Apartments in Macau? Be prepared to spend large sums
Macau is the most popular gambling destination in the world. Thanks to its booming casino industry, the special administrative region of China is now also one of the most expensive places to live in the world. Home of 33 casinos, Macau attracts visitors from China and across the globe in the billions. About 600,000 natives make their home in the small region, but it's getting more difficult for people to find affordable housing there due to the territory's soaring cost of living.
Macau Tourism Squeezing Out Locals
Unlike America's Atlantic City, Macau is flourishing. The end to its growth is nowhere in sight. Over the next several years, the tourism industry plans to add another 17,000 hotel rooms to the city's sparkling gambling landscape. At the same time, less than 5,000 affordable living spaces will be built for the citizens of the area. At this time, an apartment in Macau costs about $500,000. A realtor from the area commented that only four years ago, a new home in the area cost significantly less than that, around $125,000. At this rate of inflation, some Asians who had wanted to move to, or continue living in, Macau may find it necessary to relocate to another area.
Inflation Will Continue to Raise Prices
Housing isn't the only living expense set to escalate in Macau. In February of 2014, the inflation rate in Macau was measured at 5.65 percent, according to the government's Statistics and Census Service. Over the past 15 years, the area's inflation rate dipped to -3.65 in 1999 and peaked at 9.49 in 2008. Clearly the cost of living isn't headed back to where it was in 1999 any time soon. Even so, the resident population is expected to expand 20 percent by 2016, to about 700,000 residents. Most of these residents will be millionaires and billionaires who can afford to invest in Macau's lavish construction projects.
Competition for Working Class Housing
Just last month, 400,000 home seekers competed for the chance to live in one of Macau's 1,900 open, affordable properties. A local lawmaker complained that the government isn't doing enough to accommodate working class people's needs and accused Macau officials of siding with real estate tycoons over their own people. In light of these events, many Chinese have decided to seek new homes in affordable Hong Kong and even Thailand.
Gaming Revenue: Soaring Alongside Housing Costs
Increased housing costs in Macau seem to be mirroring the region's ever-escalating gaming revenue. Gaming revenue totaled nearly $45 billion in 2013, more than three times the revenue seen in Las Vegas. Other gambling hot spots across the globe cannot keep up with Macau, including Singapore and Australia.
The trends of increased housing prices and increased gambling revenue seemed to intertwine themselves back in 2009, when Macau's gambling industry really began to take off. The question on many residents' minds at this point is when, if ever, these two trends will break away from each other.
Casino Worker Shortages in Macau
The demand for casino workers will continue to rise as the gambling industry grows in Macau. New casinos that are projected to open in Macau over the next three years will require thousands of dealers. Experts estimate, however, that only about 700 locals will be available for the jobs each year. Linda Switzer, retail VP for MGM in Macau, said she has “great empathy” for the locals. Job demand is high, cost of living is high, but income is comparatively low. At the same time, housing is available only to the wealthy, as developers seem to be focusing mostly on luxury housing for the moment.
Public Housing: A Possibility on the Horizon
The government has not committed to fixing the housing problem in Macau, but says it will be mindful of citizens' needs as time goes by. Public housing and the release of government land for the construction of affordable housing are possibilities for the future, but no individual has agreed to make this part of the action plan right now.
Macau's Future Gambling Halls
A brand new hotel/casino resort called Lisboa Palace is set to open in Macau in 2017. The $4 billion facility will host 700 table games and three hotels. American casino mogul Steve Wynn has plans to open a signature facility in Macau in 2016. Wynn has said that his 1,700-room facility will hopefully become the “conversation piece of Asia.” Ian Coughlin, president of Wynn Macau, has predicted that “gambling won't go out of fashion.” Coughlin's prediction is clearly an understatement for the Asian region, although gambling industries in other parts of the world have not been so fortunate.
Seeking to Attract the Middle Class
Even though Macau's housing market favors the rich, Macau's casinos are focusing now more than ever on the middle class. Right now, two thirds of Macau's revenue comes from high rollers (read this) who commute to the area from mainland China via junkets. President Xi Jinping, who came to power in March of 2013, has cracked down on the junkets since his rise to presidency, and casino administrators have taken notice of this.
Tourism expert Glenn McCartney said the successful Macau casino system is "far from broken," but that Macau casino bosses are wise to avoid keeping "all eggs in one basket." The average bet in Macau is around $100, meaning that casino visitors are prospering, but the bosses know it certainly won't hurt for some of the destinations to become more family friendly.
Macau is the only place in China where gambling is legal, which could explain why the industry has enjoyed such wild success. The market in small, but the payoff for casino executives in Macau has been huge. It's a success story that American gambling proponents like Chris Christie would be jealous of, although the cut-throat housing market is not something for which most Americans would cheer.