The amount of new lending approved for the acquisition of commercial real estate units by non-residents of Macau skyrocketed 375 per cent during the month of March 2017 when compared to the previous month, totalling MOP597.2 million, according to data released last Friday by the Monetary Authority of Macau (AMCM).
New commercial real estate loans (CRELs) for residents and non-residents combined surged 91.2 per cent month-to-month, amounting to MOP5.4 billion. Of the total, CRELs to Macau residents – corresponding to 88.9 per cent of the total – were also up, by 78 per cent, with the authority noting that the results were ‘mainly attributed to larger loan amounts recorded for a number of approvals.’
Overall, the annual increase for the same category surged 77 per cent year-on-year.
The amount of residential mortgage loans (RMLs) approved by Macau banks during the month in question was lower than loans conceded to commercial real estate contracts, amounting to MOP4.1 billion. It signalled an increase of 59.6 per cent from the previous month.
Within the total, 97.5 per cent consisted of loans granted to residents, or MOP4 billion, a surge of 61.7 per cent month-to-month.
RMLs granted to non-residents posted a slight increase of 5 per cent, amounting to MOP101.5 million.
On an annual basis, RMLs rose 39.5 per cent when compared to 2016.
Speaking to Business Daily, José Isaac Duarte, an economist, explained that these types of loans tend to vary a lot from month to month. On the one hand, he said, “the current values fall in tandem with the average of the last two years, with the value of credit to non-residents still being low, at about 10 per cent,” despite the fact that it posted the most significant increase month-to-month.
On the other hand, the current statistics could also mean that banks and borrowers are reacting in anticipation of a heating up of the market.
“When credit tends to increase this way, it could be a sign that the economy is catching up,” he suggested.
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The ratio of delinquency, that is, late or overdue payments – different from payment defaults, when the borrower fails to repay the loan according to the terms agreed upon – remains low, at 0.18 per cent for RMLs – down 0.01 per cent month-to-month and up 0.08 per cent year-on-year – and at 0.13 per cent for CRELs – nearly the same as a month before and up 0.11 per cent yearly.
The number of new RMLs collateralised by uncompleted units – meaning that banks concede credit in exchange for the asset yet to be built as the ultimate guarantee for payment default – reached a 91.6 per cent rise month-to-month to MOP333.1 million. On an annual basis, the amount of new equitable mortgages approved dropped 53.3 per cent.
“There is a series of banks in Macau that may have been dealing with difficult loan contracts, such as the likes of Pearl Horizon, by having accepted as guarantee units that have not yet been built,” Duarte highlighted.
Accumulated value of loans
The outstanding value of RMLs, or the accumulated value of mortgage loans for the acquisition of residential units approved at the end of March, totalled MOP182.7 billion, representing a minor increase of 0.2 per cent when compared to the previous month, while posting a 4.5 per cent increase year-on-year. The resident component corresponded to 93.9 per cent of the total.
Outstanding RMLs to residents were subject to a 0.2 per cent increase month-to-month, whereas RMLs to non-residents dropped 1.2 per cent.
In regards to CRELs, the outstanding value of loans reached MOP169.5 billion, down 0.4 per cent from a month before and up 1.4 per cent from 2016.
Residents who acquired loans for the acquisition commercial real estate amounted to 89.7 per cent of the total, representing a 0.7 per cent drop from February 2017, while loans attributed to non-residents rose 1.7 per cent.
The MACM had not replied to further enquiries from Business Daily by the time this story went to print.