When New York City-based developer Gordon Group Holdings decided in the early 1990s to create the 634,000-square-foot Forum Shops at Caesars Palace in Las Vegas, founder Sheldon Gordon met with a lot of resistance from retailers. They baulked at the idea that people would shop where they gambled. Yet, more than 14 years later, sales top US$1,300 per sq ft, making it one of the most successful shopping malls in the US. Today, Las Vegas has become a magnet for shopping. Including suburban malls and neighbourhood shopping centres, the city has about 47 million sq ft of retail floor space, of which only 3.9 per cent is vacant. Another 7 million sq ft are under construction, most of which will be completed within the next year, while a further 10.5 million sq ft is being planned for the coming three years. The phenomenal success of this gaming-retail business model has transformed the plans of developers around the world, and it's now firing the ambitions of developers, who are aiming to build between 5.2 million and 6.1 million sq ft of retail space in Macau over the next three years. However, where Las Vegas is still considered 'under-retailed', given a relatively high sales-to-space ratio, retail expert and Taubman Asia president Morgan Parker believes Macau is undergoing a 'condensed period of exuberance' that's likely to continue for years. Taubman Asia was set up in April last year as a division of Taubman Centres, a listed real estate investment trust with a US$6 billion portfolio of shopping malls in the US. The company is considering a number of options in Macau, including projects that make up the 5.2 million sq ft of planned retail space. 'I'm somewhat concerned about the amount of supply and the speed of the supply coming to market,' Mr Parker said. 'Macau is definitely a case of build it and they will come. That's the prevailing mindset at the moment. But I think you need to supply space in a responsible way. What I'm looking to hear is what retailers want. When they tell me they only want two or three or four stores in the next five years and I count the number of projects, something doesn't add up.' One of the key projects is The Venetian, a landmark integrated resort hotel by Las Vegas Sands, which will anchor the Cotai Strip, near Macau's new airport. It's a replica of the Las Vegas development of the same name and will open in the middle of next year. With about 1.2 million sq ft of net lettable retail space, The Venetian's Grand Canal Shoppes is expected to do for Macau what the Forum Shops have done for Las Vegas. Tenants that have committed so far include luxury brands such as Piaget, Emporio Armani, Mikimoto and Dunhill, and they number significantly more than the roughly 300 tenants previously announced, according to Stephen Weaver, president for Asia at Las Vegas Sands. 'To be fair, I understand and I accept the scepticism that people have [about the retail market] ... but they keep judging based on the existing customer and that's not our customer,' Mr Weaver said. 'I think the primary objective of the existing retail in Macau has been to service the local market - which every market has to do - and to supplement the main game, which is the casino. If you take a casino and put a dozen shops in the lobby, that's supplementary. It's not retail as a destination of its own. It's impulse purchasing. In our case, we're not looking for impulse purchases. We're creating a destination where people will go purely for the shopping.' No one knows exactly whether people in Macau will actually splash out on shows and entertainment, hotel suites, restaurants and fashion like they do in Las Vegas, but Mr Parker believes that, over time, Macau will be able to support a huge amount of retail. 'I'm an absolute believer in the synergy between gaming and shopping. I think that the shopping environment is a net beneficiary of the gaming. Gaming has proved in almost every context to be a people pump and one of the key ingredients as a retail developer is to have people,' he said. 'I believe that when customers go to Macau, they will be in the frame of mind to shop. You can't see it yet because the retail's not there. 'It'll be a supply-led situation. They'll bring in the supply and the demand will come to meet it. The question then is how much supply, what type of supply and what time period.' At the moment, a shortage of suitable shopping venues in Macau has led to many luxury brands being concentrated in places such as the lobby of the Mandarin Oriental hotel, where Louis Vuitton and Hermes are located, and the Yaohan department store, which is starting to look old and dated but boasts luxury brands such as Brioni. The recent unveiling of Wynn Macau has added a significant boost to luxury shopping, with brands such as Bulgari, Chanel and Dior, although there are only about a dozen shops. Terri Monsour, senior vice-president of retail at Wynn Las Vegas, said the tenant wish list for Macau was compiled based on Wynn's current partners in Las Vegas such as Chanel, Louis Vuitton and Dior, as well as what the company thought would best suit the demographic needs of its customers in Macau. Hermes will be included in the second phase of Wynn Macau, which will open next July. With shopping ranking ahead of gambling among reasons why people visit Las Vegas, Ms Monsour said there was no reason why people would not come to Macau to shop. 'What that does is it elevates the experience for the guest at the various resorts. And the more that happens in Macau, the more Macau will become a resort destination instead of just a gambling destination,' she said. Mr Parker agrees, noting that people will be more willing to spend when they win at the tables as they feel that it's someone else's money, as well as when they lose as it helps to take something home. 'You've got people there doing something in a frame of mind that is leisure or recreationally based. If you put shopping in front of them, there's a very high propensity to spend. People are in a mode to spend. When you go to Las Vegas and you see the people there - they're not all rich people necessarily - it's a wide cross-section of gamers. All of them have a propensity to spend because of the psychological state they're in. Gaming is all about fantasy fulfilment,' he said. But marrying gaming and retail is not necessarily a foolproof combination. A tour of Fisherman's Wharf reveals that many shops are still vacant, despite the prime waterfront location near the Sands casino. The site is vast, with both indoor and outdoor shopping, and visitors often need to be ferried on golf carts in order to reach their destination. 'I understand the premise for the development in Macau, but what I don't understand is who's going to occupy these malls. When I talk to retailers, they tell me that they may open two or three stores in the next five years,' Mr Parker said. 'Maybe the fact that it's new and there's nothing else will ensure its success. Macau's not an easy market to understand immediately. There's a very strong and compelling demographic story, a very strong and compelling tourism story.'