The Macau government has “underestimated” the economic impact from the closure by year-end of Macau’s 11 satellite casinos, says the Macau General Association of Real Estate.
That is in terms of the risk attached to outstanding loans raised by satellite-property investors, and the dependence of nearby small and medum-sized enterprises (SMEs) on foot traffic from those casinos.
The association estimates “over MOP50 billion” (US$6.19 billion) in loans are directly tied to satellite properties and their investors, with up to an additional “MOP20 billion” in loans tied to satellite-hinterland shops and other service providers.
That is according to comments by Ip Kin Wa, the association’s director, as cited on Thursday by Chinese-language outlet Macao Daily News. The president of the Macau General Association of Real Estate, Chong Sio Kin, became in 2018 majority investor in the downtown-Macau hotel containing Casino Landmark, one of the satellite properties now to face closure.
According to the association, of the MOP50-billion in satellite sector-related loans, MOP10 billion is directly linked to satellite venues, and MOP40 billion is tied to loans taken out by satellite investors. The report didn’t clarify if such loans had been relying on earnings from the satellites as collateral.
In March this year, real estate service provider Savills (Macau) Ltd had told Macao Daily News that it estimated the outstanding loans of satellites and nearby SMEs combined, ranged from HKD25 billion (US$3.19 billion) to HKD39 billion.
In the association’s comments reported on Thursday, Mr Ip suggested the Macau government had “overlooked” the “input” from the shareholders of the satellite properties, who he said had mortgaged their own property assets in supporting the operation of the satellite casinos since the downturn of business at the time of the Covid-19 pandemic.
Tai Kin Ip, Macau’s Secretary for Economy and Finance, had stated at a briefing on Monday when closure of the satellites had been announced, that loans related to satellite premises constituted “less than 1 percent” of the city’s overall bank loans, and hence represented a “limited” risk to the local banking system, where liquidity was still ample.
Secretary Tai had said 320 shops were located near the satellite casinos, with half of them likely to feel “direct impact” from the satellites shutdown.
Association director Mr Ip argued the local government had “underestimated” the trigger effect the satellite casino closures would have on the city’s proportion of non-performing loans, which already stood at 5.4 percent as of April. The latter data were cited as from the city’s Monetary Authority.
The real estate trade representative also remarked that either job loss or reduced income among workers currently employed by the satellite sector, could potentially impact their ability to repay household loans.
Secretary Tai stated on Monday that the government had calculated “5,600” staff – all local residents – would be affected, of which “4,800” were under the respective concessionaires, and 800 employed by the satellite-venue owners.
A further 400 non-resident workers were employed in satellites.
The Macau concessionaires have been requested by the Macau government to absorb into their core business, the relevant workers they had previously assigned to the satellites, once those satellites shut down, said Secretary Tai.
