Die is cast: Opening of MGM China’s new casino on Cotai Strip to boost Macau leasing market
Rents to increase as many expatriates will be employed by the casino
The opening of MGM China’s US$3.4 billion resort on the Cotai Strip in January 2018 is expected to boost leasing demand as more expatriate executives start living in Macau.
MGM Cotai, comprising 1,390 hotel rooms and almost 31,000 square feet of meeting space, will considerably increase the number of MGM’s employees in the former Portuguese colony known for its string of high-profile casinos.
MGM China, co-chaired by billionaire Pansy Ho Chiu-king, the daughter of gaming tycoon Stanley Ho Hung-sun, employs close to 6,000 people, 75 per cent of whom are from Macau. The opening of MGM Cotai will easily double that number.
The mega development, which took five years to build, could create leasing demand for between 500 and 1,000 units from casino staff, said Thomas Lam, head of valuation and consultancy at Knight Frank in Hong Kong.
“The demand will come from the soon-to-be opened resort’s operational staff, such as expatriate managers who usually come from Las Vegas in the US, Hong Kong and Southeast Asia,” he said.
With expatriate staff accounting for one third of the casino’s workforce, all new or semi-new developments in Cotai will benefit.
“In the short term, probably the rent will rise by about 5 per cent next year because of the new hotel opening,” Lam said.
According to consultants JLL, the most obvious evidence of the growth in rent can be seen in the One Oasis development in Cotai South, where leasing rates have risen by about 5 per cent as some of the employees have already taken up residence.
“This is because of its proximity to the Cotai Strip and Hengqin island in Zhuhai,” said Gregory Ku, managing director of property firm JLL in Macau. The sparsely populated Hengqin island is known for its beaches and green cover.
Rents at One Oasis start at about HK$9,500 a month for a 640 sq ft flat and go up to HK$12,500 for a 1,200 sq ft unit.
For about HK$9,500 to HK$12,500 a month in Hong Kong, flats ranging between 530 sq ft flat and 710 sq ft can be rented in the distant New Territories areas of Tin Shui Wai and Sheung Shui.
The other locality popular with expatriates in Macau is Taipa. An 860 sq ft unit at the Jardim Hoi Wan scheme in the area can be leased for HK$8,000 a month, or a 680 sq ft flat in River Let can be had for HK$7,000.
However, JLL noted that about 1,500 new units would be added to the leasing market next year, which might put some downward pressure on rental growth in the city.