Property agents in the city indicated to Macau News Agency (MNA) that the Covid-19 pandemic has led to rent prices in the city falling by some 10 per cent.
“Since the crisis began around February we’ve there was a phase with zero demand. Then the demand purchases and renting started increasing […] In terms of renting, there is a drop in the number of people looking to rent and prices are about 10 per cent cheaper, not much than that at the moment. Maybe 10 to 15 per cent,” Elda Lemos a consultant for JML Property told MNA.
Meanwhile, the Senior Manager of Macau Taipa Apartments, Kenneth Ho, told MNA that many of its clients, industry executives and employees in the hotel, gaming and aviation sector which saw their sectors greatly impacted by the pandemic are requesting landlords for rent cuts between 10 to 20 per cent.
“Some landlords are willing to reduce and some are reluctant because at the same time they have to pay the mortgages […]. We expect the rent will drop further, but at the same time, there is not a lot of demand in the market because there are simply no people coming to Macau. We don’t see a lot of movement, but if this crisis prolongs for a long period obviously it will cause a large disruption in the demand and supply side,” Ho added.
Ho noted that landlords are not willing to reduce more than that because the tenants are already willing to accept the proposed adjusted rents, which are already below market price, and as they consider it would be more costly to move houses at the moment.
“We hope the pandemic can be contained soon but we also know the market will not recover that quickly since many people rely on the tourism industry, which has been greatly affected,” Ho stated.
Visitor numbers in the city reached record lows as travel and quarantine restrictions were gradually enforced and updated since the beginning of the year, with visitor arrivals falling 57 per cent year-on-year in January and February and hotel occupancy reaching 15 per cent in March.
Meanwhile, Lemos estimated it was hard to evaluate if rent prices will drop further but that this could happen if more people decide to leave the city
“Local landlords when they don’t need the rent money to pay mortgage payments he just doesn’t rent the property, it doesn’t reduce it. They prefer to have it abandoned that lower the rent. We have some tenants leaving [rent contracts] but not many yet,” she added.
In terms of property purchases, the consultant considered the same downtrend in prices has not been recorded yet despite a surging demand in inquiries by buyers looking for cheaper deals caused by the crisis.
“There are many people searching for cheaper deals that are just not appearing. Property purchase prices are not decreasing yet, but they could drop since there are no property deeds being made. We’ve had some that were already scheduled and clients gave up on the purchase,” she added.
The number of property transactions between January and February dropped by 47 per cent, with the average price per square meter falling 2.7 per cent to some MOP97,897 (US$12,258), according to information from the Financial Services Bureau (DSF).
Meanwhile, in the first half of March, some 142 real estate transactions were recorded, with an average of MOP94,027 per square meter.
The consultant underlined that with this being a time of great economic uncertainty, clients are cancelling or avoiding large business decisions at the moment, and this, of course, has impacted property deals
“People are not at ease to make a decision […]. I’ve been discussing with people that really wanted to move houses, the deal was basically done but due to the uncertainty decided not to make the final decision,” Lemos underscored.
Last week, legal experts indicated to MNA the current economic crisis could lead to more eviction notices for missing rent payments, with local authorities having so far avoided announcing any direct support for SME tenants in assisting with rent payments.
After not recording any new infections for 40 days, Macau then reported 34 new cases in the last two weeks, all imported.