Govt may let IRs open in stages

But operators must fulfil obligations; no change in their projected benefits to job scene, economy

THE Government is considering requests by both integrated resort (IR) operators for their openings to be made in stages, Senior Minister of State for Trade and Industry S. Iswaran told the House yesterday.

Both operators will also be held to fulfilling their obligations as outlined when their bids for the projects in Sentosa and Marina Bay were submitted, he said.

He added that the Government does not expect any change in the contribution that both projects will have towards the economy and job scene here.

Mr Iswaran was responding to questions from Non-Constituency MP Sylvia Lim and Nominated MP Eunice Olsen on when the IRs will fully open and whether the global financial crisis will have any impact on their ability to operate.

The recent financial crisis and the resulting credit crunch have affected several United States-based companies, including Las Vegas Sands, whose Marina Bay project here is slated to fully open next year.

Mr Iswaran noted that not only had the casino operator raised an additional US$2 billion (S$3 billion) in capital, but also its chairman and chief executive officer Sheldon Adelson had made a public declaration of his commitment to the Singapore project.

Although Sands had promised to complete the entire development by the end of next year, it has since submitted a proposal for progressive opening instead.

This is now being considered by the Singapore Tourism Board and other agencies involved.

Mr Iswaran said that Resorts World at Sentosa, which is scheduled to open in 2010, also applied for a progressive opening, and this is being reviewed too.

But he assured the House: ‘Even as we do so, our expectations remain that each development will open as an integrated resort and not just as a stand-alone casino.’

There will also be terms and conditions which the operators must abide by should their requests be approved, he added.

Although a company’s financial capability and its ability to get credit were a factor in determining the award of the projects when the IR bids were first sought, Mr Iswaran reminded the House that ‘we are now in profoundly altered circumstances’.

Still, he said both companies have assured the Government that their financing has been secured.

Mr Iswaran had already made it clear last week that the Government will not step in to bail out the IRs should their parent companies go under.

But when asked yesterday if Singapore investment company Temasek Holdings will step in, he said: ‘I think that’s a question for Temasek. It’s a commercial company – they make their own decisions.’

Ms Olsen also queried him on whether the Government had relaxed its ruling on the gaming area restriction in allowing Marina Bay Sands to have 1,000 gaming tables instead of the 600 that were originally proposed.

Mr Iswaran refuted any suggestion of a government concession.

The restriction has always been on the floor area for the casino – which has to be less than 3 per cent of the entire resort, he stressed. And that requirement remains unchanged.

In response to Ms Lim and Ms Olsen’s questions on the benefits that Singapore stands to gain from both projects, Mr Iswaran said that the Trade and Industry Ministry is standing by its projections ‘for now’.

These projections are that there will be 20,000 jobs generated directly by the IRs, and a further 30,000 to 40,000 jobs created indirectly by their operations here.

Projections that the IRs will contribute $5.4 billion to the economy were based on the projects being in a ’steady state’ in 2015 after they have been fully developed and open, he said.

But Mr Iswaran added that whether that can be achieved in 2015 is something that the ministry will have to ’study and see’.

Source : Straits Times – 18 Nov 2008

IR : Not a question of if, but when

IRs expected to meet economic targets, albeit with impact from crisis

THE promise, when the Government decided to allow the Integrated Resorts (IRs) in, was a $1.5-billion increase in our Gross Domestic Product (GDP) and 35,000 new jobs – but will these economic rewards now materialise? And if so, when?

In response to questions by Nominated MP Eunice Olsen and Non-Constituency MP Sylvia Lim yesterday, Senior Minister of State for Trade and Industry S Iswaran said the projection remains that the Marina Bay and Sentosa IRs, when they are “fully developed and running”, will achieve their economic targets and create as many as 40,000 jobs.

But whether these will be achieved by 2015 – as originally expected – “is something we will have to study and see”, he said.

“It would be fair to say that due to the global financial crisis and the slowdown already evident in our tourism sector, there may be some impact on the integrated resorts’ business when they open.”

Another issue: Marina Bay Sands (MBS) had announced that its proposed casino floor plan, which had upped the number of gaming tables from 600 to 1,000, had been approved. Ms Olsen wanted to know if the Government had made concessions to its original position.

Mr Iswaran noted that the provisions stipulated all along that up to 15,000 sq m of MBS – within the 3 to 5-per-cent limit of their over 500,000 sq m total area – could be set aside for gaming activities. There has been no change, he added, reiterating that “each development will open as an IR and not just as a stand-alone casino”.

Both MBS and Resorts World at Sentosa have requested for a “progressive opening” and their proposals are now being “carefully considered” by the Singapore Tourism Board (STB) and other government agencies, reiterated Mr Iswaran.

Both IRs had given assurances that they have secured project financing, he added, and the STB will “continue to work closely” with the operators to facilitate the developments’ completion.

Ms Olsen asked if the assurance that taxpayers’ money will not be used to bail out the IRs, can be interpreted to mean that Temasek Holdings will not step into the picture.

Mr Iswaran reiterated that would be a commercial decision to be made by Temasek.

Source : Today – 18 Nov 2008

Resorts World confirms IR opening on track

A Singapore integrated resort (IR) developer confirmed on Monday that its project was on track for a phased opening beginning early in 2010.

‘It hasn’t changed,’ a spokesman for Resorts World at Sentosa told AFP.

The spokesman, who declined to be named, was commenting after a minister said in parliament that the country’s Genting International had sought government permission for the progressive opening.

‘We’ve always said we will open in stages,’ the spokesman said.

Last Thursday the Singapore Tourism Board said the city-state’s other IR developer, Las Vegas Sands, had asked to open its Marina Bay Sands complex in stages instead of in one go at the end of next year.

