All eyes on IRs now

Business Times – 09 Aug 2008

Apart from a surge in tourism, jobs and tax receipts, Singapore’s two integrated resorts could bring in new investors

WITH expectations of a big boost to the economy, more buzz and the promise of thousands of jobs, it
is no wonder we are all a little anxious to see Singapore’s two integrated resorts (IRs) completed.

Citi analyst Chua Hak Bin believes that the biggest challenge facing the IRs now is ‘probably to
contain costs given the run-up in building material prices and completing the resorts on schedule’.
‘Getting the resorts up and ready by late 2009 or early 2010 would be regarded as a big success,’
added Dr Chua. ‘The greenlight for the integrated resorts was an important turning point for the
economy and property market. Investors could see the potential upside given the stunning growth
seen in Macau and Las Vegas,’ notes Dr Chua.

Will the IRs deliver?
Dr Chua believes that the impact from the IRs will come in two phases. ‘The first phase comes from
construction spending and improved sentiment, particularly from enhanced property values,’ he says.
‘The gains in the second phase comes from the surge in tourism, jobs and tax receipts,’ he adds.
Many have already benefited from ‘enhanced property values’ especially those who bought property
around Marina Bay and Sentosa in 2005 and 2006. But as investors now know, this ’sentiment’ driven
boost has not really been sustainable.

Dr Chua also notes that recent tourism figures suggest that visitor arrivals are being hit by a global
slowdown, stronger Singapore dollar, and higher travel costs. ‘Annual visitor arrivals could rise
sharply from the current 10.4 million, but may fall short of the government’s target of 17 million by
2015,’ he adds.

In 2006, before the sub-prime crisis set in, it was estimated that Marina Bay Sands (MBS) and
Resorts World at Sentosa (RWS) could each generate about $2.7 billion of value-add – about 0.8 per
cent of Singapore’s GDP – by 2015.

Dr Chua believes the IRs will still be a stimulus and expects GDP growth of about 0.3-0.5 percentage
points in 2010-2015. In this light, the casinos will have to perform.

The casino licence was very much the sweetener for both IR operators to pump in over $10 billion to
build the resorts. But now, even the outlook for gaming is not so certain with gaming revenues in Las
Vegas expected to fall this year.

Jonathan Galaviz of Globalysis, a Las Vegas-based boutique travel and leisure sector strategy
consultancy, says that while the casino gaming industry has been traditionally recession resistant, ‘it
is not recession proof’.

‘This is especially the case when an industry, such as airlines, indirectly inhibits the ability of tourists
to visit a destination like Las Vegas due to higher airfares,’ he adds.

And this does not bode well for other gaming capitals. ‘If East Asia were to experience a significant
economic downturn, then Macau would surely be affected, the question would only be by how much,’
says Mr Galaviz.

Singapore’s IRs are also very much modelled after the mega resorts of Las Vegas and the new
developments in Cotai, Macau. And the success of this model is still pending. ‘It will take a long period
of at least 5-10 more years to see whether the integrated resort model of entertainment in Macau has
been a successful strategic endeavour,’ Mr Galaviz says.

In the mean time, work on the IRs here continues. With barely a year to go, MBS says that, ‘a great
majority of construction works have been awarded’.

RWS said it has given out more than $2 billion worth of contracts. It added that rides and attractions
for Universal Studios Singapore are currently being designed and pre-fabricated off-site in places
such as the US and Europe.

When the IRs are up, the much anticipated ’second phase’ economic euphoria can begin. Savills
Singapore has analysed the impact of new gaming resorts on property markets and concluded that
while Singapore has undergone major structural changes, with new concepts such as waterfront
housing, integrated hotels and new retail formats, some of the impact has already been priced in.
Still, Savills director (marketing and business development) Ku Swee Yong says: ‘The publicity and
attention from tourists and high rollers could bring in new investors and many more jobs. With
Singaporeans almost fully employed, the foreign talents needed to fill these jobs add to demand for
residential units and office space.’

But Mr Ku adds: ‘The period and degree of sustainability will depend on the money spent by the
tourists, MICE groups and the spin-off they create for the economy and the financial services and
tourism sectors.’

