Macau Shopping

AUSTRALIAN David Sylvester is well down the track towards his goal of turning Macau into the luxury shopping Mecca of Asia.

The former Westfield and Lend Lease executive has signed deals with more than 400 up market retailers who will lease over 80,000 square metres of shops in the $2.3 billion Venetian hotel/ casino and the nearby Four Seasons mall.

In total, Sylvester, who joined the Las Vegas Sands group in Hong Kong just over a year ago, has the job of signing up the equivalent of two giant Westfield shopping centres of retail space in some $8 billion of hotel and casino developments planned by the company for Macau.

And that's before he signs up another Westfield centre's worth of shops in the company's new $3 billion development in Singapore.

While Macau is pitching to become the casino capital of Asia, Sheldon Adelson's Las Vegas Sands group is also determined to use its Las Vegas experience to turn the city into the luxury shopping destination of the region in only a few years.

As vice-president of retail development for the company's Asian operations, Sylvester has been signing up retailers from around the world, initially for the 350 Grand Canal Shoppes which will line three faux Venice canals in the Venetian casino/hotel complex set to open in mid-2007.

The next goal has been an even more upmarket shopping mall in the Four Seasons hotel complex due to open in the second half of the year next to the Venetian.

In total, the Sands group is looking at some 3 million square feet of shopping malls over seven different lots in Macau to be gradually opened over the next three to four years.

The developments to be undertaken by the Las Vegas Sands group will line what is known as the Cotai strip, a strip of reclaimed land between two islands in Macau, which will also be the site of the City of Dreams, the $1.5 billion hotel/casino development to be built by James Packer's Publishing and Broadcasting and his Hong Kong partner Melco.

The Sands group was given a licence in Macau in 2002 as part of the Government's move to open up its casino industry to world-class operators, breaking with its image of seedy, low-rent gambling parlours operated by the legendary Stanley Ho, who had the monopoly on the business for 40 years.

Sylvester says the company's goal in Macau is to follow its Las Vegas model, where more than half the revenue comes from non-gaming sources such as retailing, conventions, hotels and entertainment. "Retail in Las Vegas has become one of the major focuses and it will be on the Cotai strip in Macau," Sylvester says from his office in Hong Kong.

"There will be enough critical mass of malls and a broad array of tenants to give people a reason to go to Macau for the shopping alone, without relying on the other elements. Some people will come just to see these malls."

Sylvester's last job in Australia was group general manager of the Australian operations of Singapore's Government Investment Corp, including Sydney's Queen Victoria Building and The Strand arcade. He moved to Hong Kong early last year to work with Jones Lang LaSalle before he was hired by the Sands group.

Sylvester says Macau is a greenfield operation when it comes to shopping malls. "Macau is very much in its infancy in the retail hierarchy. Until the Grand Canal Shoppes are open (in mid-2007) there won't be any shopping centre in Macau.

"All that has existed is strip retail or hotel foyer retail."

The Sands group is hoping to attract the millions of affluent people across the border in mainland China who are already starting to come to Hong Kong to shop and to Macau for gambling.

"They are a great customer base (the mainland Chinese) as Macau doesn't have a luxury goods tax like China."

But Sylvester says Macau will also appeal to upmarket Asian travellers as well as Australians looking for a new destination.

At the moment, he says, Macau's capacity to handle tourism is limited by the fact that it only has around 11,000 hotel rooms.

But as the new hotel/casino developments start to open (Packer's $350 million Crown Macau is set to open in May next year, just before the much larger Venetian, which will have 3000 luxury suites) Macau will dramatically improve its status as a tourist destination.

Sylvester says interest by upmarket retailers in signing up for the Venetian and the other Sands malls on the Cotai strip has been snowballing.

In April this year the company announced it had signed up more than 115 premium retailers taking up more than 400,000 square feet. Just over six months later, when it released its quarterly figures in Las Vegas last week, it revealed leasing had more than doubled.

"It's a very big retail rollout in a short period of time," Sylvester says. "We were going into uncharted waters, but now we understand it. We know how it works. We have worked out a formula and we know how to put it together. I thought it was going to be a lot tougher than it has ended up being."

Sylvester says the tenant mix in Macau will be different from Las Vegas as Asians are much more interested in upmarket European brands. "Americans tend to be focused on American brands, but Asians have much more of a focus on global retailers."

The Sands properties will surround the Packer property in Macau. The Venetian and the Four Seasons hotel, which will house the most upmarket retailing, will be over the road from the City of Dreams while the group is set to develop four other lots next to it with hotel properties operated by Shangri-La, Sheraton, Hilton and Fairmont/Raffles.

With so many retailers either signed up or almost signed up by his group, Sylvester says he finds it hard to think there will be too many left over for the Packer site, which will feature an "underwater themed" casino and four hotels, including a Hard Rock Hotel and a Crown.

"I'm not sure how much retailing they (PBL/Melco) are planning on doing," he says. "I would doubt whether our retailers would want to have a second store over the road. This is going to be an issue for anyone coming into the Cotai strip now. We have the first-mover advantage. We have secured the brands."

Sylvester says he has already signed up some Australian retailers for his Macau malls but cannot release any names yet. With so much space to be let, he is looking for more high-quality tenants. "We are looking all over the globe at the moment."

Sylvester says he is looking at taking the tenants who have signed up for the Macau properties into the group's new venture in Singapore's Marina Bay.

He says his experience in the highly competitive Australian retail market has given him the skills to undertake what must be one of the most challenging jobs in retail leasing anywhere.

"Australia is a very competitive market. The fundamentals of shopping centre management don't change wherever you go around the world. The things we learn in Australia about tenancy mix and market analysis are very transportable."

With shows such as the Cirque Du Soleil planned for the Venetian plus a 1.2 million square feet convention area and plans for major events such as basketball tournaments and international shows, Sylvester says Macau will become a complete new travel destination. "There will be so many different people will come for different sorts of reasons and experience things that you didn't think existed."