zee
Ka, Managing Director of Ricacorp (Macau) Properties Ltd., notes the mar- ket has been pretty quiet following the latest housing curbs imposed by the Zhuhai Government.
Zhuhai joined a list of Mainland cit- ies in October 2016 imposing measures to rein in rising property prices. The new curbs ban Zhuhai residents with three homes or more, and non-residents with one home, from buying flats with a saleable area of less than 144 square metres. The measures, also tightening mortgages, apply to Hengqin, which is part of Zhuhai.
“The vehicle scheme is positive news for the Hengqin market in the long run,” said Ms. Liu. “But most Macau buyers on the island now are investors rather than end-users as Hengqin is still another jurisdiction and most new hous- ing projects have not been completed.”
Two residential projects – Sea of Dreams and The Gem, developed by a subsidiary of Hong Kong-listed China Overseas Land & Development Ltd. on the island – could be completed in the first half of 2017, providing nearly 3,100 flats, data from Centaline Macau shows. A research report by property consultant Jones Lang LaSalle (Macau) Ltd. points out that there are about ten residential projects under construction on Hengqin with a gross floor area of 2.44 million square metres, or 20,000
units. Most of the projects can only be completed from 2017 and beyond, the report concludes.
Commercial property
Edwin Cheung Hon Kit, Chairman of Hong Kong-listed developer ITC Prop- erties Group Ltd., said in a recent in- terview it would take some time before the completion of infrastructure on the island. “Hengqin may need seven years or more to become a good place to live,” he said. “If you want to find a new home for marriage, can you wait [that long]?”
But he is upbeat about the long- term prospects of the island’s property market given its strategic positioning in helping facilitate the economic diver- sification of Macau. His company will look for opportunities to acquire land for property development on the island in the future, he added.
Roy Ho Siu Hang, a director of Centaline (Macau) Property Agency Ltd., also remains optimistic about the long-term prospects of the Hengqin
market despite recent hiccups. The vehicle scheme will boost the mar- ket in the long run, depending upon how flexible the scheme becomes when it is gradually implemented, he remarked.
The first phase of the scheme might also boost commercial property on the island, as some local companies might decide to relocate their back-up opera- tions to Hengqin, Mr. Ho said. The cur- rent going rate of offices on Hengqin is about RMB30,000 a square metre or MOP3,203.42 a square foot – still half the MOP7,000 (US$875) a square foot in Macau, according to Centaline Macau.
Three office projects – including Hengqin Headquarters Building devel- oped by a Hengqin government-control- led conglomerate – are to be completed within 2017, providing 1,237 units with a total floor area of 172,000 square me- tres. “In addition to a chance to apply for the vehicle scheme, it is easier to re- cruit personnel in Mainland China with lower operating costs [than Macau],” Mr. Ho concluded.