Cost Of Building Sentosa IR May Climb To $6b

Source : The Business Times, November 7, 2007

Resorts World factors in rising construction costs, new attractions, improved designs

The cost of the integrated resort (IR) on Sentosa could climb to as much as $6 billion - from an original $5.2 billion - as building costs escalate and more attractions are added.

Resorts World at Sentosa (RWS) yesterday said that it has revised its budget to $5.75 billion and made a further contingency provision of $250 million, taking the overall budget to some $6 billion.

$275 million of the confirmed $550 million budget increase can be attributed to new rides and attractions, improved hotel and resort designs and better transport and infrastructure. The other $275 million increase is due to rising construction costs, said Justin Tan, managing director of Genting International, which won the bid for the resort in December 2006.

The announcement by RWS comes after Marina Bay Sands said in August this year that its cost could escalate to $5.2 billion, from an original $5.05 billion.

Rising construction costs have affected developers island-wide. 'We have been able to lock in the prices of concrete and structural steel at very competitive prices,' said RWS senior director of projects Michael Chin. 'Labour costs and margins of contractors, however, have risen significantly.'

Developers have also reported that projects are being delayed because by a shortage of contractors. Despite this, RWS yesterday said that construction is on track for the resort's soft opening in early 2010.

More than 50 per cent of the overall excavation, piling and reclamation work has been completed and more than $600 million of construction contracts awarded, it said. Another $1 billion of contracts will be awarded by early 2008.

Mr Tan does not expect the new contracts to hold up the project's completion. 'At this point in time, we are in negotiations with some of these contractors,' he said. 'They have not indicated that (possible delay) to us.' He also said that with the new attractions, plans for the resort are now final.

RWS yesterday announced six new attractions - two new rides at Universal Studios Singapore and four new performances that will be open to visitors free of charge.

Separately, Genting International reported a third-quarter loss because of an 'impairment' charge as a result of its acquisition of a UK casino group. Genting International lost $393.4 million in the three months ended Sept 30, compared with a profit of $86.9 million a year earlier.