Macau Property Opportunities
Fund Limited
("MPO" or the
"Company")
Investor Update H2
2024
KEY
DATA
|
Inception date
|
5 June 2006
|
|
|
Exchange
|
London Stock Exchange
|
|
|
Domicile
|
Guernsey
|
|
|
Market capitalisation
|
£15.5 million
|
|
|
Portfolio valuation
|
US$135.9 million1
|
+0.8%
(vs 30 June 2024)
|
|
Adjusted NAV
|
US$64.4 million1
|
|
|
Adjusted NAV per share
|
US$1.04 1/ 83 p2
|
-2.6%
(vs 30 June 2024)
|
|
Share price
|
25 p
|
-29.8%
(vs 30 June 2024)
|
|
Discount to adjusted NAV
|
70%
|
63%
(as at 30 June 2024)
|
|
Cash balance
|
US$3.3 million1
|
|
|
Total debt
|
US$69.2 million1
|
|
|
Loan-to-value
ratio
|
49.7 %1
|
|
[1] As at 30
September 2024.
2 Based on a US$/£ exchange rate of
1.256 as at 31 December 2024.
All other data are as at 31 December
2024.
Opening Paragraph
The Company made further progress
with divestments, despite ongoing challenges in the property
sector. Notably, two villas at The Fountainside were sold, along
with five additional units at The Waterside. These transactions
brought total gross sales proceeds to c.US$93 million since the
divestment programme began in mid-2022. The Company allocated up to
85% of the sales proceeds to debt reduction, reducing its overall
loan-to-value ratio to 49.4%.
Portfolio
The
Waterside
The Company sold a further five units
at The Waterside in H2 2024for a total gross value of HK$696.9
million (US$89.6 million). A total of 32 units out of a total of 59
have now been sold since the divestment programme began in
mid-2022. Although the leasing programme at The Waterside has been
terminated to facilitate sales, some of the remaining 27 units
continue to be leased for shorter terms. At the end of 2024, the
occupancy rate for the remaining units was approximately 52% of the
gross floor area.
The
Fountainside
Two villas together with car-parking
spaces at The Fountainside were sold in H2 2024. The two villas
were sold on an individual basis after the Manager was unable to
progress discussions with an en-bloc buyer.
Further details about the sales will be presented in the Company's
forthcoming interim results.
Three reconfigured apartments and two
car-parking spaces now remain available for sale. Bureaucratic
challenges have arisen relating to approvals for the newly built
parking spaces, which has affected the divestment of these units.
The Company continues to deploy numerous sales and marketing
strategies to divest the remaining assets.
Penha Heights
Investor interest in this trophy home
had been hampered by the Covid-19 pandemic and remains affected by
the prevailing high-interest rate environment and weakness in
China's economic recovery. To expand its appeal to potential
purchasers who currently remain on the sidelines, the Company has
engaged a firm of specialist Hong Kong real estate agents to market
the property to ultra-high-net-worth individuals in the region. In
addition, the Company continues to explore marketing avenues to
showcase the property to a select group of potential
purchasers.
Property
Macau's real estate industry is
beginning to benefit, albeit slowly, from the government's removal
of anti-speculation measures in early 2024 that had dampened demand
in the territory's residential property market for more than a
decade. The broader residential market concluded the first three
quarters of 2024 with a transaction volume of 2,496 units,
representing a 6% year-on-year (YoY) increase.
The luxury residential market
outperformed the overall market, with 163 sales involving
apartments of more than 150 square metres recorded during the first
three quarters of 2024, an overall increase of 38% YoY, albeit from
a low base. However, the number of transactions began to decline
between Q2 and Q3, with an overall 10% drop-in activity between the
two quarters. The market also saw a 7% decline in the average
transaction price over the same period and, despite a subsequent
improvement in transaction volumes, prices continued on a downward
trajectory to hit a nine-year low.
Despite three interest rate cuts by
the Monetary Authority of Macao in 2024, new approvals for bank
loans to purchase residential and commercial properties saw
declines, with residential mortgage approvals dropping by 57% month
on month to October, suggesting that potential purchasers were
still sitting on the sidelines.
