Queensland in new push for IR investors

Friday 6th of July 2018

Queensland is set to kick start its efforts to establish new IRs in the state four years after a previous round of bidding ended with little progress.

The Queensland state government is set to invite investors in late July or August to register their interest in the development of a new large-scale integrated resort with a casino license on Australia’s popular Gold Coast, media reports say. The government is also already in talks with investors to develop another integrated resort in the coastal city of Cairns.

The government would issue two new casino licenses for the projects. It would also consider one operator for both developments and the success of Cairns might be dependent on the Gold Coast integrated resort going forward, the reports say.

However, this time around the investment proposals are expected to be far more modest than the more than $8 billion mega projects that were mooted in 2014. Those proposals were criticized as being too large for the region to sustain and ultimately failed.

Investments in the new developments are likely to be A$3-5 billion in Cairns and AU$1.5 billion in the Gold Coast.

There are already significant expressions of interest in the Cairns resort with around 10 investors registering an interest, including some from the United States.

Queensland Premier Annastacia Palaszczuk recently travelled to Las Vegas and Macau and reportedly met investors.

The new IR developments in the Gold Coast and Cairns would be expected to create jobs and reinvigorate key locations across the state. The Queensland government is reportedly working with the Gold Coast city council to identify suitable blocks of land there.

Identification and purchase by the state of a suitable block of land removes some of the risks to the bidders as they do not have to first purchase the land without necessarily securing the license.

The government has already revealed the Cairns City Port precinct is its preferred site for an integrated resort which includes four hectares of waterfront already owned by the state. The development would likely see Cairns issued with its second casino license alongside current license holder the Reef Hotel Casino, but it is expected that operations would be in a form of partnership resulting in one integrated resort and ultimately one license, the reports indicate.

The government appears keen to replicate the tender process that has seen the go ahead of the AU$3.6 billion Queen’s Wharf Brisbane integrated resort with casino, now under construction. There the incumbent operator Star Entertainment Group formed a joint venture with Hong Kong-based Chow Tai Fook Enterprises and Far East Consortium to create the Destination Brisbane Consortium to develop 26 hectares over land and water.

A competitive tender process would likely attract big brands, ensure transparency and the highest standards of probity as well as spell out commitments to generate local employment and use local suppliers and companies during the construction process.

The government originally put three licenses up for tender, but only the Star development has moved ahead. The other projects would have been significantly larger than any current resort developments in the state and would have relied heavily on being able to bring in tourist dollars, particularly from Asia, amidst weak domestic spending.

The Aquis Group, backed by Hong Kong investor Tony Fung, had planned an $8.15 billion project on 343 hectares of land 13 km north of Cairns but chose not to proceed with the casino component. It is instead building a $440 million hotel in Surfers Paradise.

A separate project by the China-backed ASF Group also ran into trouble amidst concerted opposition from locals and environmental groups. The Australia-listed group scaled back its $7 billion proposal for a Gold Coast resort to $3 billion but the plan was rejected by the state government.

“The proposed project has been rejected by the Queensland State Government, however, ASF still believes in the benefits it would bring to the community and region,” it said earlier this year.

The government is seeking to boost tourism numbers and create more local jobs. The Gold Coast already highly popular with Chinese tourists, who now make up a quarter of all arrivals. Last year Queensland welcomed a record 2.7 million visitors, with year on year growth of 4.3 percent. Chinese visitation grew to a record high of 503,000, surpassing half a million visitors for the first time.

More direct flights with China and Singapore are also in the pipeline which should ensure the area remains popular, particularly as the time zones are similar.

Tourism in Queensland contributes AU$23 billion to the state’s economy and supports over 230,000 jobs and the government is committed to supporting the growth of the sector.