The Business Times, 21 May 04

New Downtown better spot for casino: Leng Beng
He voices concerns over BFC drawing away existing office tenants
by Andrea Tan

(SINGAPORE) Property tycoon Kwek Leng Beng is betting on a casino in front of the controversial Business and Financial Centre at the New Downtown.

Mr Kwek: 'It can be exciting if you have a big casino like The Venetian in Macau ... let it be in front of the BFC.' He said yesterday he isn't looking 'at the moment' at taking part in the BFC. 'But it can be exciting if you have a big casino like The Venetian in Macau ... instead of on an island ... let it be in front of the BFC,' he told reporters on the sidelines of a hotel conference organised by Jones Lang LaSalle.

Las Vegas Sands, parent company of the Venetian Resort-Hotel Casino in Las Vegas, earlier this week opened its US$240 million Sands Macao casino in the Chinese southern territory and is building The Venetian, a mega tourism development on the reclaimed land of Cotai, Macau.

Las Vegas Sands is meeting Singapore officials to discuss plans for a casino here and said it is open to having a local partner. Mr Kwek, executive chairman of Hong Leong group, first mooted building a casino open 'only for foreigners' at potential sites in Bugis and Fullerton areas in 1997. Casinos were a no-no back then. But the Singapore government has said recently it will consider allowing a casino here, and suggested siting it at Sentosa/Southern Islands.

On Mr Kwek's suggestion to build a casino at the New Downtown, Knight Frank executive director Tay Kah Poh said: 'It will add a lot more buzz to the area and the casino will be a huge traffic generator. There is some merit to that point.'

Mr Kwek, who also controls listed City Developments, reiterated his concerns over the BFC yesterday. 'The over supply situation (in the office market) is stabilising,' he said. 'I'm sure there'll be demand (for the BFC) but sometimes if they don't expand their hub business they would cannibalise demand from the existing space.'

To prevent such a situation from happening, Mr Kwek proposed that the government buy back buildings along Shenton Way, which is 'too dilapidated', and develop the area into parkland. 'When the market is better, they can still sell it and make money,' he said. 'Well, they didn't obviously accept my idea.'

Elaborating, a Hong Leong Group spokesman said: 'It would be difficult for the government to buy back all these buildings. An alternative could be to offer existing owners a stake in the BFC.' Rents for prime office space tumbled 18.4 per cent in Q1 compared with the same period last year, while capital values fell 5 per cent, according to data from JLL. Some 8 million sq ft of office space are unoccupied.

Mr Kwek said that while he will 're-examine again' having an office real estate investment trust, 'at the moment, it's not exciting yet as no building can give you 6 per cent yields'. He said he would not consider spinning off office assets, like rival CapitaLand did with CapitaCommercial Trust (CCT). 'Not at the moment, because I think you're downsizing your operations,' Mr Kwek said. 'You have fewer assets ... you get rid of them but you don't get cash in.' CapitaLand injected seven of its office assets and carparks into CCT, giving shareholders one CCT unit for every five CapitaLand shares owned. CCT has a distribution yield of 5.86 per cent based on its closing price of 97 cents yesterday. .