News release

JLL: Interest rate hikes dampen property recovery

Drastic changes in economic structure in post-Covid era

July 26, 2023

Yvonne Liu

+852 2846 5264

MACAU & HONG KONG, July. 26, 2023 – The reopening of borders in early part of this year buoyed the retail leasing market significantly in Macau. However, the weakening global economy and mainland China's slowdown coupled with the interest rate hikes has affected the recovery of the real estate market, according to JLL's Macau mid-year property market review.

Figures from DICJ show Macau's gross gaming revenue surged 205.0% y-o-y to MOP 80.14 billion, representing about 55% of pre-pandemic levels. In the first quarter of 2023, the gross revenue generated from VIP junkets soared 77.0% y-o-y to MOP 8.57 billion, which represents 24.7% of the city's total gaming revenue.

Macau's GDP totalled MOP 74.13 billion in the first quarter of 2023, up by 38.8% y-o-y. The figures for expenditure-based GDP reflected the growth is mainly driven by the exports of goods and government final consumption expenditure, which increased 38.3% and 30.1%, respectively. Private consumption expenditure, fixed capital formation and imports of goods dropped 7.5%, 1.1% and 0.7%, respectively, a sign that individual consumption and investment remained weak.

According to the DSEC statistics, Macau's total inbound tourism surged 236.1% y-o-y to 11.645 million in the first half of this year, with the combination of inbound visitors changing slightly. Visitors from Hong Kong grew significantly to 3.451 million, accounting for 29.6% of Macau's total visitor arrivals. About 59.8% of visitors came from mainland China. Macau had a total of 42,061 hotel rooms as at the end of May, up 13.9% or 5,149 rooms from the end of 2022. The cumulative occupancy rate of hotel rooms reached 76.8%, while the average length of stay of guests slightly increased to about 1.7 nights.

The industries in Macau began to recruit additional manpower, while the expatriate employees have returned to the city's labour market. Figures from the DSEC show that the number of imported labour reached 161,508 by the end of May, 6,596 people or 4.3% more than the level at the end of 2022. The overall unemployment rate and underemployment rate dropped to 2.8% and 1.8%, respectively. The overall median monthly income grew 13.3% from the end of last year to MOP 17,000, while the total resident deposit fell 0.6% from 2022 to MOP 692.92 billion.

Mark Wong, Director of Value and Risk Advisory at JLL Macau, said: "Although Macau's economic recovery has stabilised, the interest rate hikes, global economic slowdown and slowing economic recovery in mainland China weigh on Macau's property market. Investors continue to adopt a wait-and-see attitude toward the real estate market. The government recently increased the rates of land premiums could sharply reduce the profit of developers, which would affect the land market as a result. As such, we forecast that the investment property market will remain subdued in the second half of 2023, and with the heightened interest rates, distressed investors will continue to release their properties for sale."


Transaction volume in the residential market climbed 9.9% y-o-y to 1,793 as of June, according to the data from DSEC. Only 36 pre-sale transactions were recorded in the first half due to the absence of major residential projects, and the transaction of pre-sale projects accounted for only 2.0% of the overall residential transaction volume. 

In the first half of 2023, a total of nine projects with 302 flats received pre-sale permits. All of the projects are located on the Macau Peninsula and provide a total of gross floor area of 22,405.6 sqm. Macau New Neighbourhood (MNN) project in Hengqin is expected to be launched in September. It provides about 4,000 units and will absorb some of the housing demand in Macau.

Benefiting from the increasing expatriate employees, the residential rents have remained strong. Rents of luxury flats surged 13.7% in the first half of 2023, while the rents of mass residential flats grew 8.2%. Capital values of luxury residential climbed 1.3% during the same period, while capital values of mass residential rebounded 4.0%. The investment yields of luxury and mass residential are 1.7% and 1.5%, respectively.

Oliver Tong, General Manager at JLL Macau and Zhuhai, said: "The residential leasing market benefited from the return of expatriate employees after the reopening of borders early this year. However, it failed to revive Macau's property market with home sales remaining at a historic low level. Although home prices recorded moderate growth in the first half of 2023, the current market indicators are not favourable to the housing market and the housing price has dropped over 10% from the levels prior to the pandemic. Even though the market has suggested the government remove the cooling measures in the housing market many times, the government believes the housing prices will rise after the removal. But in Hong Kong, it failed to stimulate market activities after the government relaxed the cooling measures recently. As such, we believe it could help to stabilise the economy and develop a healthier market if the Macau government withdrew the restrictions to a certain extent. Under the current market condition, housing prices will be under pressure due to the interest rate hikes, fluctuating stock market, weak global economy and lower-than-expected economic recovery of mainland China, which will affect the economic recovery of Macau as a result."

