Two Way Hard Three | Las Vegas Casino & Design Blog

January 16, 2007

Hotel and Casino Observations from Macau: January 2007

Posted by Hunter

Thanks again to Chris, our friend in Hong Kong, who checks in frequently with new info on progress in Macau. Keep reading after the jump to get the latest on everyone's favorite S.A.R.

Updates on the Sands, Galaxy, Cotai, the condo market and more.

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* There is simply no way that Crown Macau will open on April 28 as announced. There are just too many parts of the building that appear nowhere close to completion for them to finish both the building and the interior fit-out to a high degree of quality, train staff, iron out any wrinkles and be ready to open and operate to a self-proclaimed "6 star" standard in 3 and a half months. The end of Q2 is also very ambitious.

* They are still at the piling / foundation stage for City of Dreams.

* Other than the Four Seasons site (which seems to now be moving beyond foundation work to the early stages of structural work), progress on the other LVS sites still appears to be negligible.

* I hear that there will be a second tower at Galaxy Starworld identical to the first tower, to be built in the space immediately behind the first tower. Foundation work is already well-advanced.

* The main floor of the Sands was absolutely heaving with people when we visited at about 2pm on Saturday. It was impossible to walk through some areas there were so many people. The Sands hotel tower is now roughly 30 stories high.

* Apartment prices in Macau continue to rise. In Taipa, prices of remaining apartments at "The Manhattan" (by far the best quality development in Taipa – and perhaps the only international standard development to date, though only small in scale with 175 apartments) range from roughly US$385 to US$500 per square foot depending on the floor. They are holding back on sales of the "south tower" - wouldn't be surprised if the whole block is sold to a fund.

* New mass-produced and decidedly average apartments nearby (ie, those at the Shun Tak "Nova Taipa" development) are selling for an average of around US$300 psf. On the Macau peninsula, there is almost nothing new selling for less than US$250 psf, with prices for new decent quality apartments generally ranging from US$250 to around US$400 psf.

* At the top end of the residential property market, "One Central" (which will be adjacent to MGM Grand, but not scheduled for completion until late 2009) is selling for up to US$800 psf and some agents firmly believe that prices in the secondary market (yes, there is a strong secondary market for yet-to-be-completed apartments) could reach HK$10,000 or roughly US$1300 psf this year. This is likely to be the most relevant benchmark used by LVS when it commences sales of its own apartments. Apart from The Manhattan, there are no new residential developments due for completion in Taipa prior to the opening of Crown and the Venetian, so it probably isn't a stretch for LVS to look towards the high end of its price expectations when it starts sales (in their investor presentations they have pegged US$1400 as the high end).

* Am wondering what's going to happen to the existing Mandarin Oriental once the new Mandarin Oriental (part of the "Once Central" development) opens in 2009. Stanley Ho owns the current Mandarin Oriental, and it sits on a prime site right next to the Sands.


Read archived comments (4 so far)
January 17, 2007 2:33 PM Posted by Mike E

Chris, thanks for the updates.

I distinctly remember my parents asking me some 18 months ago what I thought was an excellent investment opportunity and my response was Macau real estate. They blew me off. Sigh...

January 17, 2007 10:56 PM Posted by Bert

Thanks Chris for the update!

There is definitely a huge slowdown in construction in Macau! The main problem is getting qualified high level contractors of which there are few, and even getting them from China or other parts in Asia is difficult as using them causes costs to skyrocket as Crown Macau and Venetian Macau have found out.

Crown Macau will open on April 28, but it will be a soft one with the casino opening first. They may open some parts of the hotel, but expect the full completion would not be until Q4.

Wynn Macau and Galaxy Grand Waldo also have the same problem as they still have contractors fitting out some floors of hotel rooms. This is pretty standard now, as there aren't just not enough contractors! In fact Wynn Macau had to delay Phase two to Q-3 for the same reason.

The Grand Lisboa is doing the same thing, having a soft opening planned for February 16, where only the casino will open. MGM Grand Macau also is facing delays and cost overruns and cannot see them opening until late Q-4.

The City of Dreams is still a risk as the Macau Government has still not released the site, so progress right now is very slow!

It has already been rumored that the existing Mandarin Oriental will be turned into a casino.

As for apartments, they are over-priced, mostly of poor quality and standard, and can see a similar collapse in the market coming as back in 1999-2001 after hand-over. Most locals can't afford them and as usual they are mostly bought by speculators!

February 6, 2007 2:07 PM Posted by detroit1051

Chris in Hong Kong, do you follow gaming suppliers at all? If you do, how are VNX products doing in Macau? VNX has had many problems with it shufflers, but I'm wondering whether things will change now that Melco's Elixir is in the picture. Thanks.

February 6, 2007 6:01 PM Posted by Chris B

Sorry Detroit I've got no idea.