China: Hengqin island

China: Hengqin island

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Henggin island is a massive destination level greenfield project next to Macau. Tourism plus some industrial elements. Excerpts from Reuters, South China Morning Post and China Economic Review.

Why develop Hengqin Island?

There’s hardly space to build more hotels in Macau to accommodate these visitors. The Chinese Special Administrative Region (SAR) has already filled in the water between its two large islands to create the Cotai Strip, with most of that land already apportioned to casinos.

Macau welcomed almost 30 million visitors last year, but the government’s plans to increase that number are being stymied by a lack of land and strained infrastructure and services.

The logic behind the development: Macau is running out of space and needs an area for spillover. Macau has only 28,000 hotel rooms compared to an average of 77,000 daily visitors,

Meanwhile, there’s ample room for building hotels and meeting spaces on Hengqin. The island has about 28 square kilometers of land available for development, according to Citi, although estimates vary. (While the island is at least three times larger than that figure, much of it is set aside under preservations efforts.) Most of the land that can be built on is still undeveloped. Chimelong will kick off broader hotel development on the island with its 1,888 room facility, to be followed later by the 1,200-room Cinese Hotel.

“Hengqin will provide vital support to Macau, which sorely lacks land for further expansion, while Qianhai [in Shenzhen] will lend support to Hong Kong”

The island is three times larger than Macau, where hotels and infrastructure have been stretched to bursting by an influx of 28 million visitors a year, and will be a mere 10-minute ride from western Macau and 30 minutes from Hong Kong after the Hong Kong-Zhuhai-Macau bridge opens in 2016.


Hengqin island Master Plan

Hengqin island master plan


Hengqin’s Chimelong Ocean Kingdom

Billed as the “Orlando of China”, Chimelong Ocean Kingdom is seeking to emulate the Florida city.

Chimelong Ocean Kingdom is one of two big projects springing up on Zhuhai’s biggest island. The 20 billion yuan (HK$25.1 billion) theme park, which will feature a 1,888-room hotel and China’s longest wooden roller-coaster, is just a stone’s throw from a University of Macau campus that is due to open this autumn.

The opening of the two projects will certainly put the 106-square-kilometre island, a former oyster bed, under the spotlight. But whether Hengqin can turn itself into a tourism, education, creative/cultural and traditional Chinese medicine hub and achieve its target of attracting up to 30 million visitors a year remains to be seen.

Hong Kong developers and mainland enterprises are taking a huge bet that it will succeed and are pouring hundreds of billions of yuan into transforming the virgin land into a holiday paradise.


Land Sales

In the past three years, 27 sites on Hengqin have sold for a total of close to 21 billion yuan.


Accessibility & Incentives

Hengquin is connected to Macau through two underwater tunnels. By 2016, it will also be linked to Macau in the east and Hong Kong to the north by a bridge. Rail services will also be extended to Hengqin.

The island is also hoping to lure business with tax breaks and new financial policies that include allowing companies to develop offshore business in foreign currencies and piloting the exchange of the renminbi, Macau pataca and Hong Kong dollar.


Too Ambitious?

But in typical Chinese fashion, development plans are exceptionally ambitious and far-reaching in vision. Authorities hope that Hengqin will succeed in a laundry list of sectors. Hengqin is one of the more recent of five “new areas” that receive preferential tax treatment and fierce government support. d others.

By the sound of it, authorities hope the island will be all things to all industries, which hardly seems unlikely. Macau is hardly an industrial center in the vein of Shanghai or Tianjin. Undoubtedly, if Hengqin brings in money from tourism efforts, it could support other industries. For now, developments in Hengqin that support gambling and related tourism seem predestined to succeed.

As, Hengqin Island is a long-term play, and its prospects are under appreciated. But with the only place in China where gambling is allowed rapidly running out of space, Hengqin’s supporting role seems to be a sure bet.

Images: BBC News and ThaiBizChina

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