Lift on Singapore's Casino Ban To Encourage Economic Growth

The Singapore government legalized casino gambling last month in an effort to revitalize the country's economy, clearing the way for the development of two casino resorts, with each site expected to receive winning bids of approximately $2 billion.

Like the United States, Singapore has lost many manufacturing jobs to China and India, resulting in higher unemployment, according to Arsh Chaudhry, managing director of international solutions for Cushman & Wakefield Inc. Additionally, Singapore's tourism industry has suffered as vacationers explore other Asian destinations, such as Thailand.

"This is really a bold move by a government that has traditionally been conservative. It is really hoping that these integrated resorts—that's what the government is calling them, since the casinos will make up only 5 percent of the resort activity—will kick-start the economy," said Chaudhry. "Projections are that the GDP will grow by 1 percent just because of the casinos and 100,000 jobs will result from construction."

The government already has chosen two sites for the resorts: the waterfront near the city center and the island of Sentosa. The mainland site would be proximate to the convention center and would cater to business guests, whereas the island site would be more family oriented. The government wants construction on the pair to begin within the next two years, so they will be operational by 2009, according to Chaudhry.

At press time, 19 proposals from casino operators—including Wynn Resorts Ltd. and Starwood Hotels & Resorts Worldwide Inc.—had been submitted to the Singapore government. The hotel companies declined to comment.

"U.S. casino operators view Asia as the next growth market," said Chaudhry. "Construction activity (in Singapore) will certainly increase because of these casinos. It is akin to what happened when Disneyland came to Hong Kong. There was tremendous upward pressure of rental and capital values, and residential values almost doubled."