Macau’s gross gaming revenue (GGR) is expected to outperform market forecasts in 2026, with analysts at CBRE projecting stronger-than-anticipated growth driven by resilient consumer demand and ongoing investment in the city’s tourism and entertainment offerings.
According to CBRE analysts John DeCree and Max Marsh, Macau GGR is forecast to expand by 8.3 percent year-over-year in FY26, surpassing consensus estimates of 6 percent.
The analysts said the current trajectory suggests that consensus expectations may be too conservative. Following a 14.2 percent year-over-year increase in the first quarter of 2026, GGR would need to slow sharply to just 3.5 percent growth for the remainder of the year to align with consensus projections—an outcome they view as unlikely.
‘Macau GGR should top FY26 consensus,’ the analysts noted, citing improving macroeconomic conditions in China and continued recovery in visitation, particularly within the base mass segment.
Despite the positive outlook, CBRE highlighted a disconnect between Macau’s operational performance and equity market valuations. U.S.-listed Macau gaming stocks have declined by an average of 14 percent year-to-date, while Hong Kong-listed peers are down 10 percent over the same period.
The analysts attributed this divergence to two key concerns among investors: uncertainty over the sustainability of growth and pressure on margins due to rising operating expenses and heightened competition.
Valuations also remain below historical levels, reflecting investor caution despite improving market fundamentals.
Opex pressures expected to stabilize
Concerns over operating expenses intensified in late 2025, as promotional spending and costs rose across the market. Commission dollars increased 21 percent year-over-year in the fourth quarter, reaching 19.2 percent of GGR, while non-tax operating expenses climbed 8.6 percent.
CBRE noted that the increase in promotional activity has been driven by a limited number of operators seeking to regain market share, alongside concession-related investments.
However, the analysts expect these pressures to ease in 2026. ‘Promotional activity should remain elevated but stabilize,’ they said, adding that much of the recent cost inflation is now embedded within operators’ cost structures.
Recovery supported by China stimulus and tourism investment
Over the near term, CBRE expects Macau to benefit from broader economic support measures in China, where GDP growth is targeted at 4.5 percent to 5 percent. The analysts believe Macau’s gaming sector is likely to grow at a faster pace than the broader economy, supported by targeted stimulus and continued investment in non-gaming attractions.
These developments are expected to drive increased visitation, particularly from the mass market segment, which has yet to fully recover to pre-pandemic levels.
Melco seen as undervalued with deleveraging upside
Melco Resorts & Entertainment has been identified by CBRE as a preferred pick, supported by its underlying fundamentals, valuation, and ongoing deleveraging efforts. Analysts noted that the company’s shares remain ‘oversold’ following a weaker-than-expected fourth quarter of 2025, which was impacted by higher operating expenses linked to key events and increased trademark fees at City of Dreams Macau.
Despite these headwinds, Melco outperformed the broader market in 2025, recording a 25 percent increase in Macau property EBITDA, significantly ahead of the market’s 6.5 percent growth. Its GGR also rose 11.9 percent, exceeding overall market growth.
In the period ahead, CBRE expects Melco to maintain a disciplined approach to profitable growth, with EBITDA projected to rise modestly in 2026. The analysts also see scope for valuation improvement as the company reduces leverage, potentially paving the way for dividend reinstatement and enhanced shareholder returns.
