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Inside Asia Gaming

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Galaxy Macau Phase 3 Could Cost As Much As US$6.5 Billion

Jan 16, 2013
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Galaxy Entertainment Group plans to invest as much as HK$50 billion ($6.5 billion) on Phase 3 of its Galaxy Macau integrated resort on Cotai, which opened in May 2011. Construction is still underway on the HK$16 billion Phase 2 of the resort, scheduled for completion in mid-2015.



Ahead of that, Galaxy expects to start work on Phase 3 at the end of 2013 or the beginning of 2014, according to company spokeswoman Yoko Ku. All three phases will sit next to each other on the same site, which constitutes the largest contiguous land bank in Macau.



“Galaxy will continue to do well in the short run, but there may be an oversupply in the market after 2017,” said Jeremy Tan, a Hong Kong-based analyst at Kim Eng Securities HK Ltd. “Every casino operator in Macau is expanding in Cotai.”



Given that all projects are large-scale resorts with more than 2,000 hotel rooms each, it’s uncertain whether there will be enough demand to absorb the supply after 2017, when most of the new resorts will be completed, according to Mr Tan.



Galaxy plans to fund its expansion through internal resources and debt facilities if needed, said Ms Ku. The company has more than HK$10 billion of cash on hand as well as strong cash flow from operations and doesn’t require additional financing so far, she said. The operator plans to draw more middle-class families by dedicating about 95% of the area to be developed under the third phase to retail and entertainment. The expanded area will include a concert arena with about 10,000 seats, a theater with 1,800 to 2,000 seats, and one shopping mall.



The company is looking for hotel partners for Phase 3, which is expected to be completed in 2016 at the earliest and will bring the total number of hotel rooms and suites at the property to 4,200, from the current 2,300.