Housing market revives

Off-plan sales of new residential projects are being launched one after another.

As the MSAR comes out of its over-two-year economic adjustment phase, property developers have recently launched sales of their new projects, with nearly all receiving overwhelming responses. Managing Director of Ricacorp (Macau) Properties Limited, Jane Liu points out that current supply in the housing market has not yet satisfied demand.
Over the past weekend, Nova Grand, a new residential development of Hong Kong-listed conglomerate Shun Tak Group, located in central Taipa, opened the first batch of sales of some 400 two-room or three-room units of the 1,700 unit project. The units were sold out in three days.
Speaking to Business Daily, the managing director of Ricacorp said the majority of the buyers of the project were local residents.
“For our agency, around 70 per cent of the clients are local residents who aim to buy the units for self-use, or parents buying flats for their kids,” said the property agent. “The other 30 per cent are investors, who are mulling long term investment due to the Special Stamp Duty dampening the resale of property within two years.”
She added that many investors are also eyeing to make a profit from the units by leasing them out in the future.
Nestor Ng, President of Anzac Group, meanwhile, expressed that it was difficult to determine how many of the buyers of the new project were investors or buying for self-use.
“It is hard to know the numbers because we do not know what will happen if investors will resell after the two years’ purchase,” said Mr. Ng.
Nova Grand is only one of the latest projects enjoying positive responses from the local property market. In October, another luxury residential project Sky Oasis, located in Cotai, also saw the first batch of 128 units – primarily studios – sold out in two days.
According to the Anzac president, Sky Oasis seems to have attracted more investors than Nova Grand. “Sky Oasis would have more investors because not many families would like to live in studios,” Mr. Ng said.

Strong purchasing power
Ms. Liu from Ricacorp explained that the strong purchasing power apparent in the performance of recent off-plan sales is due to the prices being set by developers, which, compared to previous years, are still lower.
“People think that the current housing prices are cheaper compared to two or three years ago; they think that now is the best time to buy property units, otherwise the prices will go up again,” said Ms. Liu.
The agent’s perspective was echoed by the President of Anzac Group, Mr. Ng who pointed out that the strong sales of the new property projects are the result of accumulated purchasing power from the past few years.
One of the managing directors of Huan Yu Property Agency Limited, who preferred to be unnamed, added that buyers see the current prices as attractive. “Compared to the price in previous years, it has dropped more than 35 per cent and buyers think that it is time to buy,” said the managing director of Huan Yu.

Impact on surrounding properties
Nevertheless, the Ricacorp managing director indicated that the second-hand housing market would not be affected by the recent wave of new sales in the market.
Taking Nova Grand as example, nearby properties from the same developer – Nova City, Nova Park and Nova Taipa - would not see their prices experience significant drops as their values should stay lower than that of the latest project in the short term, Ms. Liu explained.
“People for sure will prefer buying a new flat rather than a second-hand flat,” Ms. Liu told Business Daily. “Moreover the price of Nova Grand is close to the price of second-hand units.”
The property agent, however, said she is uncertain how the housing prices of these nearby properties will be after two years, when buyers of Nova Grand start moving in. But she added housing prices would eventually depend upon on the city’s economy.
Meanwhile, the Huan Yu director remarked that prices of the surrounding second-hand properties, no matter the location, would increase, due to demand from newlyweds and young people who want to move out from their parents’ homes.
“With only some 1,000 news flats provided in the market, I don’t see there will be any drop in the property prices. A decrease in housing prices will only happen when the government intervenes,” the agent said.

Pearl Horizon lesson learnt
Asked why the Pearl Horizon incident has had little effect on the determination of clients buying off-plan properties, the President of Anzac Group said that with the current law on off-plan sales, developers are required to provide information about the development period granted by the government.
He noted that more information about projects is being shared by agencies, developers and buyers since the Pearl Horizon incident.
Moreover, Ms. Liu indicated that agents in the city have become more careful when promoting the sale of off-plan properties.
“We have confirmed with the government that the land allowance for building Nova Grand will expire in 2031, and now we are in 2016 and soon clients will be able to move in within in a few years,” Ms Liu noted.

Outlook for next year
Looking forward, the President of Anzac Group believes the housing market will grow stably. “We know that there are not many new off-plan properties and people are having a high demand,” Mr. Ng said.
Ms. Liu has the same projection given the real estate market is coming out of its two-year slump, in addition to the recent visit of Premier Li Keqiang introducing more plans to diversify the city’s economy.
She indicated that new property projects are going to open sales next year. But she noted the MSAR government should adjust its current property policies in order to boost further the purchasing power of buyers attempting to buy their first property.