The new city next door

With 70 pct of construction of Phase I done, at an investment of RMB500 mln so far, and with all five phases expected to up the price tag to RMB18 bln, Senior Vice President of the Lai Sun Group, Larry Leung, details the plans for the massive Novotown cultural and entertainment development in Hengqin – complete with brands such as National Geographic, Real Madrid, Hyatt Regency, Lionsgate and more.

Hong Kong property development and media group Lai Sun Group has currently finished “70 per cent” of the construction of Phase I of its Novotown development in Hengqin, with main construction works to be concluded by the end of this year, the project’s head of Business Development, Larry Leung, told Business Daily.
“Current development of Phase I construction works has seen good progress, with the official topping out of all buildings by the end of 2017. In 2018 there would be mainly fit-out work, landscaping, installation of equipment, testing, training of staff and, very importantly, installation of technology […] Phase I is expected to open by January of 2019,” he added.
According to Mr. Leung, in total the group expects to pour RMB5 billion (US$759.3 million/MOP6.1 billion) into Novotown’s Phase I, with the group having so far invested RMB500 million in the development of this section. All five phases of Novotown are expected to lead to total investment of RMB18 billion.
Investment for the project will be provided solely by the Lai Sun Group, which established a joint venture between two of its subsidiaries - Lai Fung Holdings Limited and the group’s investment holding eSun Holdings Limited - for the development of Phase I.
Mr. Leung is also Senior Vice President of the Lai Sun Group, having previously worked as Director of Travel Trade Sales at Hong Kong Disneyland Resort.

Conquering new lands
“Back in 2009 the Chinese central government announced it wanted to develop Hengqin and I think they already had the vision to turn the area into a culture and tourism hub,” Mr. Leung told Business Daily.
Due to the group’s experience in property development and media production, the group was considered as a viable candidate for a project in the Hengqin Cultural and Creative Zone.
According to Mr. Leung, the Guangdong party secretary approached and invited the Lai Sun Group in 2011 to take part in the development of Hengqin, with a cooperation agreement signed by eSun and Lai Fung in the same year to invest and develop on a site with a gross floor area (GFA) of 1,418,311 square metres.
In 2013, Winfield Concept - an indirect wholly owned subsidiary of Lai Fung - won a bid to develop Phase I of the Novotown project, with construction starting in 2015.
The first phase of Novotown will occupy 130,173 square metres, with an expected GFA of 260,346 square meters.
“Novotown does not position itself as a theme park, but rather as a cultural and entertainment complex […] The Hengqin government has a very clear vision of the development purpose part of the territory. The land we sit on is set for cultural development, ” Mr. Leung told Business Daily.
The development’s first phase will include a 22,000-square metre indoor Lionsgate Entertainment World, with Lai Sun having established a contract with Village Roadshow Theme Parks for consultancy during construction and to oversee the pre-opening and operate the experience centre for a minimum of ten years.
A 4,500-square metre National Geographic Explorer ‘edutainment’ centre will also be developed in Phase I, together with a multi-purpose venue with a capacity for 1,500 people; a 8,000-square metre Healthcare and Beauty Cultural Centre; and a wedding pavilion.

Not your average hotels
The Novotown Phase I will also include the development of a Hengqin Hyatt Regency Hotel with 494 rooms, which is expected to open in 2019, with Mr. Leung expecting an occupancy rate “between 70 per cent to 80 per cent”.
“We thought the brand Hyatt Regency would fit the property […] We will own the building with the hotel operations being under Hyatt Regency,” Mr. Leung added.
The Hyatt Regency property will be the only hotel to be developed in Phase I, but the group hopes to add “one or two” hotel properties in the upcoming phases, with Mr. Leung emphasising the group would focus on hotels with unique offerings.
“In our plan they would be more like boutique hotels instead of very luxurious, since for luxurious hotels you can find it all just across the river in Cotai,” he added.
The Novotown representative also told Business Daily the group won’t develop a hotel type similar to the Chimelong International Ocean Tourist Resort but look instead for something “really exclusive”.
Phase I will also include “lifestyle concept stores”, with Mr. Leung stating the group didn’t want to offer something “very similar to other shopping malls”.
“I don’t think people would come to Hengqin for normal shopping malls since they can buy almost everything online in their houses […] We’re currently approaching and being approached by different brands that could be interested in opening concept stores,” he added.
According to the Novotown representative, brands are currently more interested in stores that showcase the brands’ message and history, with the group looking to not just open “supermarkets or convenience stores”.
Mr. Leung was also adamant the Novotown project wouldn’t include any gaming related elements but that Lai Sun was “open” to establish collaborations with Macau gaming operators, such as creating shuttle bus routes between properties.

