“Hengqin development is a complement to the Macau market”

João Santos Filipe
[email protected]
Photos: Cheong Kam Ka
The development of Hengqin Island will bring to Macau’s doorstep more entertainment and light industry, which in turn will increase the value of the property market in the territory. Such is the view of Wilson Chung, Marketing Director of luxury residential project One Oasis
The sales of One Oasis flats has achieved considerable success with all units sold. What are the reasons for this success?
Wilson Chung: First, I believe the location of One Oasis is very important. This is a project where people feel they are living in a resort. One Oasis is just a few minutes drive from the Cotai Strip then add to that the fact that it is just next to the river and the mountain. It really looks like a resort. More importantly, we have internal facilities, like the clubhouse, which allows the project to combine the living style of a resort and a city. We were also helped by the property market, which has performed quite well these few years. So we combined a good project with good timing to achieve good results.
What’s the profile of buyers acquiring units in One Oasis?
Most of our buyers are Macau residents. They represent around 80 per cent of our clients. They have the purchasing power to afford these residential units. According to the government’s figures the ownership of houses in Macau is higher than in Hong Kong, which is over 70 per cent. This means that locals have spare money. Another 20 per cent of the buyers are from Hong Kong and Mainland China. But there are also people from other countries including Europe, America and Australia. There are, as well, Malaysian Chinese who bought property here because they want to invest in the territory.
After acquiring these units, do the owners actually live in them or are theying buy to rent or just as an investment?
Local residents buy the properties and most of them occupy them. Others see these properties as long-term investments. Also, many residents buy to rent because there are a lot of expats in Macau. These owners are interested in keeping the houses because they want to receive the income from the rent every month.
Focusing on non-local residents, such as Hong Kong and Mainland people, what is the use for them of the flats?
Half of the Hong Kong and Mainland residents keep the houses for themselves while the other half buy for investment. Now, of course, those people using the houses, given that the price of the properties has increased significantly, will consider selling. However, some are more keen on keeping the properties as a home resort. For example, Hong Kong people can come here during the weekend and instead of staying in a hotel they can stay in their property. The same happens with Mainlanders, who actually do this quite often when they visit Macau.
Is the rental value of One Oasis property enough to cover the investment of acquiring the flats?
The market value of these flats must be around HK$18 to HK$20 per square foot. For example, the one-bedroom units rents are around HK$10,000 per month. For a two-bedroom unit the rental value is between HK$16,000 and HK$18,000 per month, which is quite good. Now, if it is enough to cover the mortgage value, it depends on the time these owner acquired their units. For instance, if they bought in 2010, then the rental value can cover the mortgage payment and still generate profit.
The rental market is very important in supporting the development of the property market. One Oasis does quite well on the rental market because people have confidence in the project. They know if they do not want to live there, they can always rent the flats to other people and generate income from them.
How do you perceive such investment nowadays, considering the new wave of casinos opening in Cotai?
Prospects are good, mainly because One Oasis units are just a few minutes away from the Cotai Strip, where most of the resorts are concentrated. At this moment, there are 28,000 hotel rooms in Macau but in the coming two or three years the new resorts opening will create 20,000 extra rooms. These new resorts will also bring to the city lot of entertainment activities and with them people from the upper classes, such as the expats. There are, as well, local residents studying or living abroad who like the lifestyle of international communities. So, when these people return to Macau they will prefer to live in a place with this international environment, which can be found in One Oasis.
Twelve towers are already completed. Are there other plans for the development of the property?
We’re targeting launching the pre-sale of the last phase of One Oasis during next year. But this phase will take two or three years to be completed, as we’re still building the foundations of the project.
We’re also considering launching in the market during this year our special units in One Oasis Phase III. These units are already completed but haven’t been made available for sale yet. This decision will depend upon the market, as these units are priced at HK$15,000 per square foot for now, although we’re targeting a price of HK$18,000 per square foot.
Have you already determined a name and the design of this last phase of the project?
We’re still considering it. For the moment, the designation is the new phase of One Oasis. Whether we’re going to call it this in future we haven’t yet determined. We’ll announce it later.
How many housing units will this project add to the Macau property market?