The government is ‘considering these requests by Marina Bay Sands and Resorts World at Sentosa with due reference to what they have committed’, Senior Minister of State for Trade and Industry, S. Iswaran, told parliament.

‘Even as we do so, our expectation remains that each development will open as an integrated resort, and not just as a stand-alone casino,’ he added.

Mr Iswaran said Genting cited ‘physical on-site constraints’ for its progressive opening.

The development is to include a Universal Studios theme park, which the Resorts World spokesman said will require an on-site storage area while the rides are assembled. That accounts for the site constraints, he said.

But the theme park, casino, four hotels and a dining and shopping area are to open as scheduled in early 2010, he reiterated.

Other features of the project will open later, also as previously announced, he said.

Stephen Weaver, the head of Las Vegas Sands Asia, said last week that his company had run into construction difficulties in Singapore.

Las Vegas Sands has announced a halt to some developments in the southern Chinese gambling enclave of Macau due to trouble accessing credit during the global financial crisis.

But the company said completion of the Singapore project remains its top priority. Marina Bay Sands is to include hotel and convention facilities as well as gaming tables.

Source : Business Times – 17 Nov 2008

Genting trims losses in Q3, IR soft open early 2010

Genting International Public Limited Company said net loss for the third quarter this year was at S$116.83 million compared to S$393.38 million a year ago.

Revenue slipped 1 per cent to S$177.43 million.

The quarter’s results were, however, affected by higher bad debts and exchange losses but these have been cushioned by fair value gains on derivative financial instruments of S$17.1 million recognised in the current quarter.

The group also recognised an impairment loss of S$100.8 million on goodwill arising from its acquisition of Genting Stanley in the current quarter. The impairment loss can be attributed to the general economic slowdown in the UK and the rest of the world. The slowdown has adversely affected business volumes at the Group’s UK casinos.

It said construction is on track for its Singapore Integrated Resort’s soft opening by early 2010.

Source : Business Times – Nov 2008

Markets learn to live with IR worries

Impact of any delay likely to be greater in luxury segment

THE uncertainty surrounding the two integrated resorts projects — in particular, the Marina Bay Sands — is unsettling already fragile sentiment in the property market. After all, the prospects for economic benefits from the IRs have been positive for the market.

But recent developments and positive announcements from the operators have eased fears that the projects would be delayed, with analysts and industry players confident that the IRs will be completed more or less on schedule.

Still, they cautioned that any major delay would affect all parts of the property market — from luxury properties right through to the HDB market.

The Marina Bay Sands resort, which promises jobs for 10,000 people, had been under the spotlight recently, after its parent company Las Vegas Sands ran into financial difficulties.

Jones Lang LaSalle head of research (South-east Asia) Chua Yang Liang noted that the market “understands the significance” of the Marina Bay Sands IR to the Government, which is why it is not getting overly jittery.

Dr Chua said: “It is not in the State’s interest to have a gaping hole and a semi-completed structure right at the mouth of the newly-completed barrage. The negative image that could bring to the international front is not ideal and the State is likely to do what is required to push it on.”

Colliers International director of research and advisory Tay Huey Ying agreed, saying: “There is underlying optimism and confidence that the Government will ensure that the development of the Marina Bay IR will proceed one way or another.”

Prior to the current financial turmoil, the buzz generated by the announcements of the opening of the IRs — together with the F1 Grand Prix — contributed a lot to the property bull run, which has ended abruptly as the world financial crisis develops.

An example is the way “early bird” prices at The Sail @ Marina Bay went up 20 per cent, from $900 per square foot to $1,080 psf, within six months after the IR was given the green light.

Dr Chua said: “While the announcements probably did affect the psychology of the buyers, the direct impact in terms of genuine demand for real estate would only come closer to the completion of the projects with the hiring of new staff to man the resorts.”

On Tuesday, Las Vegas Sands issued a press statement stressing that Marina Bay Sands was its “No 1 priority”, as it pulled the plug on its Macau developments to focus on Singapore.

The threat of bankruptcy appeared to be staved off following the injection of US$525 million ($787 million) by Sands founder and chief executive Sheldon Adelson, but financial analysts expressed concern that it had been achieved “at a heavily dilutive price”.

Any delay to the completion of the Marina Bay Sands IR, said Dr Chua, was likely to hit the mass market more, given that some 60 to 70 per cent of the IRs’ labour requirements are expected to be filled by the local workforce typically residing in HDB flats.

But Ms Tay believe the impact of a delay would be felt greater in the high-end and luxury segments, where speculative activity is stronger.

HSR Property Group chief executive Patrick Liew expect any repercussions to be restricted to private residential properties near the Marina Bay area, with prices dipping by 3 to 5 per cent in the event of a delay.

He said: “The supporting factors for the HDB market are very well controlled. At this point in time, there’s no major oversupply situation and there is still a healthy demand.”

In fact, DTZ senior director of research Chua Chor Hoon felt a slight delay to the completion of the hotels and retail space at the Marina Bay Sands project “may not be a bad thing, as the economy is expected to fare worse next year and it is uncertain whether the expected number of visitors would materialise”.

She added: “So, if some of these are delayed, it would add less pressure to the retail and hotel sectors.”

Regardless of the short-term uncertainty, Ms Tay pointed out the IRs have already left “permanent marks” on the property market. She said: “For example, it has since paved the way for Singapore to be placed on the world map of global investors.

“While the ultimate failure of the IRsto proceed will adversely affect market sentiment, uncertainty and slight delay in the IRs’ completion and opening dates are notforeseen to have any major negative impact on the property market.”

Source : Today – Nov 2008