Welcome to Part 4 of the investment series.
Purchasing property in Macau is not a difficult process. However, before embarking on a property venture, it helps to gain a clear understanding of the steps involved.
We trust the following information can help towards demystifying the process and assist you in your planning.
Once you have identified a target property, the next steps are;
Obtain the Government Registration Document known as the “Busca”
Obtain a bank valuation on the property.
Check for outstanding rates and utility bills.
Do a comparative market analysis.
Complete a Promissory Contract.
Sign the Sales and Purchase Dead.
You can obtain this Certificate at the Macau Land and Real Estate Registry Office (Conservatoria do Registo Predial de Macau).
This document is not only invaluable when sourcing a bank valuation, but it also provides property specifications (the actual useable area etc) as well as owner’s details, registered address and whether or not the property is under finance.
The information may also help you to identify any illegal structures.
Be careful here and note that the loan amount is based on either the bank valuation, or the negotiated purchase price, whichever is the lower of the two.
Therefore we recommend that you should only make an offer on a property after you have obtained a bank valuation.
Interest rates vary from bank to bank, some banks will not loan to non-residents, so shop around.
Rates are still competitive, but the banks have a lot of requirements that must be met if they are to loan money. In general banks in Macau will loan you 50-80% of their valuation.
You may have to go back several years because bills can mount up and accrue. Be aware that outstanding bills are accrued against the property, not the individual.
Your agent will help you by providing the average price per square foot for the apartment complex/similar property.
This will allow you to establish what price you want to offer the vendor.
Negotiate the price.
This is a contract drawn up by your lawyer.
It will include; full details of the vendor, your own details as the buyer, the agreed price, any special terms and conditions of the contract and the completion date.
You will have to make a down payment at this stage, usually around 10% of the purchase price.
To complete the purchase of your property you will need to sign in person the Sales and Purchase Deed as well as the Mortgage Deed in front of a Macau Notary Officer.
The official documents will be prepared in Chinese or Portuguese and a further copy will be made in English at your request. Your lawyer will be responsible to attend all post completion, stamping registration etc.
Having found the property that meets your criteria and completing the negotiation process - remembering to only make an offer on a property after you have obtained your bank valuation - a deposit must be paid.
In Macau the initial deposit amount is usually 10% and the timing for final payment, whilst negotiable, is normally 30 – 60 days from deposit payment.
Bear in mind that after paying the deposit, if you withdraw from the contract the deposit is forfeited. Likewise, if the seller withdraws from the contract, they must pay back double the deposit amount.
There are also fees and taxes to be paid which we covered in last weeks articles “Who is Buying Macau? And What are the costs of buying?”.