The good news is that both are scheduled to open on time. MBS maintains that it will be completed by
December 2009 and RWS confirms it will open in early 2010. ‘As our resort is massive at 49 ha with
varied offerings, we are indeed opening in progression, starting with Universal Studios Singapore,
Hotel Michael, Maxims Residences, Hard Rock Hotel, Festive Hotel, FestiveWalk, as well as the
casino in early 2010. The rest will open progressively,’ adds RWS assistant vice president,
(communications) Robin Goh.

One of the bigger challenges at the IRs is labour. Mr Goh says: ‘Finding talent, training them, and
then retaining them – is no walk in the park.’

MBS managing director George Tanasijevich adds: ‘We are working closely with the Singapore
government and relevant government agencies to ensure there is a proper balance in the labour pool
in order to maintain a stable and competitive labour market overall. Priority will be given to
Singaporeans for all roles.’

That the IRs are projects on a national scale is not lost on the operators either.
RWS’s CEO says: ‘Singapore’s founding fathers built this country into what it is today, with very little
and within a very short time. Resorts World at Sentosa strives to replicate her success, and make
Singapore proud with a destination that will rank as Asia’s No 1 leisure spot when it opens in 2010.’

Sembawang E&C bags $400m IR contract

SEMBAWANG Engineers and Constructors (SEC) has been awarded a $400 million contract by Marina Bay Sands Pte Ltd to build the Marina Bay Sands integrated resort’s (IR) North Podium comprising the casino, theatres and retail arcade.

But with a construction period of just 15 months, pressure will already be on Singapore’s biggest construction company to start work soonest possible.

Saying that the timeframe is ‘pretty tight’, SEC president and CEO Alwyn Bowden added: ‘The Marina Bay Sands (MBS) North Podium is a fast-track project which will require our dedicated attention.’

In November 2007, SEC was also awarded a $463 million contract for architectural, civil and structural works at the Bayfront MRT station in Marina Bay.

Mr Bowden added: ‘We are especially well placed to handle (the MBS) project as we are also constructing the new Downtown Line Bayfront MRT station in Marina Bay, which will connect directly to the resort’s MICE (Meetings, Incentives, Conventions and Exhibitions) centre.’

The MBS project involves building the substructure and superstructure of the North Podium, and will have four upper levels and a four-storey basement.

Work is expected to start this month and is set for completion in April 2009.

Apart from maintaining a 24-hour construction site, fast-tracking construction will also require coordination with various parties involved who will invariably have inputs. Mr Bowden explained that they have to ‘make sure changes do not impact on construction process’.

On the complexity of the project, and the possibility of delays, he said: ‘We have tried to cover whatever eventuality that may arise.’

As far as equipment and building materials are concerned, Mr Bowden is confident that its supply chain management has sources and prices under control. ‘We have not found materials to be a problem,’ he added.

Mr Bowden could not say how many other construction companies had been in the running for the coveted contract, but he did say that there was ‘an emphasis on price’, when it came to bidding.

However, with construction company services in high demand at the moment, the days of ‘razor- thin margins’ are over.

Mr Bowden added: ‘For construction companies, the volume (of work) means that one can look around and be a bit more choosy.’

 

Source: Business Times 15 Feb 08

Las Vegas Sands draws down $2b for S’pore IR

LAS Vegas Sands Corp, the world’s largest casino operator by market value, has drawn down $2 billion from its credit facility for the building of a Singapore casino, it said in a statement yesterday.

The company is paying an interest margin of 3.6 percentage points more than the 30-day Singapore dollar swap offer rate, it said in the statement.

Las Vegas Sands got its initial funding for the integrated resort in Singapore at a time when the credit markets are roiled by rising borrowing costs due to concern about losses in US sub-prime mortgages. The Singapore dollar one- month rate is at 1.5 per cent, 2.5 percentage points lower than the one-month London interbank offered rate (Libor), a benchmark for US dollar borrowings.

‘The credit facility, which is the largest private Singapore dollar-denominated financing ever completed, will provide flexible and cost effective financing’ for the gaming resort, Sheldon Adelson, chairman of the casino company, said in the statement. ‘We are quite gratified that the Singapore interest rate is significantly below the rates which we would have to incur in the US or other international markets in today’s market.’

About 42 per cent of the US$24.8 billion that loans companies received in Singapore in 2007 are in the local currency, compared with 25 per cent of US$26.1 billion of debt for 2006, according to data compiled by Bloomberg.

