Inside Asian Gaming

INSIDE ASIAN GAMING | November 2008 24 being the location of more dead and dying shopping malls than almost anywhere else in the country,according toMike Shedlock of SitkaPacific Capital Management,who writes about these things on a website called Mish’s Global Economic Trend Analysis . Macau has a few dead or dying shopping malls of its own, but they are all serving the local market, which is a world away from the shoppers being targeted by the likes of LVS on Cotai and Wynn Macau on the Macau peninsula. The good news from the viewpoint of this ‘new’ Macau is that it’s targeting a highly specialised sector. Most of Illinois’ ill-fated shopping centres were mass-market offerings in areas where the chances of deep-rooted success were marginal at best. They were places built during America’s out-of-town retailing mania in the 1970s that in hindsight coincided exactly with the beginning of the end of America’s post-Second World War industrial boom. Now China has taken over the US’ role as the factory of the world, and it’s the turn of newly enriched Chinese citizens to shop until they drop, notwithstanding the looming threat of world recession. The decision to build high end malls in Macau, a veritable mousetrap for some of the world’s most passionate gamblers and shoppers looks like what the LVS chairman Sheldon Adelson might call ‘a no brainer’. Hard bargain LVS has a reputation for highly effective deal making in selling or leasing real estate assets in general and retail space in particular—a technique known in the financial sector as ‘monetisation’. Of late though, LVS’s brand image has not been as powerful as hitherto, due to the well publicised challenges it, along with other casino operators, has had in interesting the shell shocked banking community in issuing it with fresh loans. Retailers also read newspapers and sense this is the time to drive the hardest possible bargain with LVS in the Macau market. “There’s always pressure in every market to keep rents down, but what we’re focusing on is getting the sales up,rather than getting the rents down,” explains Mr Sylvester. If LVS can support retailers in building their sales then everybody wins, he says. “We have base rents and we have percentage rents. With that percentage rent formula you need to see what the turnover is