Build­ing a Rus­sian ver­sion of Ma­cau

Financial Mirror (Cyprus) - - FRONT PAGE -

In­vestors are push­ing for­ward with a multi-bil­lion dol­lar gam­bling cen­ter near Vladi­vos­tok, hop­ing to lure up to 10 mil­lion visi­tors per year. About $2.2 bln will be in­vested in the gam­bling com­plex, which is ex­pected to at­tract visi­tors from north­ern China, ac­cord­ing to Ros­siyskaya Gazeta.

Rus­sia has signed agree­ments with in­vestors, in­clud­ing gam­bling ty­coon Lawrence Ho, on con­struct­ing a new casino cen­ter near the Far Eastern city of Vladi­vos­tok.

In­vestors are push­ing for­ward with the multi-bil­lion dol­lar gam­bling cen­ter, hop­ing to lure up to 10 mil­lion visi­tors a year to a Rus­sian ver­sion of Ma­cau.

The re­sort area’s first casino is set to open its doors this Septem­ber. In­vestors are plan­ning to plow a to­tal of $2.2 bln into the gam­bling com­plex, which has been dubbed “Pri­morye” af­ter the Rus­sian name for the re­gion.

“Con­sid­er­ing the zone’s ge­o­graph­i­cal lo­ca­tion, we can as­sume that about 50% of all visi­tors will come from Asia, es­pe­cially from China,” said Timur Nig­mat­ullin, an­a­lyst at Fi­nam in­vest­ment com­pany.

An­a­lysts said that Pri­morye might ben­e­fit from be­ing sig­nif­i­cantly closer to north­ern China than Ma­cau, which is the largest gam­bling cen­ter in Asia and is si­t­u­ated on China’s south­ern coast near Hong Kong.

One of Pri­morye’s key in­vestors is Melco In­ter­na­tional Ltd, a firm be­long­ing to Lawrence Ho, one of the heirs to Stan­ley Ho’s gam­bling em­pire in Ma­cau.

Apart from the Ho fam­ily, other large in­vestors in the pro­ject in­clude Diamond For­tune, which is pre­par­ing to be­gin the con­struc­tion of a casino dubbed Golden Gate as early as the first half of 2016.

Royal Time Group, the pro­ject’s third in­vestor, which is al­ready heav­ily in­volved in the Azov-City gam­bling zone, is ex­pect­ing to start the con­struc­tion of its 250,000 sq.m. Zhar-Ptitza (‘fire­bird’) casino and re­sort this sum­mer.

The de­sign­ers be­hind the pro­ject say the name was picked for a rea­son, since the fu­ture re­sort will mostly tar­get Asian tourists.

The Zhar-Ptitza, or Phoenix as it is also known, is a myth­i­cal bird, which arises from the ashes, and is con­sid­ered highly sym­bolic in some Asian cul­tures.

“The pro­ject’s en­tire in­fra­struc­ture has a uni­form Asi­ain­flu­enced style,” says Alexey Belin­sky, head of the Euro­pean di­vi­sion of Steel­man Part­ners, an ar­chi­tec­tural com­pany work­ing on the pro­ject.

The orig­i­nal plan called for the casino to house 500 slot ma­chines and 30 gam­bling ta­bles. But the num­bers are cur­rently be­ing re­viewed and may reach 3000 ma­chines and 150 ta­bles.

Once com­pleted, the 619- hectare space will in­clude 15 ho­tels, 12 rental vil­las, a yacht club, a mul­ti­func­tional trade fair com­plex and other recre­ational in­fra­struc­ture.

The zone will even­tu­ally be able to com­pete with Ma­cau for the ti­tle of Asia’s largest gam­bling cen­ter – and, ac­cord­ing to Rus­sian ex­perts, it has sev­eral cru­cial ad­van­tages.

Pri­morye is closer to north­ern China than Ma­cau, with Vladi­vos­tok lo­cated a two-and-a-half hour flight from Bei­jing and just a one-and-a-half hour flight away from Harbin, the cap­i­tal and largest city of Hei­longjiang province which borders Rus­sia.

Ac­cord­ing to Rus­sia’s Min­istry for the De­vel­op­ment of the Far East, the ap­prox­i­mate rev­enues of the Pri­morye com­plex may amount to $1.2 bln, reach­ing up to $5.2 bln in ten years. The tax rates for the zone will be be­tween 3% and 7% - sig­nif­i­cantly lower than Ma­cau’s 39%.

Rus­sia, which by na­tional law pro­hibits gam­bling out­side spe­cially-es­tab­lished zones, has es­tab­lished gam­bling cen­ters in other ar­eas, in­clud­ing in the Euro­pean-in­flu­enced ex­clave of Kalin­ingrad, the Al­tai Ter­ri­tory in Eastern Siberia and in the Rus­sian Far East.

An­a­lysts said Pri­morye has the best prospects gam­bling zone es­tab­lished by Rus­sia so far.

“Ac­cord­ing to my es­ti­mates, given the pro­ject will likely re­ceive some tax re­lief, the in­vest­ments in the pro­ject should pay off in about 18 months to two and a half years af­ter the con­struc­tion is com­pleted,” says Timur Nig­mat­ullin, an­a­lyst at Fi­nam in­vest­ment com­pany. “The Pri­morye gam­bling zone is the most promis­ing pro­ject com­pared with other sim­i­lar zones in Rus­sia.”

Nig­mat­ullin says the en­ter­tain­ment busi­ness — and gam­bling in par­tic­u­lar — is tra­di­tion­ally cost ef­fec­tive and is con­sid­ered to re­turn on in­vest­ment quickly. A weaker ru­ble will also make vis­it­ing the re­sort cheaper, he said.

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