‘Bank liquidity is extremely strong in Singapore,’ said James Chua, who helps manage US$450 million at Phillip Capital Management Ltd in Singapore. ‘This is a low-risk project due to the duopolistic nature of the casinos and the high execution skill of Las Vegas Sands.’

Singapore Prime Minister Lee Hsien Loong’s government has pledged to allow only two casinos in country in the next 10 years. The nation ended a four-decade ban on casinos in a bid to triple tourism revenue to $30 billion by 2015.

The other casino licence was awarded to Malaysia’s Genting International plc, owned by Kuala Lumpur based Genting Bhd. Genting is building a casino resort on Sentosa island.

The Singapore resorts will capture a slice of the regulated gambling market in the Asia-Pacific region, expected to expand 15.7 per cent a year to US$30.3 billion in 2011, according to PricewaterhouseCoopers LLP. The loan will also test the city-state’s debt market, where more loans are being issued in the local currency.

Las Vegas Sands hired eight banks, including Goldman Sachs Group Inc and Singapore-based companies DBS Group Holdings Ltd, Oversea-Chinese Banking Corp and United Overseas Bank Ltd, to arrange the $5 billion borrowing, according to three people, who declined to be identified because the information is private, on Sept 20.

The other four arranging banks are Morgan Stanley, Merrill Lynch & Co, Lehman Brothers Holdings Inc and Citigroup Inc.

The casino company’s debt is rated three steps below investment grade at ‘Ba3′ by Moody’s Investors Service and an equivalent ‘BB-’ by Standard & Poor’s.

Las Vegas Sands’ downtown Marina Bay resort, next to Singapore’s business district, will feature three hotel towers linked by a sky garden, a convention centre, restaurants run by celebrity chefs Charlie Trotter and Thomas Keller, and an art-and-science museum.

 

Source: Bloomberg Business Times 17 Jan 08

Catching Formula One race in high style

Grandstands will also be set up in the S’pore Flyer Garden

FORMULA One (F1) fans hoping for a bird’s eye view of the inaugural Singapore Grand Prix can opt to watch it from the 165-metre tall Singapore Flyer.

Singapore GP has forged a land-use and ticketing partnership with the Flyer under which Singapore GP will establish grandstands with adjoining marquees, lifestyle areas, entertainment and F&B outlets in the Singapore Flyer Garden and adjoining areas facing the track.

The grandstands – reserved for corporate buyers – will be standalone private buildings as opposed to a single large one.

Details are still being hammered out, but Flyer general manager David Beevers reckons ticket prices for corporate boxes in the Flyer Promenade could go between $3,500 to $4,500 each over the three days of the GP.

Pricing and the number of seats are expected to be released in late January 2008 by Singapore GP.

The $240 million Flyer observation wheel, which is expected to open on March 1, 2008, can hold 28 guests in each of its 28 capsules, translating to 784 passengers for every half-hour long ride.

Although tickets for the Flyer can be bought by the public, promenade ticket holders will get preference.

‘Given the number of private land owners around the circuit, the deal will be a good model to use with other interested parties,’ said Michael Roche, executive director of the Singapore GP.

Because the right to sell tickets remains solely with Singapore GP, the company is in talks with venues around the race circuit to engineer additional partnerships.

This will help ’secure unobstructed race views and maximise involvement from as many vantage points as possible’, said Alastair Hunt, Singapore GP’s circuit park manager.

Safety fences, the lighting system and advertising hoardings are expected to serve as obstacles and discourage viewing from unauthorised venues on the periphery of the track.

Singapore GP has also awarded to two companies – PICO Art International and Kingsmen Creatives – the contract to construct some of the grandstands, seating and corporate hospitality suites for the race. The five-year contract is expected to be worth $25 million.

 

Source: Business Times 7 Dec 07

Award of casino bid not known yet: Lian Beng

SINGAPORE construction firm Lian Beng Group, whose share price rose 8 per cent yesterday on speculation that it has won a $500 million casino project, said it has not been told of the outcome of its bid.

‘Lian Beng has submitted a tender but has not been informed of the outcome yet,’ said a company spokeswoman.

