Hoi An casino breaking ground April 23

Vietnamese officials have announced that the Nam Hoi An Casino Resort, located in the UNESCO heritage city of Hoi An, would break ground starting April 23 on the US$4 billion (MOP 31.95 billion) project’s first phase, according to research by Union Gaming. The first phase of the project is estimated to cost US$500 million and occupy 160 hectares of ground, with an estimated completion date of the first quarter of 2019, CalvinAyre reported.
The casino resort is a joint venture project between Vietnamese investment banking firm VinaCapital, Macau-based SunCity Group and Hong Kong-based Chow Tai Fook Enterprises, with the jewellery operation taking the lead after acquiring VinaCapital’s majority stake in September, reported the publication.
VinaCapital, however, announced on Tuesday that it would be increasing its stake in the project to a total of 32 per cent, up from its previously held 22.5 per cent, the publication states.
SunCity and Chow Tai Fook stepped in to fill the void left by Genting Malaysia Berhad – previous investors in the project until September 2012, when the group announced its sudden withdrawal from the project during site clearance work – wrote Business Daily.
Work was originally set to begin on the project in mid-2015, according to a statement by VinaCapital CEO Don Lam in October of 2014.
Union Gaming opines there is ‘probably no better local partner than VinaCapital’ and, given the local market, having a ‘high-powered, well-connected, local partner is critical’ – especially in the case of obtaining approval for locals to gamble. The group see the case of Ho Tram Strip resort – Vietnam’s other integrated resort, located on Vietnam’s southern tip – as ‘what not to do’ and expect VinaCapital to ‘back-end load the development timeline and capital commitment’. This would allow the group to pay for future phases in years and to be ‘bought down’ by residential sales to reach the total US$4 billion investment, predicts Union Gaming.
Locals needed
Nam Hoi An Casino Resort will be the first integrated resort in central Vietnam with high-end gaming options; however, these are still restricted to international visitors, one of the reasons Genting pulled out, following the government’s demand of a US$4 billion threshold investment, CalvinAyre reports. Union Gaming foresees ‘the developers ultimately petition the government for a locals licence and thus try to garner an outsized ROI.’ Given the ‘easy access via airlift’ as well as being a ‘preferred vacation destination’ Union Gaming sees that with a potential future locals licence would likely capture a significant amount of domestic high-end play, according to the analysts.
The research group also predicts that the local government will ultimately green-light locals gaming at up to four IRs [integrated resorts], with one locals licence in each of the North, Central, South and Southwest zones.
Given Nam Hoi An’s first-mover advantage and significant commitment, Union Gaming sees the integrated resort as a shoe-in for the Central-zone licence and since the political winds have shifted the group sees this as potentially happening as early as the 2019 opening date.
This doesn’t play well for the Macau VIP situation, especially considering figures such as Imperial Pacific’s US$6.1 billion in rolling chip turnover. This turnover, which if analysts assume is ‘entirely ripped out of Macau’ represents a ‘200 bps negative impact’ on Macau’s gross gaming revenues growth rate this year, say the analysts.
Integrated resorts such as Nam Hoi An cause the outlook of Macau’s VIP market to be further impaired as volume seems to be gravitating towards greener pastures.