Design changes for Barangaroo
Two global resort kingpins are moving ahead with mega-resort projects in Australia, destined to change the shape of gaming in the nation and even on the Pacific Rim.
James Packer, majority owner of native firm Crown Resorts, has finally agreed to compromise on his $2 billion Barangaroo project in Sydney, New South Wales. The project, in a holding pattern because of unapproved changes in its design and footprint, will now move ahead thanks to changes in that design. And the Great Barrier Reef Resort & Casino in Queensland, planned by Hong Kong tycoon Tony Fung, may be close to winning government signoff on its Chinese investment partners.
According to the Sydney Morning Herald, Crown Resorts got approval for the Barangaroo VIP casino and hotel after “a bruising two-year battle” with the NSW government. But due to the delays, the resort will likely open in 2021, instead of late 2019 as originally forecast, giving incumbent operator Star Entertainment an extended monopoly in the jurisdiction.
Crown has agreed to move its building back from the waterfront, increase the width of the public promenade, add new entrance points, make changes to the façade, and add a public observation deck, among other changes.
“Our updated designs, including significant changes to the hotel podium, will help ensure Crown Sydney is embraced by the local community and visitors as one of the world’s best hotels and architectural icons,” said a Crown spokesman. “The observation deck at the top of Crown Sydney will be an iconic experience for Sydneysiders and an additional tourism asset to attract interstate and international tourists.”
Gaming will take place over two floors, despite Crown’s contention that split gaming floors “result in inferior returns,” based on “first-hand evidence” at its Macau properties, Altira and City of Dreams. The splashy resort will cater to international high rollers, especially Chinese gamblers who no longer travel regularly to Macau, which is struggling with a two-year recession.
The NSW Department of Planning and Environment said it’s satisfied with the modifications to the Sydney resort. “The department considers that the proposed scale of the podium is acceptable and that it has an appropriate relationship to the public domain and foreshore,” said a government statement.
Crown CEO Rowen Craigie noted that the budget for the Sydney complex may rise as the project proceeds. “It’s still four to five years away, so we will be trying to catch up as much as possible,” he said. “Construction costs can rise, but your revenue projections rise as well.”
In 2014, Packer paid $100 million upfront as part of the deal to obtain Sydney’s second casino license, according to SMH.
In Queensland, Fung is making headway in his planned $8.15 billion casino resort, to be located in Northern Cairns near the Great Barrier Reef. That project too has hit roadblocks due to differences with state regulators over Fung’s Chinese investors, Tandellen and Chinese state-owned CCCC International Holding. Tandellen is owned by Jack Luo, who is known for upscale development projects in Beijing. CCCC was in the news last year when it faced corruption allegations. But GGRAsia and the Australian report that the Chinese partners are likely to be confirmed “within the coming month.”
Aquis has talked up the economic benefits of the massive development, which would be Australia’s largest resort. It could add almost 3,800 construction jobs and 10,000 permanent jobs, and contribute $55.4 billion in value to the region by 2030, says the Hong Kong-based company. The current blueprint includes eight hotels with 7,500 guest rooms, a convention center, a golf course, and VIP and mass-market gaming, all overlooking an artificial lake and lagoon. The resort may begin development without being assured of a casino license, however, according to the Asia Gaming Brief.
Fung and the Chinese firms reportedly also partnered to buy a parcel of land on Queensland’s Gold Coast for AU$40 million (US$30 million). Fung, former chairman of Hong Kong-based financial services company Sun Hung Kai and Co Ltd., also owns the International Beach resort on the Gold Coast and Casino Canberra in the Australian Capital Territory.
In November 2014, the billionaire threatened to ditch his Great Barrier Reef project because of “increasing complexity and difficulty” in the approvals process. But in an open letter to the community in April 2015, he said he remained “totally committed” to the project.
The development of two lavish resorts in Australia, not to mention Star Entertainment’s massive project in Brisbane, could signal that Macau’s unrivaled dominance in the gaming sector may be coming to an end. According to the Macau Daily Times, the MSAR’s rivals are “increasingly willing to spend all it takes to lure away the affluent Chinese players” that for years made Macau the No. 1 gaming destination in the world.
“Times might be improving for Macau, but the challenges keep growing every day,” an analyst from World Gaming wrote.
Though shares of the six local casino operators have risen an average of 30 percent over the past two months, those stocks are still almost 70 percent below their peak numbers. And the downtrend is expected to continue, with analysts predicting that GGR will fall 15 percent to 20 percent year-on-year for the month of March.
China has laid out a five-year economic plan to transform Macau into a “global tourism center” with diverse attractions beyond gaming. But the Wall Street Journal has called the plan “misguided at best,” because the financial worth of high-rolling gamblers who once frequented Macau may not be easily replaced.
