Composition Capital forms JV in Chinese gambling mecca

The Dutch group has entered into a five-year partnership with a developer to build apartments for first-time buyers in Macau, an area heavily dependent on gambling and tourism.

Composition Capital Partners has taken a bet on the residential sector in China’s equivalent to Las Vegas.

The Dutch firm said it had formed a five-year joint venture with a Macau-based developer to build studio and one-bedroom apartments to sell to first-time buyers currently “priced out” of high-end apartments.

Composition and its partner – which it has not named – have completed one investment so far, it said. Earlier this month, it invested in a project to develop 26 apartments in an in-fill location in Macau’s old town to be completed in 2013.
Director for Asia, Bill Shaw, said the joint venture would access very local, small-scale developments that were unattractive to many developers given the scale.

Of its new partner, he added: “Our partner has demonstrated the skills and experience required to deliver this strategy. In fact, we were attracted to this manager as they are one of the very few players in the market who could show us an excellent track record operating in this interesting niche market.”

Macau is on the southern tip of China and was first settled upon by Fujan fishermen and farmers from the Gaungzhou region of China when it was known as Ou Mun, roughly translated as “trading gate” for the Italian silk trade.

It is a Special Administrative Region, and, like Hong Kong, is treated by Beijing along the lines of “one country, two systems”. The tiny 30 square kilometer region has developed into a tourism hotspot, with casinos featuring heavily, and is growing by building on reclaimed land and diversification.

Some firms have structured whole funds around the special region’s attractions. Hong Kong-based, Sniper Capital, for example, last year launched the Macau Sniper Fund, hoping to attract $100 million in equity investments from high net worth individuals, private banks and sovereign wealth funds to capitalize on what it termed a lack of “quality non-gaming leisure

Macau does have a central business district. Indeed,in May, US private equity real estate firm, Westport Capital Partners, and Hong Kong-based developer Tenacity Real Estate Group sold office building, 39 Macau, to an undisclosed buyer for HK$970 million (€88.74 million, $125 million) in May.