By Lucy Scott

Sniper Capital: taking aim at Macau

Sniper Capital was set up in 2004 to invest in Macau.

Its Macau Opportunities Fund, created to develop property in Macau and the Pearl River Delta in south China, listed on the London Stock Exchange's junior AIM market in 2006 and raised £105m of capital. Its South China Sniper Fund also invests in leisure properties in Macau. 

Shares in the Macau Opportunities Fund are trading at around £0.95 after hitting £0.50 earlier this year.

Tom Ashworth, a partner at Sniper Capital "In 2002, we began looking at Macau's potential, and two years later we founded Sniper Capital. With local salaries rising rapidly, there is demand for new, high-quality assets, such as One Central, and a need for affordable homes. We are building a block for first-time buyers called Rua do Laboratorio. The scheme cost $20m in acquisition expenses and is likely to cost $30m to develop. The sale prices for units in this development are $250,000-$300,000. 

"The planning process in Macau can take up to two and a half years. Senado Square, in the tourist district, took a couple of years to purchase from 17 different owners, and we eventually paid less than £350/sq ft.

"Property prices are 70% cheaper than Hong Kong, but this will not last. The Hong Kong-Zhuhai-Macau Bridge, which will be completed in 2015, will connect the west side of Hong Kong to Macau and the mainland city of Zhuhai.

"Warehouse rents are 80% cheaper there than in Hong Kong. We will be building a logistics scheme that will be 30 minutes from Hong Kong once the bridge is completed."

Macau: Firms gamble on Asia's 'Monte Carlo'

US gaming giants are seeking to raise billions through initial public offerings on the Hong Kong stock exchange to expand operations in Macau. In August, as gaming revenues surged by a record 17% on the previous year to $1.4bn (£857m), Wynn Las Vegas sold 25% of its stake in its Macau subsidiary and raised $1.6bn (£978m) on the Hong Kong stock exchange to fund expansion in Macau.

A few weeks later, Sheldon Adelson said he would seek to raise $2.5bn (£1.5bn) in a similar move. His firm, Las Vegas Sands, is looking to list its Macau assets on the Hong Kong stock exchange later this month. Adelson's 24-hour casino, the Sands Macau, opened in 2004 and the firm has a handful of others in the Cotai district of Macau.

Until the early part of the decade, Hong Kong tycoon Stanley Ho had a monopoly on gambling in Macau, but in 2002, the Macau government granted casino operating licences to overseas operators. There are now 28 casinos in Macau, although Ho's Sociedade de Jogos de Macau still has a 30% market share.

But the introduction of travel restrictions to Macau for residents in Guangdong province underlines the territory's vulnerability to policy changes on the mainland. However, Ashworth says, "One cannot underestimate how much demand there is from the mainland. We view the recent tightening as a healthy initiative to ensure that Macau avoids overheating and continues to grow at a sustainable rate."

"In 2006, gaming revenues in Macau beat the Las Vegas strip for the first time with $6.5bn," says Tom Ashworth, a partner at Sniper Capital. "But last year, that number doubled to $13.5bn. Within five years I think that number could expand to $20bn."

(Extract from Property Week, November 2009)