Integrated resorts to pay 'fair market value' for land when expanding: Chee Hong Tat

Integrated resorts to pay 'fair market value' for land when expanding: Chee Hong Tat

Senior Minister of State Chee Hong Tat in Parliament on May 6, 2019
Senior Minister of State Chee Hong Tat speaking in Parliament on May 6, 2019.

SINGAPORE: The operators of the two integrated resorts (IRs), which are looking to ramp up their offerings here, will have to pay for land based on “fair market value” determined by the chief valuer, said Senior Minister of State for Trade and Industry Chee Hong Tat on Monday (May 6).

Mr Chee was responding to questions from Members of Parliament (MPs) regarding the S$9 billion expansion plans of Marina Bay Sands (MBS) and Resorts World Sentosa (RWS).

Ang Mo Kio GRC MP Gan Thiam Poh asked how the Government ensures a “fair” land cost without calling for a public tender. Non-Constituency MP Daniel Goh wanted to know the amount IR operators will have to pay for land under the proposed investment, as well as the additional land cost for the expansion of gaming areas.

In his reply, Mr Chee said the Government is open to directly allocating land to investors when there are substantial investments that can benefit the Singapore economy and workers.

This is a “longstanding policy that has been extended to both local and foreign companies across different industries”, he added.

In the case of the IRs, the proposed S$9 billion investment will introduce additional world-class attractions and experiences for both tourists and locals.

These are expected to attract an additional 500,000 international visitors each year, contribute S$500 million annually to Singapore’s economy, create up to 5,000 new jobs and increase opportunities for local companies, he said.

For the land, Mr Chee said both operators “will pay fair market value … as determined by the chief valuer in accordance with market conditions and established valuation principles”.

“The expansion site for Marina Bay Sands is 3.3 hectares, at a cost of S$1.3 billion. Resorts World Sentosa has set aside a budget of S$1 billion to intensify the use of existing land and purchase around 1 hectare of new land,” he elaborated.

“If the IRs choose to activate their options for additional gaming area, they will have to pay additional costs for these areas."

This amount, according to Mr Chee, will also be determined by the chief valuer based on prevailing market conditions when the option is exercised.

Several MPs also asked why the Government decided to give both operators additional gaming provisions.

MBS and RWS are each currently allowed 15,000 sq m of approved gaming area but they will be given the option to deploy an additional 2,000 sq m and 500 sq m respectively, subject to the payment of additional land costs.

MBS and RWS will also be given the option to increase the number of gambling machines by 1,000 and 800, respectively.

Mr Chee said the business model of an IR "combines a controlled proportion of gaming activities with a wide range of non-gaming amenities", such as theatres, theme parks and museums.

Gaming activities are an important source of revenue for the operators, contributing more than two-thirds of their total revenue, he added. 

In response to Assoc Prof Goh's supplementary question on whether the new attractions will be loss-making if the gaming areas are not expanded, Mr Chee replied: "The new facilities ... are expensive facilities. Without the additional gaming provisions as options for the operators, they may not find it commercially viable to make these additional investments to create additional jobs."

At the moment, however, both IRs have not decided to activate their additional gaming options, said Mr Chee.

Even if both operators exercise their options for additional gaming area in full, gaming area as a proportion of total floor area will drop from the current 3 per cent to 2.3 per cent as the expansion of non-gaming area is much larger, he said.

The IRs have also stated that the additional gaming provisions will be “targeted at higher-tier, non-mass market players, who are mostly tourists”.

Source: CNA/sk(rw)

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