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OUE, Lippo, Caesars in S Korea casino project
[SINGAPORE] A consortium consisting of OUE Limited, Lippo Group and Nevada-based casino operator Caesars Entertainment has received preliminary approval from the South Korean government to build the country's first foreign-owned casino integrated resort (IR).
This project will comprise hotel, retail, convention and residential components. It will also feature a foreigners-only casino that will be operated by Caesars Entertainment or one of its affiliated companies.
OUE, which is 55 per cent owned by Hong Kong-listed Lippo Group and backed by Indonesia's Riady family, will focus mainly on the hotel component and convention centre of the project. It has an undisclosed significant stake in the project.
According to OUE, phase one of the project is estimated to cost about 855 billion Korean won (S$1 billion), covering a total development gross floor area of over 150,000 square metres on a 4.3 hectare site in Incheon, west of Seoul.
It is expected to be ready in time for the 2018 Winter Olympics in Pyeongchang, South Korea.
OUE executive chairman Stephen Riady said that OUE is bringing to the project its expertise in developing and operating large-scale hospitality, retail and commercial properties.
Caesars, the largest owner of US casinos, is also entering the South Korean market for the first time. It may elect to include Caesars Growth Partners LLC - a joint venture between Caesars Entertainment and Caesars Acquisition Company - in the development of the project.
If roped in, Caesars Growth Partners may provide the capital investment while Caesars Entertainment will act as the operator and share in the management fee associated with the project.
"We are excited about the opportunity to expand our network and brands to Asia," said Gary Loveman, chairman, CEO and president of Caesars Entertainment. "Foreign visitation to South Korea has grown significantly, and we look forward to creating a world-class destination to further support Korea's economic growth and tourism goals."
The decision to allow foreign-run casinos came as South Korea is planning to draw 10 million Chinese visitors each year by 2020, up from 4.3 million last year, according to the Korea Tourism Organization.
The full price tag for the new integrated resort project is estimated to be as much as 2.3 trillion won. It may add more than 890 billion won in tourism income from new visitors and create more than 8,000 jobs during construction from 2014 and 2018, according to the Ministry of Culture, Sports and Tourism of the Republic of Korea. The new casino resort will be pitting itself against 17 existing casinos in South Korea.
An OUE spokesman said that it is too early to assess the impact and contribution of this project to the group's bottom line.
OUE's participation is still subject to certain conditions, including further negotiation and finalisation of definitive transaction documents as well as compliance with pre-approval conditions, third-party financing and finalisation of the project costs.