The JLL Chief Operating Officer for Greater China, Gavin Morgan, stated today that future developments in Hengqin will help ease the lack of available office space in Macau.
According to information provided by Morgan in a presentation today at a BritCham Inter Chamber lunch seminar, Macau has less than 4 million square feet in grade-A office gross floor area and less than 24 million square feet in non-grade-A office space, with most of it located in the Nam Vam District.
Meanwhile, the vacancy rate for the office market in Macau has gone from about 25 per cent in 2010 to some 7 per cent in 2019, with the average monthly rent per square feet having increased from almost HK$10,000 in 2010 to around HK$23,000 by last year.
This lack of available office space was compromising the expansion of the commercial office market, something seen by Morgan as an important step for Macau to ‘step up’ its value as a Greater Bay Area city.
However, the Managing Director for JLL in Hong Kong noted how available office gross floor area in Hengqin had ballooned from less than 500,000 square meters in 2016 to more than 4.5 million in 2019 and is projected to reach 4.6 million by 2024.
“It is likely that a market like Macau that is low vacancy, very thin and with almost non-existent future supply pipeline is either going to define the means of supply that will accommodate future demand or form relationships with locations in the immediate vicinity that can help satisfy that demand in a way that works well for people that want to be based in Macau,” the JLL representative indicated.
Improving interconnection between Henqgin and Macau was also seen as a factor that could – as the new expanded Henqgin Port prepares to open with new administration arrangements – also increase synergy between the neighboring regions, although residential and commercial developments in Hengqin have not been developed at the same space as office projects.
“There has been a lot of development and focus on specific sectors, but there has been so much more land for development and infrastructure in place to facilitate future developments. There’s huge opportunity there to still play around with mixes and zoning to make it the place that it needs to be based on future demand, which is one of the reasons why I remain optimistic that if the demand comes and the development and expansion of this area transpires as we believe it could, the opportunity is definitely there,” he noted.
With several cases having also been reported of Macau and Hong Kong investors getting tangled into failed or fraudulent real estate investments in the Guangdong Province, Morgan noted due diligence was still crucial before jumping into investment ventures.
“Of course, if you are going into real estate investment with partners, you need to do that due diligence […] There are different jurisdictions and it certainly complicates things as opposed to just investing in one place, but it just presents to the need of due diligence and the need to have the expertise to know what is happening around you in each of these locations to make sure you don’t have any missteps,” he added.