Macau Residential Index – % Change

Sector 1H 2023
Mass & Medium Residential Capital Values ▲4.0%
Mass & Medium Residential Rental Values ▲8.2%
High-end Residential Capital Values ▲1.3%
High-end Residential Rental Values ▲13.7%

Macau's office market remained subdued, even though the number of new incorporations registered in the first five months of 2023 increased by 20.0% y-o-y to 2,166. Leasing demand is mainly driven by financial services and insurance industries, which were actively looking for the premium office for upgrading or relocation. JLL Macau Office Index shows the rental values for the overall offices and Grade A offices dropped 0.7% and 4.3%, respectively, from the levels at the end of 2022. According to the DSEC statistics, the vacancy rate for the overall office market was about 12.0% by the end of the first quarter of 2023.

In the sales market, only 30 office units changed hands by the end of May based on the DSEC statistics. The transaction volume dropped 37.5% y-o-y. JLL Macau Office Index shows the capital values of the overall offices and Grade A offices are similar to the levels at the end of 2022. The yields for the overall office market and Grade A office market were 2.7% and 3.0%, respectively.

Matt Kou, Senior Manager, Leasing at JLL Macau, said: "The exit of several government departments from private offices continued to affect the leasing market, which has put upward pressure on vacancy rates. The rents stayed at low levels. Some landlords are willing to offer flexible leasing terms to lure tenants with better affordability to engage in long-term partnership solutions. As such, tenants have a higher bargaining power. For the market outlook, we believe office sales will remain subdued in the rising interest rate environment. In the long term, the government should introduce more measures to attract talent in order to grow the diversified financial services industries, which could help to support the office leasing demand."

Macau Office Index – % Change

Sector 1H 2023
Rental Values of overall offices ▼0.7%
Rental Values of Grade A offices ▼4.3%

Figures from the DSEC show the total retail sales raised 29.3% y-o-y to MOP 24 billion in the first quarter of 2023, the strongest performance for Q1 in history. The proportion of tourist spending in total retail sales rebounded to 37.5%, closes to the level prior to the pandemic. Sales of Chinese food products surged 231.5% y-o-y, the strongest growth among all products. Department stores, clothing, cosmetics, watches and jewellery also recorded a sales growth of about 30%.

The market recorded a total of 115 retail property sales in the first five months of 2023, down 14.8% y-o-y. JLL Macau Retail Index shows the rental values of prime street shops rebounded 9.5% in the first half of 2023, while the capital values remained stable. The yield of top-tier retail properties was 2.1% in the middle of this year. Since the interest rate hikes would increase the cost of holding properties, investors have a higher expectation on rental yields of commercial properties and investment sentiment would be cautious as a result.

“The shopping behaviour and preferences of tourists have changed after the reopening of borders. Therefore, the leasing demand for retail properties is mainly driven by pharmacy, souvenirs, mass market brands, food and beverage retailers. Luxury brands began to return to the retail market gradually, but remain cautious towards the market. Increasing departure of Macau residents for travel and shopping is another challenge for Macau’s retail market. Figures from Macau PSPF show the total departure of Macau residents via Hong Kong-Zhuhai-Macau Bridge reached 3.98 million in the first five months of 2023, 36.3% more than the level in 2019. Rising outbound travel to mainland cities or Hong Kong led to the leakage of domestic spending, which would dampen the recovery of retail market. Also, the depreciation of RMB would attract more local residents to visit mainland China for consumption and affect the attractiveness of Macau to mainland tourists for shopping,” Tong added. 

JLL Macau Retail Index – % Change

Sector 1H 2023
Rental Values of prime street shops ▲9.5%
Property Management

We have started to see Macau's property and asset management industry advancing at a rapid pace, with landlords and developers growing increasingly aware of the importance of quality property management services.

Ben Tse, Head of Property and Asset Management at JLL in Macau and Zhuhai, said: "The development of property management services in Macau is lagging behind the other property sectors. Many landlords have the wrong perception of this industry and believe property management service is limited to security, maintenance and cleaning only. This is the reason Macau's properties have a higher depreciation rate compared to other cities in the region. In fact, the property management industry is providing professional services and has adopted advanced technology and introduced ESG to add value to the properties. In the post-pandemic era, more landlords are aware of the importance of property and asset management and want to introduce the international property management model as they believe that quality property management services could maintain and enhance the value of their properties. JLL is one of the few international property management teams in the city and our appointments for property management services have increased by 40% from three years ago, which is a sign that more landlords have an increasingly higher expectation regarding the services." 

(Left to right) Ben Tse, Head of Property and Asset Management, Mark Wong, Director of Value and Risk Advisory, Oliver Tong, General Manager, Matt Kou, Senior Manager of Leasing

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit