Gov’t grants 25-year lease concession for future housing project land in Areia Preta

Macau Urban Renewal Limited was granted a 25-year renewable lease concession granted by authorities for a 47,682 square meters land plot in Avenida do Nordeste in the Areia Preta district, a government dispatch published at the Official Gazette indicates.

The land – valued at MOP8.9 billion (US$1.1 billion) – was granted to the public entity without a public tender and is to be used for the construction of replacement or temporary housing and public installations, with authorities having decided to use most of it for future elderly housing.

Development of the land for its intended purposes must take place within 5 years.

Macau Urban Renewal Limited was a public company created by local authorities to be responsible for the lcoal urban renewal.

A MOP2 billion contract has alrady been handed out by local authorities to China Civil Engineering Construction Corporation (Macau) to develop the 37-storey building in Lot P in Avenida do Nordeste in the Areia Preta district, where the failed Pearl Horizon project was to take place.

Secretary for Transport and Public Works Raimundo Arrais do Rosário said previously that the 1,800 housing units that will be developed for elderly residents in a project in Areia Preta will only have 38 square meters each, or “enough for two people”.

The original 68,001 square meters land concession was declared as expired by authorities in January 2016, the expiry of the concession, but buyers in the Pearl Horizon project were allowed to purchase similar housing units in the future property.

Macau Urban Renewal was said to have requested the Chief Executive the lease concession to be exempted from public tender and for the adjustment of the premium value, the dispatch signed by Secretary for Transport and Public Works Raimundo Arrais do Rosário informed.

The area has been divided into three lots, lot A with ​​21,888 square meters destined for replacement housing, commerce and a swimming pool; lot B with ​​6,537 square meters for temporary housing commerce and parking; and lot C with ​​19,257 square meters for temporary housing, commerce, parking and a bus terminal.

The company claimed that the amounts currently in force for the determination of the premium amount increased almost four times in relation to those applied in the calculation of the premium due by the Pearl Horizon project and that it would therefore have to sell the units to housing candidates for exchange at prices set 13 years ago, despite the current construction price being higher than in that period, which would cause the company ‘great economic pressure’.

The Macau SAR government considered that the premium due for the concession of land or the revision of the concession constitutes a form of participation by authorities in the capital gains that the concessionaire will obtain with the use of the land and therefore no premium will be charged in relation to lots B and C since they are intended for housing for temporary accommodation.

However since lot A is intended for replacement housing that must be sold at the price fixed 13 years ago, the respective construction being at current costs, the percentage of the premium was set at 10 per cent, with Macau Urban Renewal to pay a premium for the lease contract on this lot of MOP1.3 billion.

During the land use period, Macau Urban Renewal will have to pay MOP12 per square meter of lot A for a total of MOP262,656; and some MOP8 per square meter of lot B and lot C, in a total amount of MOP52,296.

Rentals may be updated every five years.

The concession contract conditions were agreed and signed on February 23 by Macau Urban Renewal Ltd. Chairman of the Board of Directors, Peter Lam Kam Seng.