A source said the contract to build a part of an upcoming multi-billion dollar Marina Bay Sands casino in Singapore is likely to be awarded next week. A consortium comprising Lian Beng and Koh Brothers, which both called for trading halts yesterday, and privately-held Gammon, are the two shortlisted bidders for the project, the source said.

CIMB-GK Research said in a note yesterday that Lian Beng Group has the advantage of knowing the ground conditions well at Marina Bay, and said it was one of two contenders.

‘We believe LBG stands a better-than-average chance of clinching the casino/museum contract,’ said analyst Song Seng Wun at CIMB-GK, maintaining an outperform rating on the stock and raising its target price to $1.14 from $0.89.

Shares in Lian Beng climbed 7.8 per cent to $0.76 before the trading halt yesterday. The stock has more than tripled this year. Koh Brothers jumped 24.3 per cent yesterday, versus a 0.2 per cent drop in the broader Singapore index.

 

Source: Reuters (Business Times 7 Dec 07)

Staging adrenalin-pumping shows

CLARISSA TAN highlights some of the high-profile sporting events in the Marina Bay area, including next year’s Singapore Grand Prix

SLEEK machines zoom under flyovers and streak past the towers of Suntec City, the Padang, the Old Supreme Court and the Esplanade theatres before screeching down the pit straight, where spectators emit a thunderous roar.

This will be the scene in September next year when the Singapore Grand Prix – the world’s first night Formula One race – takes to the city’s streets.

The race, which will course through the centre of the new downtown at Marina Bay, is set to be ‘the social highlight of the year’, says Jonathan Hallett, media and communications director of promoter Singapore GP. ‘Such a world-class event in the heart of a business district, with prime shopping centres and hotels within walking distance, will give a unique snapshot of Singapore.’

The GP is one of many high-profile, adrenalin-pumping sporting events in the Marina Bay area.

On Dec 2 this year about 40,000 runners will take part in the annual Standard Chartered Marathon – six times more competitors than in 2002. The full-marathon route includes the Singapore River,

Marina South, the Central Business District and the Old Supreme Court and City Hall.

‘The marathon has grown phenomenally,’ says Yazed Osman, event director for the Singapore Sports Council. ‘Not just in terms of overall participation, but participation among women and international runners.’

WaterFest Singapore, which takes place in August and September, attracted 18,000 visitors on its inaugural weekend at Marina Bay’s floating platform. ‘The central location and easy accessibility made it a great location to kick off the WaterFest,’ says Mr Yazed. ‘We can showcase many watersports against our beautiful city skyline.’

The six-week festival includes international competitions such as the Aviva Ironman triathlon and Wakeboard World Cup, as well as offbeat events such as Beach Ultimate Frisbee Hat Tournament.

Last weekend, hundreds of people ran up the 73 storeys of Swissotel The Stamford, the tallest hotel in Southeast Asia, in this year’s Vertical Marathon. The men’s overall winner, Zakayo Mwai Nderi, climbed the 1,336 steps in seven minutes and three seconds.

The Vertical Marathon has been held since 1987 but will carry even more cachet as the Marina Bay area is developed.

The entire development, over some 360 hectares, will contain the Marina Bay financial centre, upmarket housing, shopping outlets and public waterfront areas and parks.

It will also be home to some of Singapore’s icons – Esplanade Theatres on the Bay, the Flyer, the Double Helix Bridge and the Marina Bay Sands integrated resort. The area, which includes the Marina Bay Residences and the newer Marina Bay Suites, will be a hive of activity.

Besides The Esplanade theatres, which have been staging arts performances for five years, the rest of the structures should be completed by end-2010.

The Singapore Flyer, a giant ferris wheel that will provide spectacular views of Marina Bay, is scheduled to start operating early next year.

All of these attractions and events will bring in visitors. ‘The Formula One GP will give a strong boost to tourism,’ says Lawrence Leong, director of the project for the Singapore Tourism Board. ‘It is expected to generate incremental tourism receipts of about $100 million a year. Hotels, night spots, restaurants, retailers, airlines, taxi drivers and many other groups will benefit.’

About 80,000 spectators are expected for the GP, of whom 30-40 per cent will be foreign visitors. ‘There will be broader economic spin-offs as well,’ says Mr Leong. ‘Our private wealth management industry, strong contingent of multinational and local companies and diverse retail and entertainment establishments can all take advantage of the event to derive benefits for their clients and their business.’

