The pipeline for development in Macau continues immediately with the Wynn Macau project in the Cotai region. But after that, it’s anyone’s guess. SJM and MGM China are hoping for the government’s next concession in Cotai, and Galaxy Entertainment has already begun construction on phase II of its Galaxy Macau project.
And now, a new wrinkle has been thrown into the mix: Sands China last month dropped its challenge to the government’s withdrawal of its claim to sites 7 and 8, which could mean that it will get the go-ahead to develop its last available site, No. 3.
But it was the price of the 51-acre Wynn project that made analysts sit up and take notice. While most had expected Wynn to spend at least $3 billion, the higher number surprised some observers.
“The cost hasn’t gone up,” Wynn said at the press conference in Macau announcing the project. “When we first said what we thought we would spend, it was strictly a horseback comment on what a hotel might cost.”
Most other developments in Cotai came in much less than the Wynn estimate. Sands Cotai Central, which opened in April, had a similar cost, but it has three times the number of hotel rooms—6,000 vs. 2,000 for Wynn Cotai.
Unlike the first two Macau projects in the city’s Peninsula area, which concentrate on the VIP sector, this Wynn Resorts development is being built for the mass market. Some of the non-gaming attractions include a 3.2-hectare (eight-acre) lagoon that will allow visitors to ride air-conditioned, Austrian-built gondolas complete with recorded music piped in. Other features of the property include 500 table games, 10 restaurants, shops, a spa, meeting rooms and a nightclub.
Sands China, which has a stranglehold on the mass-market segment, appeared to compromise with the release of its claims to sites 7 and 8.
In December 2010, the Macau government rejected a land claim to the sites, contending that the application was filed past the deadline, even though there was an apparent verbal agreement prior to that date. The next month, Las Vegas Sands filed an appeal with the Court of Second Instance.
Last month, the company withdrew the appeal. In the 2011 annual report for Las Vegas Sands, the company said it would take a charge for all or some portion of the US$101.1 million in capitalized construction costs as of December 31, 2011.
While no details of the withdrawal were announced, some speculated that the company had reached an arrangement with the government for development of site 3, which had a deadline for completion of April 2013. A statement by Sands China President Ed Tracy said the company hoped to “accelerate” the development of the project, while “bringing it to the market as quickly as possible.”