Singapores Government- Casino

Singapore's Government to Fix Land Price for Casinos (Update2)
Nov. 4 (Bloomberg) -- Singapore said companies competing for the right to build the country's first casinos will pay a fixed price for land, a move aimed at averting a bidding war that would sap funds available for developing the projects.

The government will sell a 20.6-hectare (51-acre) site in downtown Singapore for S$1.2 billion ($707 million), Trade Minister Lim Hng Kiang said. Bidders including MGM Mirage and Harrah's Entertainment Inc. must submit their casino proposals by March 29, and a winner may be named by mid-2006, he said.

Singapore in April said it would drop a long-standing ban on casinos and allow two to be included in resorts planned for the city's downtown and a nearby island to help lure tourists. Fixing the price of land will allow bidders to spend more on the resorts themselves, Lim told reporters in Singapore today.

``Land is a precious natural resource in Singapore and the government has ensured that land value is maximized, while at the same time allowing the creation of a world-class integrated resort that is economically viable,'' said Jonathan Galaviz, a partner at Las Vegas-based Galaviz, Ong & Co., which tracks the gaming industry.

The government didn't disclose the price of land for the proposed casino on the southern resort island of Sentosa.

Casino operators including MGM, Las Vegas Sands Corp. and Genting Bhd. are among 12 groups competing for a license to run casinos in Singapore. The companies plan to tap a market that's within a six-hour flight of 2.5 billion people, and replicate the success of new casinos in the Chinese city of Macau.

Guidelines

Merrill Lynch & Co. last month estimated that the two casino resorts would attract $5 billion in investments, and each would generate about $1 billion in gaming revenue in the first year.

The government will announce guidelines for the casino bids on Nov. 15, Lim, the trade minister, said today.

The casinos will be allowed to set aside a maximum of 15,000 square meters for gaming, and operate no more than 2,500 gaming machines, Singapore Tourism Board Chief Executive Lim Neo Chian said today. The government will levy a 15 percent gaming tax, which won't be increased for 15 years, he said.

Singapore has said its key motivation for lifting the ban on casinos is to boost tourist arrivals and spending, not tax revenue. The government estimates its visitor arrivals would double in the next decade and tourism spending would triple during that time.

Entrance Fees

The government last month said it would scrap a plan to impose a levy on gaming revenue that exceeded 50 percent of sales because it didn't want to ``unnecessarily constrain'' bidders.

The city-state plans to bar casino operators from extending credit to Singapore citizens and permanent residents unless they deposit at least S$100,000 ($58,844) with the casino, according to draft legislation published on Oct. 17. Citizens will pay a daily levy of S$100 to visit the casinos, it said.

The government also plans to review the operations of the casinos every three years to ensure they remain free from ``criminal influence,'' according to the draft law.

The price for a 60-year lease on the downtown site was based on valuations by property companies CB Richard Ellis in Las Vegas and Knight Frank in Singapore, Lim said.

Land near the proposed site of the downtown casino was sold for S$1.8 billion in July to a group including Hong Kong billionaire Li Ka-shing's Cheung Kong Holdings Ltd., Hongkong Land Holdings Ltd. and Singapore's Keppel Land Ltd.

`Fair Price'

``What we are looking for is the best IR concept and not just the best land price,'' Lim said today, referring to proposals to develop the so-called integrated resorts. ``But at the same time, we must get a fair price for the land.''

Las Vegas Sands, the world's biggest casino-hotel operator by market value, plans to team up with Clear Channel's Entertainment unit to bring Broadway musicals such as ``The Lion King'' and ``The Producers'' to the Singapore resort. Kuala Lumpur-based Genting plans to build a Universal Studios theme- park if it wins the bid for the Sentosa site.

By fixing the price of land, bidders ``will be able to devote their full energy and resources to come up with the best integrated resort concept,'' the Tourism Board said today. ``The government would also be able to evaluate and select the IR proposals based on their tourism appeal, level of development investment, architectural design, and strength of the consortium and partners' track record and reputation,'' it said.



To contact the reporter on this story:
Linus Chua in Singapore at  lchua@bloomberg.net.
Last Updated: November 4, 2005 05:56 EST