One factor that could help put Singapore on the sports and entertainment map is the novelty aspect of some of the events. The Vertical Marathon, for instance, not only involves racing up one of the world’s tallest hotels, the winners also get to represent Swissotel in New York’s prestigious Empire State Run-Up.

Perhaps not so much novel as focused, last month’s Great Eastern Women’s Race, with five kilometre and 10km routes through Marina Bay, was open only to women.

The Vertical Marathon and Great Eastern race are part of a series of events under the banner of the Marina Bay Urban Challenge, organised by Enterprise Sports Group (ESG).

ESG is now planning a race for children called the Kids’ Dash, says head of marketing and client services Adeline See. ‘We hope to attract some 3,000 children to take part in the inaugural run covering distances from 50 metres to three kilometres.’

But without doubt, the Formula One GP will be Singapore’s single biggest tourist draw.

‘This new venue on the streets of Singapore will likely set a new standard,’ says Andy Fuchs, general manager of marketing, communications and business development for Panasonic Toyota Racing.

And Heikki Kovalainen, a driver for the ING Renault Formula One team, says: ‘The race in Singapore looks pretty exciting owing to the fact that they plan to hold it by night. It will be quite exciting for us at the wheel – and a good opportunity to offer a fantastic show.’

 

Source: Business Times 15 Nov 07

Gardens to do a Garden City proud

Marina South phase to cost $900m, entire project could draw 2.7m visitors a year

(SINGAPORE) The Gardens by the Bay project – comprising three themed gardens at Marina South, Marina East and Marina Centre – is expected to draw 2.7 million visitors a year and contribute around $1 billion of tourism receipts over 10 years.

But the 101 hectare project will not come cheap. The first phase – the 54-ha Gardens at Marina South, slated for completion by end-2010 – will cost $900 million. Development of the 32-ha Marina East and 15-ha Marina Centre gardens will take place later.

Highlighting the intangible value of the gardens, National Development Minister Mah Bow Tan said that their worth cannot be measured in dollars and cents alone.

‘Gardens by the Bay will be a national garden set in the heart of Singapore on prime waterfront land,’ he said in his speech at the ground-breaking ceremony yesterday morning. ‘Gardens by the Bay will offer a compelling leisure experience for Singaporeans and visitors alike. It will add value to the surrounding real estate.’

According to Mr Mah, the Gardens will boost Singapore’s international standing and differentiate it from other emerging cities.

Gardens at Marina South will boast two cool conservatories – a 1.4 ha ‘cool dry’ conservatory and a 0.9 ha ‘cool moist’ one – that will exhibit flowers and plants from the Tropical Montane and Mediterranean environments.

The National Parks Board (NParks) is looking into sustainable energy and water technology for the gardens. A commissioned study showed that cooling technology can cut energy consumption for each conservatory to less than that of a comparable commercial building in Singapore of similar size.

NParks adviser and project director for Gardens by the Bay, Tan Wee Kiat, said: ‘Singapore is a garden city of perpetual summer. We are bringing spring into the picture. On top of that, the challenge to our staff is to use as many species of plants that are seldom seen in our other parks. Not only that, we want to use them in very creative ways.’

Visitors can also look forward to horticultural show gardens, ‘edu-tainment’ gardens, a flower market, a space for events and SuperTrees.

SuperTrees are steel structures 25 to 50 metres high that will act as vertical gardens. They will feature tropical flowering climbers, epiphytes and ferns, as well as a canopy to provide shade. At night, the canopies will feature lighting and projected media.

‘The most exciting part is this is the most precious part of modern Singapore,’ said Dr Tan. ‘If you’re very pragmatic, that is sold to the highest bidder. Yet this piece of territory belongs to everybody in Singapore.’

 

Source: Business Times 10 Nov 07

Cost of building Sentosa IR may climb to $6b

Resorts World factors in rising construction costs, new attractions, improved designs

(SINGAPORE) The cost of the integrated resort (IR) on Sentosa could climb to as much as $6 billion – from an original $5.2 billion – as building costs escalate and more attractions are added.

Resorts World at Sentosa (RWS) yesterday said that it has revised its budget to $5.75 billion and made a further contingency provision of $250 million, taking the overall budget to some $6 billion.

