For those seeking a nutshell summary of Macao's real estate sector this year, we are breaking it down for you.

The recent sale of two connected residential lots in Fai Chi Kei for 1.4 billion patacas, coupled with The Praia selling for 2,300 patacas per square foot, has buoyed the local market.

Yet, the best news is yet to come, and should after the final transaction volume and value figures for the first quarter of this year come in.

As for the remaining nine months, an upward price trajectory is almost a certainty for both commercial and residential properties, be they luxurious or average ones.

Improved investment sentiment was found in the city's residential market following short-term uncertainty during the third quarter of last year, when the government bore mounting pressure arising from local residents regarding affordable housing, as well as the current real estate development approval process and land policy.

Three months into 2008, a string of positive news has created a "good atmosphere" in the residential market on the heels of progress in financing the Hong Kong-Zhuhai-Macao Bridge.

Moreover, the sale of two connected residential sites located in Fai Chi Kei attracted strong demand and aroused a lot of attention recently. One reason: The land sale was only the government's second land auction via public tender since the 1999 handover. Furthermore, the two land plots raised a total of MOP1.4 billion ($175 million) - about nine times more than the opening bid. The price achieved at auction demonstrates a continuingly strong market appetite for prime land sites.

Benefiting from such encouraging land sales, The Praia - located in propinquity to the above two sites - is likely to rise in value by 20 percent in the near term. The Praia's selling price was capped at 2,300 patacas per square foot when it was recently put on the market.

Reversing the softening demand of the third quarter of 2007, the number of residential units transacted was recorded at 4,830 units in the fourth quarter of last year, up 33.8 percent quarter-to-quarter but down 25 percent year-on-year, according to official stamp duty records. The total transaction value reached 11.59 billion patacas during the fourth quarter of 2007 - an increase of 57.7 percent quarter-to-quarter or 12.1 percent year-on-year.

Residential transactions for all of last year rose by 25.9 percent to 21,628 units, but more importantly, the transaction value surged to 120.3 percent year-on-year to 42.1 billion patacas. This indicates that price growth has outstripped volume growth.

Average residential capital values in Macao were up 3.1 percent quarter-to-quarter, or 28.9 percent year-on-year, to 1,314 patacas per square foot during the fourth quarter of 2007.

Macao's peninsula was priced at 1,220 patacas per square foot with an increase of 8.1 percent quarter-to-quarter, or 36.4 percent year-on-year.

Taipa appeared to be the most expensive residential area with average values up 7.5 percent quarter-to-quarter, or 35.7 percent year-on-year, to 1,834 patacas per square foot. That was followed by Coloane, with average values reaching 1,595 patacas in the fourth quarter of last year.

Vigers Research predicts that average capital values of the about-to-launch properties in the first quarter of this year will rise by 11.1 percent from the fourth quarter of 2007. With times looking tougher now, Macao is seen as a safer haven compared with mainland cities, such as those in the Pearl River Delta region.

The author is the managing director of Vigers Asia Pacific.

(HK Edition 03/27/2008 page3)