Last month Ambiente Properties conducted another of their series of investor tours to Hengqin Island, in conjunction with Hengqin resident, American investor and consultant Matthew Ossolinski of GW Investment Consulting. It needs to be stated upfront; these tours are not for selling properties or soliciting investment. Their aim is to encourage those living here and overseas to spend some time understanding Hengqin, its relationship to both Macau (and Hong Kong), the transportation infrastructure, its economic and political underpinnings and the supply-demand equation that exists in Mainland China for the future Hengqin product.
“Hengqin will be the biggest game-changer for Macau since the 2002 liberalization of the gaming industry,” asserts Ossolinski. “The island today reminds me of the Cotai Strip in 2005: large-scale construction projects, big plans that seem outsized for their day, a general lack of awareness among international investors, and scarce mechanism for communicating those plans to the outside world.”
A free-trade zone and three times the size of Macau, Hengqin was once a sleepy rural backwater with duck farms and oyster-beds. It was only about 12 or so years ago that we’d go over by sampan for a slap up seafood lunch and then a stroll through narrow village streets. The place will soon have more than 10,000 hotel rooms and more in the planning! That will initially add an ther one-third to Cotai’s room capacity.
Supply-constrained Macau now has around 38,000 hotel rooms – compared with Las Vegas’ 167,000 and Orlando’s 122,000. Hengqin will deliver tens of thousands more hotel rooms to the Macau mix, with the added contribution of family-themed, non-gaming attractions of Orlando proportions.
The build out of transportation infrastructure is mind boggling. China’s high-speed rail will run to Hengqin. An underground train station and new Hengqin-Macau border facility are expected to begin opening incrementally this year with a capacity for 80 million passengers and crossings per year – the biggest in the world. (In comparison, the current Gongbei border handles around 15 million crossings per year). Macau’s much anticipated LRT will eventually run to this facility too.
Then there’s the Hong Kong-Zhuhai-Macao Bridge highway; the mainland landing point will be at Hengqin giving it access to Hong Kong airport. A rail and highway bridge will extend from Hengqin to the expanding Zhuhai airport. So Hengqin will effectively be served by three international airports.
“In the next few years, we will see Hengqin grow into one of its planned roles: a transportation hub for the western half of the Greater Bay Area,” says Ossolinski.
Despite these major infrastructure projects still being in the works and not yet operational, Phase 1 of Hengqin’s Chimelong Ocean Kingdom theme park took in 10 million visitors last year – the most in Asia, outside of Japan. Phases 2, 3 and 4 are under construction. At last count, there were 89 active construction projects on Hengqin.
Phase 1 of the Novotown tourism resort is expected to open shortly. This first phase (comprising only 13 percent of the total project’s land) will include a Hyatt Regency hotel, Lionsgate and National Geographic experience centers, performance venues, and cross-border bus terminal. A 1,600-room, internationally-branded hot spring resort opened its first phase last year. The Zhuhai International Convention & Exhibition Center is visible from Macau and contains a 548-room Sheraton, 454-room Huafa Place hotel, and recently opened luxury 250-room St. Regis.
Macau businessman David Chow has built the Portuguese-themed Legend Ponto Square shopping mall, structurally completed with a stated opening date of this year. Shun Tak Holdings is constructing a mixed-use project, adjacent to the future immigration facility and comprised of hotel rooms, office, and retail space. Galaxy Entertainment Group’s Hengqin hospitality/resort project has not yet broken ground on its 2.7 square kilometers of land, earmarked for yet more hotels and theme parks.
“New buildings can be seen sprouting up on Hengqin when viewed from Macau. What is less tangible, but more significant, is the underground city that already exists: completed train tunnels, moving walkways, parking lots, utilities infrastructure, retail space – all interconnected,” explains Ossolinski.
There are still some questions yet to be answered: how will Hengqin impact Macau’s gaming and hotel properties and in turn effect their share prices, their annual visitation numbers, the potential mix of visitors, and when will these changes start taking effect? What’s the likelihood of Hengqin being turned into a special zone that allows companies to operate casinos there? When will some kind of “critical mass” be achieved in Hengqin which results in attracting a substantial number of visitors that would otherwise not likely have visited Macau? How will the rise of Hengqin as a tourist destination affect the central government’s policies on visa requirements for mainlanders visiting Macau? Will Hengqin pioneer duty-free shopping and so impact Macau’s retail sector? When will Macau residents, long promised, be able to drive to Hengqin without having to go through the time consuming hoops of getting a China number plate?
Time will tell.
However, it is clear that from the moment in 2009 when then-Vice President Xi Jinping launched Hengqin’s ‘special’ status, the Chinese central government’s support and vision of the island have not wavered.
“With Hengqin playing a linchpin role in Macau’s economic diversification, combined with its status as the only special zone in China connected to both the Macau and Hong Kong SARs, some have said that politically Hengqin is ‘too big to fail’.”