Travel revival boosts hotel asset projections

Macau’s hotel assets are looking up as tourism makes a comeback, according to JLL’s Macau mid-year 2025 market review. Investors are showing sustained interest in this segment while the retail sector struggles due to increasing cross-border consumer spending. The commercial property market continues to face obstacles like distressed assets and office properties selling at discounted rates, hindering a full recovery.

The first half of 2025 saw a 4.4% year-on-year growth in Macau’s gaming revenue, reaching around MOP 118.77 billion, with VIP junkets contributing 11.2% growth, totaling MOP 30.79 billion. The Gross Domestic Product showed a 1.8% year-over-year growth to MOP 202.09 billion, supported by increased net trade exports, fixed capital formation, government final consumption expenditure, and private consumption expenditure.

Tourism in Macau thrived in the first half of 2025, with visitor arrivals reaching around 19.219 million, up 14.9% from the previous year. Mainland Chinese visitors made up 71.6% of the arrivals, increasing by 19.3% year-on-year, with Individual Visit Scheme (IVS) visitors up by 24.6%. Macau’s hotel room supply at mid-2025 was 43,886, a 4.9% increase from the previous year, with an average occupancy rate of 89.1% and an average stay of 1.7 nights.

The employment market weakened in the first half of 2025, with a slight increase in the unemployment and underemployment rates. Expatriate employees’ growth slowed down, and median total income decreased by 1.1%. Local residents’ deposits rose by 5.5% compared to the previous year. Mark Wong, Senior Director of Value and Risk Advisory at JLL in Macau, expressed that while Macau’s external economic environment is uncertain, the gaming and tourism sectors are performing well, making hotel assets an attractive investment option. Hotel yields remain stable, offering a good entry point for investors looking for long-term asset allocation.

Residential transactions decreased by 13.1% in the first half of 2025, with pre-sale transactions dropping by 11%. The launch of nine projects with 462 new homes contributed to a total gross floor area of around 32,249 sq m. Rental values of high-end residential flats increased by 1.9% in the first half of 2025, reflecting a slight rise in values compared to the previous year.

Overall, Macau’s tourism sector and hotel assets are showing resilience, providing a promising investment environment, despite challenges faced by the broader commercial property market. The growth in visitor arrivals, increased gaming revenue, and steady hotel occupancy rates indicate a positive trend for the hospitality sector in Macau.