Macao is a tiny special administrative region (SAR), a former Portuguese colony, not far ago returned to China under 'one country two systems' model. In fact this tiny piece of land under Chinese rule has become more prosperous and capitalist than during the time when it formally was part of the 'West'. In the years to come Macao will attract even more foreign capitals and people, and eventually may even surpass Las Vegas as world prime place for gambling. Notwithstanding what's developing as competition in other Asian countries, as far as Macao remains the only place in China where gambling is allowed, this tiny region can look to the future with optimism.

This article isn't about exactly about gambling. Talking about any facet of life in Macao however, the real estate development being not an exception, usually leads us to considering this paramount aspect of life in this former Portuguese colony. Like in Las Vegas, in Macao the business that started it all was the gambling. Unlike Vegas, where there have been major attempts for business diversification, in Macao gambling will remain at the center of all business activities for quite some time. Other developments will only follow the trace left from the big gambling companies.

For centuries Macao was a Portuguese colony. Even when Portugal itself was in crisis, e.g. during 1960s-1970s, China didn't follow the example of India invading Goa, and didn't occupy Macao. Why China abstained to attack? There are many speculations on that issue ranging from plausible to fanciful. Whatever the main reason was, China took Macao peacefully in 1999, and this is also part of the reason why it's so prosperous now.

Legal gambling has existed in Macao for more than a century but up until very recently it has remained a rather elitist pass-time for few people with very deep pockets. To illustrate this point, no more than 20% of all casino earnings in the past came from ordinary gaming tables, and up to 80% came from the VIP lounges. Average bets there were in the range of tens of thousands dollars each. The handover to China began a process of fundamental changes. Beijing made gambling more accessible for 'masses', sort of capitalist democratization. VIP lounges still work at full steam, but the main activity is gradually shifting toward mass entertainment, to people who are able to spend no more than a couple of hundred dollars over weekend.

How Beijing was able to do this? China opened the market and invited new players, thus virtually eliminating the monopoly on gambling that was maintained for decades by 'Casino King' Stanley Ho. It isn't surprising that newcomers are somehow related to gambling business in Las Vegas. On the other hand, with plenty of disposable money to spend and difficulties to freely invest it abroad because of currency inconvertibility, China needs places like Macao acting as financial buffers.

But as promised, this article isn't all about gambling. New huge real estate projects are mushrooming across Macao, some worth many billions of dollars, and many more are in the pipeline. With virtually no unemployment and fertility much below the population replacement rates this special administrative region needs to absorb new tens of thousands of foreigners, each with particular housing needs. As Las Vegas has boomed in the last decade or so, Macao is about to experience similar trend on top of what has already been seen. It's located in very close proximity to more than 50 million customers, including Hong Kong, most of which within years will have 'first world' middle class and upper middle class disposable incomes, and similar appetites for life accordingly. If there has been any fear before the handover in 1999, now it's driven away. The example of Macao is so compelling that many countries in the region, from Japan to Thailand, now emulate it.

Macao SAR profile:

• Area: 28.2 sq km
• Population: 453,000 (July 2006 est.)
• Population growth rate: 0.86% (2006 est.)
• Life expectancy at birth: 82.19 years
• Total fertility rate: 1.02 children born/woman (2006 est.)
• Net migration rate: 4.56 migrant(s)/1,000 population (2006 est.)
• Ethnic groups: Chinese 95.7%, mixed Portuguese and Chinese ancestry 1% (2001 census)
• Religions: Buddhist 50%, Roman Catholic 15% (1997)
• Languages: Cantonese 87.9% (official), Portuguese (official).
• GDP per capita: purchasing power parity $24,500 (2005).
• Unemployment rate: 4.1% (2005).
• Main trading partners: China, United States, and Hong Kong.
• Internet users: 201,000 (2004)

(Sources: CIA World Factbook 2006, Reuters)