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Residential Yields in The North
06 Jun 2007

Locally, The North means the cross-border town located in the northern most of the Macau peninsula, beyond which is the mainland China. In general, The North has been given the impression that it is the poorest part of the Macau SAR where most of the immigrants settle there. So the property price was in the low end of the market spectrum, or around Hong Kong dollars 350,000 for a decent 2 bed flat just a few years ago before the gaming rights were opened. In addition to the blooming gaming industry which is the main force behind the local economy growth, the Investment Immigration Policy also boosted up the property price to some extent as the requirements for investment immigration amongst others were to purchase a property worth one million. The property price in The North met the budgets of most applicants well.

According to Mr Jimmy Yeung, District Director of Sales of Midland Reality (Macau) Ltd. that the market had been quite and the transaction had been slow following the repeal of Investment Immigration Policy by the Macau SAR with effect on 4th April 2007. However, there have been signs of market recovery largely due to the vendors are willing to accept less, making the investment yields as high as 6%, which is quite attractive for investors as there may be capital growth as well in the long run. As a result there have been increasing flats for leases in the market suggesting investors may have entered this used to be forgotten market.

Mr Yeung said that The North was one of the most densely populated area or the main supply for low price property area. However, in the past the price was inflated partly due to the demand from investment immigrants. Now the price level has been back to the beginning of this year. If they are reasonably priced, there would be demand for this end-market properties such as Kam Hoi San, Hoi Pan Garden, U Wa Garden…etc as there have been continuously inflows of overseas workers which create demand for accommodation constantly. This market is attractive to investors or companies who may use for staff quarters or for leasing as the lump sum involved is small whilst the return is much better to put money in bank deposit account. Recently there has been a local investor who acquired a 750 sqft flats for $0.83m and let for $4,300 per month. The investment represents approx. 6% yield. Similar transactions are included below to illustrate the point further.

n the past 2 months, there were two extremes in the market noticeably there were investors, who might have hold a large number of investment properties, willing to cut price for 3%-15% with a view for quick sale, but on the other hand, there were investors who took the opportunity of buyer's market to acquire cut price deals. There have been signs of market revival since May this year and the prices have started from moving horizontally. Although there is no indication from the Government for the re-opening of the investment policy, most investors take the optimistic view of the property market and shop around in the market for good bargains because of strong evidence of economy growth.

We may find out more about the current market condition by comparing the figures "before and after" the repeal of Investment Policy released by the Government. In terms of the volume of transactions in April this year, although the figure dropped as compared to March, it increased if we compare with the same period of last year's which suggests the market is still healthy. The number of transactions in April was 1,973 compared to the same period of last year's 1,038, equivalent to 90% increase. However if compared to March this year 2,514, just dropped by 22%. In terms of lump sum involved, in April was $3.0 billion represents about 400% increase if compared to last year's $700 million. However, it dropped by about 20% if compared to $4.2 billion in March this year.

 

Estates
Floor level
Floor area Sqft(g)
Unit rate $/sqft
Sold price $/m
Rent $/month
$/sqft
Approx.Yields (%)
Kam Hoi San Gdn
Mid- floor
750
1,106
0.83
4,300
5.7
6
Kam Hoi San Gdn
Low- floor
750
1,133
0.85
4,200
5.6
6
Hoi Pan Gdn
Mid- floor
800
1,125
0.90
4,500
5.6
6
U Wa Gdn
High- floor
780
1,128
0.88
4,000
5.1
5
Tong Wa Gdn
Low- floor
500
1,240
0.62
3,200
6.4
6


 
               
 
 
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