Wednesday 10 September 2008

Beijing travel curbs add to Macau market misery

China can also curb travel to Singapore if too many Chinese lose money at our IRs. Then who is going to feed our 2 IRs?

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Guanyu said...

Beijing travel curbs add to Macau market misery

Sandy Li
Sep 10, 2008

A further tightening of visa conditions aimed at limiting mainland visitor flows to Macau has rubbed salt into the wounds already suffered by the territory’s property market.

Coming at a time when international funds have slowed their acquisitions amid tighter credit and an uncertain global economic outlook, the new visa conditions would further depress demand for Macau property, agents say.

Macau’s luxury residential market, which depends on overseas buyers for some 50 per cent of its deals, has already fallen about 30 per cent since January this year, according to Rico Kwok Chiu-lung, managing director of Centaline (Macau) Property Agency.

“The latest visa restrictions will certainly deliver another blow to the already worsening property market,” Mr Kwok said.

Under the new policy that took effect from September 1, a separate travel permit is required for mainlanders who apply to enter Macau via Hong Kong under the Individual Visitation Scheme (IVS).

Previously, individual mainland visitors issued travel permits to Hong Kong were automatically entitled to a visa-free visit to Macau.

The tighter visa policy comes on top of earlier moves by the mainland government to cut the number of times mainlanders travelling independently of tour groups could visit Macau from twice a month to once from June 1 and then again to just once every two months from July 1.

The Macau property market began to feel the impact of the changed travel arrangements in July on concerns that the new policy would lead to less frequent visits to the city by mainlanders, thus dampening casino business, said Mr Kwok.

Ronald Cheung Yat-fai, the chief executive of Midland Realty Macau, said institutional investors from Europe, the United States, South Korea and Japan had also become cautious about making acquisitions in the territory.

Since overseas buyers accounted for about 50 per cent of sales of luxury residential homes in Macau and 20 per cent of its overall property deals, sellers would now have to depend heavily on price-sensitive local buyers, said Mr Cheung.

Investment sentiment was also likely to be hit by the new visa conditions, aggravating the adverse effects on the market of the US subprime mortgage crisis and the mainland government’s austerity measures to curb property lending, he added

Prices at the upmarket project La Cite, which is popular among mainlanders, had declined 30 per cent to HK$2,800 per squarefoot from HK$4,000 in January, said Mr Cheung.

He said prices for other luxury residential projects, such as One Central Macau, had also fallen 25 per cent to HK$6,000 per square foot during the same period.

Fearing further falls in home prices, local buyers had now adopted a wait-and-see attitude and owners were holding back on selling in view of the poor market sentiment, Mr Cheung said.

“It is not easy to close any deal right now. The number of transactions has dropped near 1,000 per month compared with about 2,000 in normal circumstances,” he said.

Jeff Wong Chi-wai, a director and head of residential sales at Jones Lang LaSalle’s Macau office, attributed the correction to the souring market sentiment worldwide and a falling mainland A-share market that had locked up mainlanders’ savings.

He said prices should decline another 10 per cent over the rest of the year.