It’s not yet decided. We’re still planning the flat mix. If we decide to construct more one-bedroom flats, then the project will add more houses to the overall market but if we want the flat mix to comprise larger houses then the number of units added will be less.
Will this new phase change the type of clients targeted or will the focus continue to be the high-end market?
We’ll continue to target the upscale market. One Oasis has created a luxury brand and living style in Macau and we will not change it.
Do you expect the new One Oasis phase to be impacted by the decline in gaming revenues?
We know that since May last year the gaming industry has been declining in terms of revenues. But we believe the sector will be strong in the mid-term because it is increasing the number of hotel rooms and creating an entertainment hub. At the same time, there is an effort to diversity the economy of the territory. I hope that during this summer we can see some improvement in the gaming industry. But I do not think there is a very clear relationship between gaming revenue and the prices of our properties. Gaming revenue may drop 20 or 30 per cent but property prices will never drop that much.
In fact, the whole property market has already been through a consolidation phase since the fourth quarter of last year up to the first quarter of this year. Now the second quarter is showing signs that the market is warming up again.
How much did prices drop during this consolidation period?
During the consolidation phase market prices fell between 15 and 20 per cent.
How much do you expect the market to grow from the second quarter on?
Now the market is recovering but a return to the time when prices were increasing 10 to 20 per cent ever year is not to be expected. In terms of luxury projects like One Oasis, we predict prices will increase between 5 and 10 per cent.
Is the luxury property market in Macau affected by the anti-corruption crackdown and the slowdown of the economy in Mainland China?
In the Macau property market the proportion of Mainland buyers does not represent a large share; instead, the largest share is held by Macau buyers. I may say that there is a small impact affecting Mainlanders that bought property here. However, most of them have enough economic power to hold their properties in spite of the slowdown of the economy. There is not a direct relationship of these factors with the market.
Anyway, we believe the Mainland market will continue to do well in spite of the slowdown. The economy may be growing 6 or 7 per cent now, while in the past it was growing above 10 per cent, but Mainland buyers have the purchasing power and so they are not that affected for the time being by the slowdown.
Did this consolidation also affect the rental market?
The rental market is rather stable and I believe there will be a steady increase in rental values because of the expats coming to work in the new casinos projects in Cotai. This increase will be driven by this demand. Also there are many local youngster getting married and moving out of their parents’ places as well as residents increasing their income and considering moving to better houses. These people will create demand in the rental market. At the same time, I believe many people will continue to buy houses here, and Chinese people are very keen on this; they like to invest in property because it is more stable than the stock market, which is always moving up and down.
It’s also worth mentioning that for the past few years the Macau property market was only supplied with 2,000 housing units. In the coming few years the supply will also be less than 3,000. This may continue to drive prices up.
The One Oasis project focuses on the importance of the Light Rail and the bridge connecting Hong Kong-Zhuhai-Macau. But these projects have been delayed. Has this affected the desirability of the property?
We offer to the people living here shuttle buses that run to Cotai as well as the Macau Peninsula. These projects are delayed but most of our residents have their own cars. We don’t control the public works but our residents are happy with our property because we offer enough parking spaces and shuttle buses. Our residents have good alternatives. Of course, the Light Rail may save you 10 minutes going to the Peninsula but our shuttle buses heading to the Peninsula only take 15 minutes. Another point is that from One Oasis you can easily access the three bridges connecting Taipa to the Peninsula. Our location is very good.
Hengqin is developing and a lot of property is being built there. How is this going to affect the market in Macau and One Oasis?
It is a complement to the Macau market. We don’t perceive it as competition. It will have a good effect on Macau not only because of the property market growing there but because of the whole development of the land, which will bring more facilities, like the University of Macau, entertainment facilities and some light industry. It is a good complement. We do not share the view of some people who consider Hengqin’s development will bring competition to the property market.
Is Hengqin an area where the developers of One Oasis may consider developing projects in the future?
At the moment, we are focused on One Oasis because of the new phase of One Oasis. It is a large area and people from the street can already see the construction site.
The government plans to roll out 28,000 housing units of public and economic housing. Do you believe this will impact the market?
In relation to One Oasis sales it will not have any impact because the people targeted are very different. Considering the market, there might be a little effect but not much because the type of people living in public housing and buying private housing are different. However, it is good for society to have these houses because they offer housing to different people.