$275 million of the confirmed $550 million budget increase can be attributed to new rides and attractions, improved hotel and resort designs and better transport and infrastructure. The other $275 million increase is due to rising construction costs, said Justin Tan, managing director of Genting International, which won the bid for the resort in December 2006.

The announcement by RWS comes after Marina Bay Sands said in August this year that its cost could escalate to $5.2 billion, from an original $5.05 billion.

Rising construction costs have affected developers island-wide. ‘We have been able to lock in the prices of concrete and structural steel at very competitive prices,’ said RWS senior director of projects Michael Chin.

‘Labour costs and margins of contractors, however, have risen significantly.’

Developers have also reported that projects are being delayed because by a shortage of contractors. Despite this, RWS yesterday said that construction is on track for the resort’s soft opening in early 2010.

More than 50 per cent of the overall excavation, piling and reclamation work has been completed and more than $600 million of construction contracts awarded, it said. Another $1 billion of contracts will be awarded by early 2008.

Mr Tan does not expect the new contracts to hold up the project’s completion. ‘At this point in time, we are in negotiations with some of these contractors,’ he said. ‘They have not indicated that (possible delay) to us.’ He also said that with the new attractions, plans for the resort are now final.

RWS yesterday announced six new attractions – two new rides at Universal Studios Singapore and four new performances that will be open to visitors free of charge.

Separately, Genting International reported a third-quarter loss because of an ‘impairment’ charge as a result of its acquisition of a UK casino group. Genting International lost $393.4 million in the three months ended Sept 30, compared with a profit of $86.9 million a year earlier.

 

Source: Business Times 7 Nov 07

Cost of building Sentosa IR may climb to $6b

Resorts World factors in rising construction costs, new attractions, improved designs

(SINGAPORE) The cost of the integrated resort (IR) on Sentosa could climb to as much as $6 billion – from an original $5.2 billion – as building costs escalate and more attractions are added.

Resorts World at Sentosa (RWS) yesterday said that it has revised its budget to $5.75 billion and made a further contingency provision of $250 million, taking the overall budget to some $6 billion.

$275 million of the confirmed $550 million budget increase can be attributed to new rides and attractions, improved hotel and resort designs and better transport and infrastructure. The other $275 million increase is due to rising construction costs, said Justin Tan, managing director of Genting International, which won the bid for the resort in December 2006.

The announcement by RWS comes after Marina Bay Sands said in August this year that its cost could escalate to $5.2 billion, from an original $5.05 billion.

Rising construction costs have affected developers island-wide. ‘We have been able to lock in the prices of concrete and structural steel at very competitive prices,’ said RWS senior director of projects Michael Chin.

‘Labour costs and margins of contractors, however, have risen significantly.’

Developers have also reported that projects are being delayed because by a shortage of contractors. Despite this, RWS yesterday said that construction is on track for the resort’s soft opening in early 2010.

More than 50 per cent of the overall excavation, piling and reclamation work has been completed and more than $600 million of construction contracts awarded, it said. Another $1 billion of contracts will be awarded by early 2008.

Mr Tan does not expect the new contracts to hold up the project’s completion. ‘At this point in time, we are in negotiations with some of these contractors,’ he said. ‘They have not indicated that (possible delay) to us.’ He also said that with the new attractions, plans for the resort are now final.

RWS yesterday announced six new attractions – two new rides at Universal Studios Singapore and four new performances that will be open to visitors free of charge.

Separately, Genting International reported a third-quarter loss because of an ‘impairment’ charge as a result of its acquisition of a UK casino group. Genting International lost $393.4 million in the three months ended Sept 30, compared with a profit of $86.9 million a year earlier.

 

Source: Business Times 7 Nov 07

Sentosa IR to cost $800m more, says Genting

Higher construction and labour costs and new attractions will bring the bill to $6b

THE price tag for Genting’s Resorts World at Sentosa will be bigger than expected as a result of higher construction costs and additional attractions, such as a new roller coaster, being lined up.

Genting International now expects to spend $6 billion on the project, 15 per cent more than its original budget of $5.2 billion, said its managing director Justin Tan.

Of that extra $800 million, $275 million will go into the higher-than-expected construction costs; another $275 million will pay for the added attractions, with the remaining $250 million being put aside for contingencies.

The company explained that while it had locked down the prices for concrete and steel, labour costs and contractors’ margins had shot up.

