Primorye projects full speed ahead, investors see potential

Published in: Latest Intelligence While Altai struggles to attract international investors, projects in its sister zone Primorye in the Russian Far East leap forward, with investors expressing full optimism in the region’s development
Hong Kong-listed NagaCorp has plans for a $350 million integrated resort, gaming and entertainment complex near the port city of Vladivostok. Meanwhile, Lawrence Ho is investing in two Russian gambling resorts worth $630 million as he expands his businesses overseas. Melco International Development and Summit Ascent Holdings, both backed by Ho, will buy a combined 51 percent stake in a holding company that will develop the two casino hotels.
“The Russian government is fully supportive of building tourism for the region and we are excited and pleased to be a part of their overall development," NagaCorp chairman Tim McNally told Asia Gambling Brief.
Located in the Eastern tip of the Russian Federation the Primorye gaming zone "is an ecotourism attraction possessing beautiful lakes, bays, rivers and forests, just a beautiful setting for a 'European city' located in the heart of Asia.”
Primorye rests within a two-to-three hour flight from major population centers in Korea, Japan and China: "this region is accessible to a large population area in Asia and we believe they will enjoy the European experience without the need to travel 8 or 10 hours.”
Beijing and the three northeast provinces of China alone have a total population of better than 125 million, and is very much a different market than Macau which is substantially visited by individuals and groups from Southern China.
Although renowned for bitterly cold winters, the majority of the population base in the region is used to the extremes and are likely to be quite comfortable with winter conditions.
In an effort to boost tourism in the region, Primorye Governor Vladimir Miklushevsky in October inked an accord with his counterparts in regional areas of Japan, China, Mongolia and South Korea at an international summit in Vladivostok, local media said. The accord has the target of boosting visitor numbers to 12 million a year.
Part of the plan includes measures to upgrade Primorye’s infrastructure to support the development, a factor seen as lacking in the Altai zone of Siberian Coin.
A modern international airport, sea ports, developed railroad system and hospitality facilities will make the region more attractive to tourists.
"Tourist organizations have already developed over 300 routes in Primorye," Miklushevsky was cited as saying. "We are planning to buy modern light aircraft that can fly across the region, and to the most difficult to reach areas in the north. I am sure this will assist the growth of the tourism throughout our region," he added.
NagaCorp’s plan for the zone centres on building a sustainable community with the vision of having a population of not less than 20,000. It will initially offer 1,000 hotel suites for purchase, mostly to foreign purchasers under the 'Primorsky My Second Home concept.
McNally is "confident there is considerable demand for affordable and good yield hotel suites within the Integrated Entertainment Zone and near the vibrant city of Vladivostok.”
“Our entry costs into this market have been very reasonable, tax structure is low by comparison of other gaming jurisdictions, and the potential market is brilliant just to think about it. We are excited about the Russian venture and will work closely with government officials to make this a success. We have estimated a date of 2018 to open our operations but if we can work our way successfully through the local government building requirements, we will then certainly move that timetable forward when all the approvals have been obtained,” he said.
The investment for the initial phase in Ho’s development is about $130 million, according to Hong Kong Stock Exchange filings made by the company. It will have a 119-room hotel, about 800 slot machines, 25 VIP gaming tables and 40 mass market gaming tables.
Summit Ascent Holdings also recently said it has clinched the equity financing for the operation.
However, it has not been all smooth sailing for the resort.
Earlier this month, Summit confirmed Oleg Drozdov, one of the indirect minority investors in the project, was detained following allegations of business malpractices relating to the construction of a waste treatment facility in 2009/2010. Drozdov is a minority investor in Oriental Regent, an investment holding company that owns First Gambling Company of the East, which is developing the project.
 

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