Melco International Development Ltd, the parent company of international IR operator Melco Resorts & Entertainment, has won a joint bid with Hong Kong-listed Agile Group to develop a multi-billion dollar mixed-use residential, entertainment hospitality complex in Zhongshan, Guangdong Province.
The project, to be mostly completed by 2025, will cover a gross floor area of 750,000 square meters in the heart of Zhongshan, located just north of Zhuhai. It will feature residential, commercial, recreational and entertainment elements, including residential complexes, office areas, hotels, serviced apartments, wellness centers, shopping malls and a theme park.
Melco said Wednesday that the development, to be jointly managed by Melco and Agile, was part of its strategy to invest in non-gaming assets while being an active participant in the formidable development of China, particularly the Greater Bay Area. The company added that it plans to leverage its successful intellectual properties created in Macau into the development and management of the theme park, restaurants and other hospitality facilities in the complex.
Melco owns and operates integrated resorts City of Dreams, Studio City and Altira in Macau, City of Dreams Manila in the Philippines and is developing City of Dreams Mediterranean in Cyprus, slated to open in late 2022.
It is also one of two remaining contenders to partner with Yokohama in its pursuit of an IR license in Japan.
According to a filing with the Hong Kong Stock Exchange, wholly-owned Melco subsidiary Melco Zhongshan has formed a joint venture with a subsidiary of Agile called Zhongshan Yachen that will see them acquire the project land for around HK$4.8 billion (US$618 million).
Melco, via its joint venture parties, Melco Zhongshan and Creation Elite Limited, will be responsible for development, management and operation of the theme park. It will also contribute RMB150 million (US$23 million) towards the land acquisition price, RMB250 million (US$39 million) towards development of the land, fund the cash contribution on any construction costs and pre-opening expenses in respect of the theme park that are over and above RMB1.45 billion (US$224 million), and fund the ongoing operational costs of the theme park.
Melco Zhongshan will subsequently be entitled to all profits and losses arising from the operation and ownership of the theme park while Agile’s subsidiary Zhongshan Yachen will be entitled to profits and losses from the remainder of the project, other than residential units covering 5,000 square meters which will be allocated to Melco Zhongshan by Zhongshan Yachen at zero cost.
“Over the past 15 years, Melco has been creating, developing and operating world-class entertainment facilities in Macau and globally,” said Melco’s Chairman and CEO, Lawrence Ho.
“In doing so, we created a distinctive model of integrating quality leisure, culture and entertainment. We have developed incredible brands that have great growth potential beyond our existing properties.
“We are determined to play an active role in the development of the Greater Bay Area, and to leverage the incredible expertise of the group in non-gaming activities.”
The development is an astute move by Lawrence Ho. It ticks a lot of boxes for Melco not only by expanding its non-gaming offerings into Macau’s largest feeder market of Guangdong Province, but also supporting the mainland government’s expansion initiatives across the Greater Bay Area.
Melco further strengthens its connections with the mainland by partnering with Agile Group, which has two companies listed on the Hong Kong exchange. Agile was established in 1992, has nearly 60,000 employees, does business in over 200 cities across mainland China and has over RMB 300 billion in assets. It is involved in property development, environmental management and urban renewal.