Mr Tan Hee Teck, the chief executive of Resorts World,said: ‘If you look at Singapore today, there is $20 billion worth of construction going on. And because resources are scarce, the cost has escalated by more than we had anticipated.’

Resorts World is not alone in being stung by the changing economics of the construction industry. Soaring demand and the high prices of sand and steel have also hit building projects across the island.

Just two months ago, the other integrated resort, Marina Bay Sands, also disclosed that it was ’struggling…to stay within budget’.

Las Vegas Sands president William Weidner reckoned in August that the project could cost up to US$1.4 billion (S$2.03 billion) more than expected as a result of higher construction costs, as well as refinements to the design.

The executive director of the Singapore Contractors Association Limited, Mr Simon Lee, noted that contractors were dealing with close-to-full order books and were therefore being ‘very selective’ about the projects they were taking on.

Projects are thus attracting fewer tenderers, he added – not good news for Resorts World, which will award about $1 billion in jobs by early next year.

But Mr Tan still expects the resort to be ready for a soft opening in early 2010.

Construction is on track, with more than half the excavation, piling and reclamation works already done.

Asked about the new attractions being planned, Mr Tan said that two new rides would be put into the Universal Studios theme park, including a new roller coaster.

He added that four new multimedia shows would also be added, some designed by Jeremy Railton, who was behind the 2002 Winter Olympic Games ceremonies in Salt Lake City in the United States.

Money was being put into these and design improvements, he said, in anticipation of a ‘bullish tourism outlook for Singapore and Asia in the next few years’.

Despite the higher budget, project returns to the resort are unlikely to be hit, the company said in its third-quarter results released yesterday.

It reported a loss of $393.4 million for the three months that ended on Sept 30, a reversal from the net profit of $86.9 million from a year earlier.

 

Source: The Straits Times 7 Nov 07

Hugo Boss leads the way with IR boutique

It’s the first luxury brand to confirm a space at Marina Bay Sands IR

LUXURY brand Hugo Boss will set up a 2,000 square feet boutique in the upcoming Marina Bay Sands integrated resort (IR) – the first luxury brand to confirm taking space there – as it seeks to grow its sales in Singapore by as much as 50 per cent over the next three years.

‘I see a potential upside for growth of about 50 per cent over the next few years, especially with the new stores,’ said Hugo Boss chief executive Bruno Salzer. ‘We will definitely have a presence in the two casinos.’

In addition to the Marina Bay Sands boutique and the one targeted for Genting’s Sentosa IR, Hugo Boss is also keen to have a presence in upcoming Orchard Road mall Ion Orchard, said Brian Ang, managing director for the Hugo Boss franchise in Singapore and Bangkok. ‘It is important for us to be in Ion Orchard,’ he said. ‘Most probably we will be somewhere prominent in the mall.’

Hugo Boss recently celebrated its 20th anniversary in Singapore, for which Dr Salzer flew into town. The upcoming boutiques in Singapore are part of Hugo Boss’s push to expand in the region at a fast clip.

The label has about 170 stores in Asia (excluding Japan) at present, but Dr Salzer wants to grow the number by about 15-20 stores yearly over the next few years, he said. ‘Asia now contributes about 10-11 per cent of total sales, and I expect double-digit growth over the next couple of years,’ said Dr Salzer.

Within the region, Japan and China are the biggest markets for the group. Of the 15-20 new stores the brand aims to add each year, the bulk are likely to be in China, he said. But Dr Salzer is also excited about the potential for growth in Singapore, especially with the new stores coming up.

Mr Ang said that in addition to the planned new stores, Hugo Boss is looking at revamping its existing boutiques.

Right now, the brand’s flagship boutiques in Ngee Ann City are split across two levels. But by the end of next year, the brand hopes to have its space all on one floor, – with a 7,000 sq ft floor plate – Mr Ang said. He did not specify if the boutique will be in Ngee Ann City as well. In addition, there are also plans to revamp Hugo Boss’s 1,600 sqft store in Paragon. Mr Ang is looking at taking up more space. The brand also has a boutique at Changi Airport.

The Boss boutique in Marina Bay IR will be ‘more luxurious’ and will be designed to appeal to high-rollers, Mr Ang said.

 

Source: Business Times 6 Nov07