Standing in the shadow its neighbors, most investors would consider nearby alternatives long before buying Macau real estate.
Perhaps you’re familiar with Macau because of casinos rather than its real estate market. The Chinese Special Administrative Region surpassed Las Vegas decades ago to become the world’s top gaming destination.
Macau’s reliance on its casino and tourism industries means Macau’s growth isn’t stable or consistent though.
For example, Macau’s GDP plummeted by over 21% when China began a crackdown on corruption. The economy picked up since then and is currently growing at double-digit rates once more.
Our question today is: should you buy property in Macau? After all, Macau doesn’t have an equity market. Nor are there anywhere near the number of business opportunities in Hong Kong.
The territory’s population of barely 600,000 is far below Hong Kong’s, let alone mainland China. Would you rather start a business in a place with a few hundred thousand people… or several million like cities right across the border from Macau?
With all that said, there are some reasons why you might want to consider investing in Macau real estate.
Freehold Property Ownership in Macau
It’s rather easy to overlook that Macau is the sole part of China which allows freehold property ownership.
Both locals and foreigners are both able to buy Macau real estate on a permanent basis.
Compare this to mainland China where all land is technically owned by the state. Land in Hong Kong is on a lease which expires in 2047, although locals believe the government will renew all leases at that time.
Of course, nothing is certain in the Macau real estate market – especially given Hong Kong’s current situation.
The cost of real estate in Macau is only about half Hong Kong’s prices too. It’s certainly not cheap at US$10,000 per square meter on average. Granted, we’re comparing that to one of the most expensive cities in the world which sits right next door.
Yet not every plot in Macau is freehold property. Make sure to carefully read what you’re buying before signing any contracts.
Numerous apartments in Macau, several of them freehold, stand next to its world-class casinos.
Macau Real Estate’s Potential
There’s no stock exchange here. As such, buying property in Macau is the only method of investing in the city besides starting a company here.
But you still won’t have the same variety of real estate options as you would in Hong Kong or Shenzhen. Gambling and tourism are Macau’s two major industries. They don’t really have a tech, finance, or manufacturing sector.
Worse yet, a tiny population of under one million makes catering to the city’s domestic consumer market impractical. Foreigners who start investing in Macau generally either start a business or buy real estate.
Here’s the good news: Macau’s economy is starting from a far lower base than Hong Kong and isn’t quite as developed. GDP per capita in Macau is lower while tourist arrivals are rising by over 10% per year.
Investing in Macau real estate gives potential for return because of this. Foreign buyers should understand that most opportunities in Macau rely on the tourism and gambling sectors though – whether directly or indirectly.
Macau’s Connectivity: A Main Growth Driver
Macau and Hong Kong are also now more connected than ever. The two cities were previously separated by 62 kilometers of water. You had to either take a helicopter or an hour-long boat ride to travel between them.
Recently, one of the longest bridges in the entire world was finished. This links Macau and Hong Kong by road, allowing you to simply drive between them now.
The bridge gave more than 7 million people in Hong Kong easier access to Macau when it was finished several years ago.
Plans for connectivity in Southern China don’t stop there. A series of trains, highways, bridges, and roads will further link Macau and Hong Kong to mainland China.
Shenzhen and Guangzhou – two megacities of approximately twenty million people each – are right across the border from Macau.
Over 80 million inhabitants live in the Pearl River Delta region as a whole. Even if it just leads to more tourists and gamblers, increased connectivity will surely help boost Macau’s economy in the long-term.
To summarize, expect to pay a minimum of US$500,000 if you wish to start a company or buy real estate in Macau.
Investing in Macau’s property market could pay off if you’re active, or have spare cash and are willing to cope with a severe lack of available options.
FAQs
How Much Are Macau Real Estate Prices?
You should expect to pay about $10,000 per square meter when buying property in Macau. The island is rather small, so there isn't much opportunity to reduce this cost by moving into the suburbs.
Can Foreigners Buy Property in Macau?
Yes. Not only can foreigners own real estate in Macau, but it's also the only Chinese territory where it's possible to buy on a freehold basis.
Is Investing in Macau a Good Idea?
Macau is a small territory with a population below 1 million. While this equates to scarcity of land, it also means you have a lack of investment options - especially as a foreigner!
Likewise, real estate prices in Macau are already very high. Our opinion is that there isn't much room for them to increase further. You have better options elsewhere in Asia.
