he tax-haven country has a vibrant gaming and tourism industry that collectively generate more than 50% of its GDP, while clothing constitutes about three-quarters of its exports, given its close proximity to key trading channels.
The country also appears well-positioned for the future, with Chinese economy continuing to hum along. Meanwhile, domestic programs also promote success and include free education for 15 years, free healthcare via one major public hospital, private healthcare options through one major private hospital, and defense and foreign affairs handled by China.
Macau’s gaming industry has historically been operated under a government-issued monopoly license by Stanley Ho’s Societade de Turismo e Diversoes de Macau. When the monopoly was dissolved in 2002, six licenses were granted to a number of casino operators, including several from the US Las Vegas strip, like Wynn Resorts, Galaxy Entertainment and MGM Mirage.
Recently, Wynn Resorts established its subsidiary in the country dubbed Wynn Macau, which is trading on the Hong Kong exchange under the symbol 1128. In sharp contrast to casinos on Las Vegas’ strip, Macau-based casinos continue to generate significant revenues. In fact, revenue growth was reported to be more than 60% higher in January 2010 compared to the prior year, versus declines in the U.S.
While gambling is outlawed in China, the government has allowed Macau to exist as a special district for legalized gambling. As a result, the country enjoys a unique position as the entertainment capital of China, which itself is seeing a booming middle class population. Over the coming years, this growing wealth could continue to propel Macau’s gaming sector even higher.
Macau’s real estate market is also experiencing significant growth as workers continue to pile into the country. Macau Property Opportunities Fund is designed to invest in high-end residential, retail and commercial properties to capitalize on the booming economy – and so far, it appears to be successful.
Revenue growth over the past year has been in the mid-to-high double digits, while the fund’s portfolio remains relatively conservative. The highest loan-to-value (LTV) loan in its portfolio is just 60%, while its average remains at a very low 23.8%. These assets include three residential properties, one mixed-use property and one industrial property.
With Macau’s economic growth pegged to continue its rapid growth in 2010 and beyond, demand for both residential and commercial properties shows no signs of slowing in the near future. As a result, investors may want to take a look at this relatively undiscovered play on the country’s core assets – it’s real estate.