Fund to spend HK$1b building 20 blocks in Macau
Hong Kong-based Telok Real Estate Partners plans to spend a projected HK$1 billion over the next three years building up to 20 small- to medium-sized residential projects in Macau.
After the successful launch in 2010 of its second residential project, Verde, to address the housing needs of younger homebuyers, the boutique closed-end opportunistic investment fund aims to become a more aggressive player in the mass home market.
'The fund has bought a 2,000 square foot development site and negotiation for another similar-sized plot is to be completed,' said Telok partner Philip Pang.
Each of the development projects involves building 30 or more flats of between 400 and 600 square feet in size, and requiring a total investment of about HK$50 million. 'Over the next three years we hope to build 10 to 20 such mass residential projects,' Pang said.
In 2009, the fund spent about HK$88 million to build the seven-storey Verde, a single residential block with 68 one- and two-bedroom flats between 424 and 1,150 square feet in size. Current secondary market prices at Verde are HK$4,000 per square foot, up 48 per cent from the price of HK$2,700 per square foot when the flats were launched in 2009, Pang said.
The success of the development was due to the rapid economic growth in Macau, he said, which had been fuelled by the transformation of the former Portuguese enclave into Asia's gaming and entertainment holiday destination. The jobs created to support the gaming and tourism sector had in turn brought new-found wealth to Macau households.
For instance, it was now common to see a couple working in a casino and earning a combined household income of HK$30,000 a month. 'And with such an income they can afford to buy homes of HK$3 million or so each,' Pang said.
To build its brand among these new homebuyers, Telok organised a creative entrepreneur contest in Macau in August last year to rejuvenate six ground-floor shops on Rua da Erva, the street on which Verde is located. Two winners of the contest would receive 15-month rent-free periods in two of the six shops to help start up their business.
Macau resident Ritchy Leong, 26, and three of her partners proposed using one of the shops to offer Japanese lifestyle products such as kitchen sets, tableware and home improvement items. Their proposal won the contest and became the first such store in Macau.
The prize of a rent-free period provided by the developer had enabled the partners to bring forward their plan to start the business by one year, Leong said.
'The monthly rental for a 600 square foot store will be HK$20,000 to HK$30,000 a month. Without a rent-free period it would have taken us another year to save enough start-up capital,' she said.
Within two weeks of the store opening, the partners had already met their sales target for the first three months, Leong said.