Retail properties

US$50 million Macau fund injection shows confidence in city

Fund manager raises US$50 million capital injection for food, beverage and retail units as sales grow in a strong economy

PUBLISHED : Wednesday, 19 September, 2012, 12:00am
UPDATED : Wednesday, 19 September, 2012, 3:19am

Sniper Capital, a manager of real estate funds invested in Macau, is raising a capital injection for its fund that invests in the food and beverage industry and retail properties in view of the strong economic fundamentals in the city.

The US$50 million was being raised for the existing fund, said Tom Ashworth, principal of Sniper Capital, which manages three funds - the Macau Leisure Income Fund and the Macau Sniper Fund, both of which are private closed-end funds; and the Macau Property Opportunities Fund (MPO), which is listed on the main board of the London Stock Exchange.

Sniper is now in talks with investors, who will inject US$50 million into its Macau Sniper Fund, focusing on food and beverage business. The fund also operates and runs retail shops, according to the company.

Sniper was confident about the outlook for Macau's retail sector in view of its record of strong growth in retail sales, Ashworth said.

Data released last month by the Macau Statistics and Census Service showed that the value of retail sales for the second quarter of 2012 totalled 12.74 billion patacas, up by 30 per cent year on year.

Sniper has an impressive track record with its property investment in Macau, according to Ashworth, and its London-listed Macau Property Opportunities Fund recorded an increase in adjusted net assets of 70 per cent from 2006 to 2012. The prime asset in the fund is The Waterside, its en-bloc tower located in One Central Residences. Sniper bought the tower from developers Hongkong Land Holdings and Shuk Tak Holdings in 2006.

The Waterside has now reached more than 90 per cent occupancy on the back of positive demand and limited supply of high-end luxury apartments for lease in Macau. About 70 per cent of the tenants are businessmen or VIP room operators from the mainland.

Monthly rental at The Waterside is up from HK$13 per sq ft in 2010 to present levels of HK$26 per sq ft - the highest residential leases in Macau.

"You get what you pay for," said Ashworth, referring to what he called top-class services and facilities for tenants.

He expects rents in the development to increase to HK$30 per sq ft next year on the back of the city's solid growth momentum into 2012 after ending last year with a GDP growth rate of 21 per cent.

International property consultants also passed a vote of confidence in the Macau property market, which is backed with a tight labour market, a high GDP per capita and the government's strong fiscal position. "One thing the Macau government does not lack is cash," said Ashworth.

Savills believes that home sales will continue to trend upward in 2012, with more investors eyeing long-term capital growth and steady rental returns, despite the global economic uncertainty.