By  on October 16, 2006

Macao Special Administration Region of the People's Republic of China isn't the most enticing name for a retail and gaming mecca.

More and more retailers, however, are being lured to the tiny peninsula off the southeast coast of China. The appeal is in the sales potential of hundreds of millions of Chinese, forbidden from gambling on the mainland, who are within a relatively short plane flight of the former Portuguese colony. They are arriving in hordes and, more important, they are spending, even though most are still more interested in good bets than in luxury goods.

Real estate developers and investors have been quick to label Macao the Las Vegas of Asia, but so far, at least, Atlantic City may be a more appropriate comparison, retail brokers said.

Upscale retailers hope that once increasing numbers of middle-class Chinese become accustomed to and more familiar with buying luxury brands — aided by a 30 percent sales tax break, courtesy of Macao's "special administration" status — a presence on Macao will translate into a wider audience of shoppers on the mainland.

DFS Group, a subsidiary of LVMH Moët Hennessy Louis Vuitton, is constructing an 86,000-square-foot galleria of its luxury brands such as Hermès, Dior and Prada in the Four Seasons casino hotel. David Yurman and Dolce & Gabbana have plans to open in Macao in the next few years. Bulgari and Louis Vuitton are among the luxury brands that already have stores in casino hotels.

"Macao is a huge opportunity for retail right now," said Robert Futterman, chief executive officer of Robert K. Futterman & Associates, which markets retail space in Las Vegas casinos. "Retail and casinos go hand in hand, whether it's in Vegas or in Asia."

Casinos and hotels valued at about $12 billion are being built in Macao, according to the International Council of Shopping Centers. As an indication of the speed of the development, last spring Wynn Resorts announced plans for a $345 million expansion of the Wynn Macao, even before construction of the original resort was completed. The newest Wynn resort, which opened Sept. 8, covers 11 acres and has 600 hotel rooms, 100,000 square feet of casino space, seven restaurants and 28,000 square feet of retail space.The expansion will add two more restaurants and 85,000 square feet more casino space, and is expected to begin in the first half of next year. The Venetian Macao, when completed five years from now, is projected to have as much as 3 million square feet of retail adjoining the Four Seasons.

Macao's casinos, of course, aren't luxury's only gateway into the vast Asian market, just the trendiest. Hong Kong and Singapore have long been home to wealthy Asian shoppers and business travelers from the West. Singapore, where the resort and casino scene is slightly less developed than in Macao, is growing to meet increasing demand.

"Every day is like the day before Christmas in Singapore," said Jeffrey Roseman, executive vice president of Newmark Knight Frank Retail, a New York retail brokerage.

The Singapore government in May selected Las Vegas Sands Corp. to build and operate a $3 billion resort and casino on the Marina Bay Waterfront. The Marina Bay Sands is targeted for an opening in 2009. The company won a competition for the site with Harrah's Entertainment's Caesars Singapore, which included a retail component from Taubman Asia.

Taubman still has plans for New Songdo City, in South Korea, where it can potentially build 10 million square feet of retail. New Songdo City, under construction now and marketed as yet another gateway city by its developer, Gale International, is following in Singapore's footsteps with an all-English vernacular and Western-style mixed use of residences, shopping and entertainment.

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