The next step
The group is currently discussing with the Zhuhai government the land acquisition for Phase II, with Mr. Leung telling Business Daily that the group has been receiving “very positive feedback and support from the local government so far” and that a consensus for the land acquisition was expected to be reached “by end of this year”.
Novotown’s Phase II is set to be developed in a 191,070-square metre site and have 382,140 square meters of GFA, mainly for retail dining and entertainment.
Due to still being in its early stages of planning, the group couldn’t provide an expected investment amount for the second phase, but advanced that this phase was expected to open in 2021.
This month the group announced it entered into a licence agreement with Spanish football club Real Madrid Club to launch an interactive football experience centre upon the opening of Novotown’s Phase II.
The centre will occupy 12,000 square metres of indoor space with interactive, augmented and virtual reality attractions and a Real Madrid museum, together with food and beverage outlets and concept retail concessions.
“With the very extensive network of our group’s chairman, Peter Lam, the Novotown project team was able to kick-start discussion with Real Madrid last November. Together we spent months on ideation, concept planning and now finalized a partnership deal. Our vision is to create a world’s first, high-quality and fully engaging interactive football experiences centre for guests across Asia by 2021,” Mr. Leung told Business Daily.
The license agreement states Real Madrid will license its intellectual property rights to Lai Fung or its subsidiary in return for payments - largely in the form of royalties for 10 years after the centre is launched - with an option to extend it for a further 10 years.
Phase II will also include a European Automobile Experience Centre - a 15,000-square metre entertainment complex focused on auto-sports attractions - and a 52,500-square metre International School for both foreign and local students, with capacity for 1,500 students and expected to open in September of 2020.

The third musketeer
Lai Sun currently estimates Novotown’s Phase I will attract 5 million visitors in the first year of opening, with Phase II expected to attract 10 million visitors.
Of the initial expected 5 million visitors, 70 per cent would be from mainland China, with the remaining 30 per cent composed of Macau, Hong Kong and Southeast Asian visitors.
Mr. Leung considered 10 million visitors by 2021 a “conservative estimate” if one looks at the numbers of the nearby Chimelong Ocean Kingdom, which attracted around 8.5 million visitors last year, more than the 6.1 million in attendance seen at Hong Kong Disneyland.
“When Phase I opens in 2019, Chimelong will be hitting around 10 million visitors. Since Novotown is only a 3-minute drive away we don’t believe people wouldn’t spend another half-day or even another day in our property,” he added.
The Novotown business developer didn’t consider that the two properties would steal each other’s visitors, but that instead they would complement each other.
“While Chimelong, as a theme park, provides a resort-wide ocean-focused encounter for families, Novotown supplements visitors’ experience with more cultural and interactive high-tech experiences. Visitors can also find beauty, healthcare, live entertainment and hotel facilities in Novotown,” Mr. Leung stated.
The Vice President of Lai Sun also believed by 2021 the “entire Hengqin will be more mature” with an expected population of 100,000 people.

Your neighbourhood wonderland
For Mr. Leung, the lack of space for development in Hong Kong makes it complicated to add more attractions, with Hengqing proving a “hinterland” to supplement entertainment offerings for tourists in the region.
With the opening of the Hong Kong-Zhuhai-Macau Bridge, expected to take place at the end of this year, Mr. Leung believes visitors going to Hong Kong “won’t mind making the 35-minute drive” to visit Hengqin as well.
The group also established an agreement with Trans-Island Limousine Service Limited to create a cross-border bus service between Hong Kong and Hengqin as part of Phase I.
“Everything will be at an hour’s distance. If you want shopping you can go to Hong Kong; you want gaming, you go to Macau; and if you look for entertainment, you will go to Hengqin,” he added.

A bit of everything
Hong Kong conglomerate Lai Sun Group was founded in 1947 by garment businessman Lim Por-yen, with the group’s current chairman being Hong Kong billionaire, and Mr. Lim’s son, Peter Lam Kin-ngok.
The group is composed of five companies, engaging mainly in property development and in media production.
According to the most recent interim report, the group’s property development subsidiary Lai Sun Development Company Limited registered HK$818.4 million in revenue for the six-month period ending on January 31 of this year, a 24.4 per cent year-on-year decrease.
Currently the group’s property development portfolio reaches more than 1 million square metres in mainland China and 250,838 square metres in Hong Kong, with Novotown being the group’s largest on-going project.
The Lai Sun Group also currently owns and operates 1,291 hotel rooms, with 471 more rooms to be added when the Hong Kong Ocean Park Hotel - managed by the Marriott group - opens at the end of this year.
The group owns Hong Kong production company and film distributor Media Asia Entertainment Group, with Mr. Leung stating that Lai Sun aims to produce “between 10 to 15 movies every year”.