The Chinese government has introduced
a number of significant stimulus measures to support GDP growth and
the country's real estate sector. These measures have started to
have a visible impact on the residential property sector in tier-1
cities in mainland China, but potential investors in Macau have
remained cautious and have continued to take a "wait and see"
attitude.
Macau
Economy
During the first nine months of 2024,
Macau's GDP expanded by 11.5% to approximately 86% of 2019's
figure. In Q3 2024, the territory's GDP rose by 4.7% YoY to 87.3%
of Q3 2019's reading. This represents a continued growth trajectory
through 2024 to an expected GDP growth rate of 10.6% for the full
year, bringing the economy close to 93% of its 2019 pre-pandemic
size of approximately MOP419 billion (around US$52
billion).
However, the recovery remains uneven,
with tourism and gaming leading the rebound, but other sectors
lagging behind. Many local enterprises are performing poorly as
they face stiff competition from businesses in nearby cities such
as Zhuhai, hampering their growth prospects.
The appointment of Macau's new chief
executive, Sam Hou Fai, who took office on 20 December with Chinese
President Xi Jinping attending, is regarded as a positive
development for the territory. The change of leadership raises the
possibility of further economic support for Macau.
It is too early to assess extensively
the impact on Macau of the recent US presidential election.
However, Macau's prospects remain firmly focused on mainland China,
where the outlook is potentially looking more positive in the
months ahead.
Tourism and gaming
Macau's visitor arrivals for 2024
showed strong growth in the second half of 2024, surging past the
30 million threshold for the first time since the pandemic. Total
visitor arrivals for full-year 2024 reached more than 34 million,
24% higher than in 2023 and 88% of their volume in 2019. For
full-year 2023, Macau recorded a total of around 28 million visitor
arrivals. The territory also showed remarkable progress in
attracting international visitors, growing that segment by 75% YoY
to approximately 76% of 2019's pre-pandemic level.
The gaming sector continued its
strong performance in the second half of 2024, with gross gaming
revenue (GGR) reaching MOP227 billion for full-year 2024, a 24%
increase YoY that equated to around 78% of pre-pandemic GGR in
2019.
Outlook
While Macau's economic outlook
remains positive with the tourism and gaming sectors expected to
maintain their strong performance and GDP growth forecasted at 5%
for 2025, any meaningful benefits to the property market have yet
to materialise.
Property industry professionals in
Macau have urged the government to take further steps to stimulate
the real estate sector. They propose expanding the "residency
through investment" programme to include property investments as
qualifying investments. This would align with measures introduced
in Hong Kong in late 2024 to revitalise its property market by
encouraging foreign investment.
The Company remains committed to its
divestment programme, focusing on meeting debt repayment schedules
and returning capital to shareholders. A clear strategy for 2025,
including property-specific tactics, has been established. The
Board sincerely thanks shareholders for voting to extend the
Company's life for another year at the Annual General Meeting on 20
December 2024.
The Company's Interim Results are
due to be published by late February.
About Macau Property Opportunities Fund
Premium listed on the London Stock
Exchange, Macau Property Opportunities Fund
Limited is a closed-end
investment company registered in Guernsey and is the only quoted
property fund dedicated to investing in Macau, the world's leading
gaming market and the only city in China where gaming is
legalised.
Launched in 2006, the Company
targets strategic property investment and development opportunities
in Macau. Its current portfolio comprises prime residential
property assets.
The Company is managed by
Sniper
Capital Limited, an Asia-based
property investment manager with an established track record in
fund management and investment advisory.
Stock Code
London Stock Exchange:
MPO
LEI
213800NOAO11OWIMLR72
For further information:
Manager
Sniper Capital Limited
Group Communications
Tel: +853 2870 5151
Email: info@snipercapital.com
Corporate Broker
Panmure Liberum
Darren Vickers
Tel: +44 20 3100 2222
Company Secretary & Administrator
Ocorian Administration (Guernsey)
Limited
Kevin Smith
Tel: +44 14 8174 2742
