Casino operator Melco Crown Entertainment (MCE) has boosted the budget to complete its new Studio City property on Macau’s Cotai Strip by $300m. MCE made the announcement in a filing with the US Securities and Exchange Commission on Tuesday. The increase amounts to 15% of Studio City’s planned budget, bringing its total development cost to around $2.3b. No reason for the increase was provided, although MCE’s rivals have faced similar budget overruns on their own Cotai projects as construction costs soar in Macau.
Studio City is set to open by the middle of 2015, one of seven new mega-developments scheduled to launch on Cotai between 2015 and 2017. Questions have arisen as to Macau’s capacity to staff all these new casinos while adhering to the special administrative region’s strict policies against importing foreign workers to act as croupiers. The number of non-resident workers in Macau in the 12 months ending April 30 rose 29% to 149k, nearly two-thirds of which came from mainland China. The additional non-residents have been blamed for driving up the cost of living for Macau’s local population.
Macau Secretary for Economy and Finance Francis Tam Pak Yuen addressed these concerns last week, telling the Legislative Assembly that a moratorium would be placed on issuing future casino permits while Macau adjusted to the changes the Cotai additions will have on its economy. Tam said that once the last new Cotai casino opened in 2017, “there will be a seven- to eight-year period without new casino properties.” That would mean operators would have to wait at least until 2025 before applications for new casino permits would be considered.
If the mass market hordes continue to grow at their current pace thanks to improved infrastructure channels on the mainland, the new Cotai establishments might prove unable to cope with the demand. But there’s a bigger factor limiting Macau’s future development: the city is rapidly running out of physical space on which new casinos might be built. Then again, Cotai was an unusable swamp until Sheldon Adelson viewed it otherwise, so where there’s a will, there’s a dredger.