Macau: a Gamblers Paradise, China's Las Vegas

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Still Hot Property

(Posted: 02/01/06) Locals not sure about the water, but foreigners dive straight in

While local buyers seem to be taking a breather, the current slow down fails to deter global players pouring money into the Macau property market.
Despite the falling residential transaction volume, foreign interest in Macau shows no sign of fading, says Savills Consultancy limited. The company did 87 major valuations here in the last 12 months - 40 per cent for investors from Hong Kong and other parts of the world.

"The number of requests didn't fall even in the run up to Christmas," says Franco Liu, Associate Director of Valuation and Consultancy, "this type of activity shows that the market remains attractive."
The majority of the valuations involve blocks of buildings and sites. In many cases, the investors are planning to create deluxe properties that are set to outclass the existing luxury flats in Macau, says Franco Liu.
"They will adopt international design standards." For instance, the new projects will probably feature more spacious dining rooms with a smaller number of bedrooms, a departure from the local penchant for numerous bedrooms and tiny dining areas. They will also place a greater emphasis on the amenities both inside and outside the apartments, he says.

Logging on to the website of MacauLand.com, you can get a glimpse of what the future luxury flats will look like. It contains promotional information about the Manhattan, a "premium" property project in Taipa. It promises would-be owners "soaking bathtubs", "rainforest showers" and "built-in wine refrigerators". The offerings at the club house include jacuzzis, an outdoor pool, spa treatment rooms, gym and yoga studio and outdoor barbecue terrace. The website also boasts world-class management services, to complement the top notch facilities.
The Manhattan is the latest indication of the robust foreign investment interest in the Macau property market. United States based Citigroup Property Investors bought the development in a joint venture with MacauLand.
CitiGroup Property Investors is joining a growing list of global players who have spent money on Macau property, says Jim Ng, Associate director of Investment at Savills. They include , Morgan Stanley, Henderson Land, Hong Kong Land, Lippo and Cheuk Nang.

Ng suggests locals are not as optimistic as foreigners about the economic future. "The foreign investors are very confident about Macau because they know the experience of Las Vegas. It turned from a desert into a tourist destination. Macau already had a reasonable infrastructure."
"Even though Macau's internal consumption is weak, one million square feet of retail space are being built in Macau. The developers are after the convention business. It really shows how optimistic people who are familiar with Las Vegas are about Macau."

He says that judging by the valuation assignments handled by Savills, foreign investment funds are very keen to invest in Macau, and one even spent 2 million patacas on soil testing before signing any land contract.
Most of the announced projects target highly-paid expatriates and wealthy locals. There are 16,959 up market units planned, according to the Lands, Public Works and Transport Department, of which 7,052 are under construction with the remainder pending approval.

Developers say they are not worried there will be an over supply.
San You Development Company whose portfolio includes Kingsville, Greensville and Hillsville is the seller of The Manhattan site in Taipa. It is also developing Gold Cove, a high-end residential and retail complex, in Orient Pearl District, where the Hong Kong-Zhuhai-Macau bridge link will probably be built.

Gold Cove has 700 luxury residential units, serviced apartment sand a shopping mall, and is scheduled for completion in 2008. Sammy Wong, executive director, of San You, believes that supply is still catching up with the demand in the high sector of the luxury market. With an influx of well-educated expatriates, the demand for quality housing will go up too, anticipates Mr. Wong.

"Unlike Hong Kong, it is not uncommon to live in a 1,000 sq foot apartment in Macau. Can we say they are all luxury apartments?" says Mr. Wong. "There are many criteria. In reality, there are not many genuinely luxury apartments in Macau and the demand is soaring."

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