Operator News
Casino project could save Malaysia’s failing US$100bn Forest City ‘ghost town’
By Phil - 25 April 2024
A second casino licence has once again been touted for Malaysia with Prime Minister Anwar Ibrahim evaluating whether a casino could revive the fortunes of the failing US$100bn Forest City residential development in Johor, close to the border with Singapore.
Bloomberg has reported that the PM has discussed the potential opportunity with Genting Group’s Lim Kok Thay, who operates the only casino in Malaysia located in Pahang on Mount Ulu Kali in central Malaysia. He has also met with Vincent Tan, who owns Berjaya Corp and has long mused a casino project of his own.
Forest City, located on the tip of southern Malaysia, was developed in 2016 by Country Garden Pacificview, a joint venture between Country Garden Group and the Malaysian-government-backed Esplanade Danga 88. Compromising four man-made islands spanning 30km2, the newly-built Forest City is a smart and green futuristic city that combines environment, technology and cutting-edge technology to create an ideal, idyllic and technology-driven living and working space ecosystem.
The only hitch has been investment. The project needed Chinese investors to buy properties but due to restrictions introduced by Beijing on its nationals investing overseas, its has been left as a ghost town. It was supposed to house one million people but only a handful of its units have been bought, leading residents to describe it as a ghost town. Forest City also has a prominent investor in Malaysian King Ibrahim Iskander, who has a 20 per cent share in the development.
Nomura analysts Tushar Mohata and Alpa Aggarwal said another casino project would be ‘broadly negative for Genting Group.’
They said: “In a scenario that Malaysia allow a Forest City casino and award the license to Genting, while Genting Singapore will be still negatively impacted, the net impact on Genting Malaysia and Genting Bhd will depend on which entity builds the casino, but the eventual impact on the group holdco Genting Bhd should be less negative, in our view.”
“We think the Singapore casinos, under Genting Singapore and Marina Bay Sands, will be net losers should Malaysia eventually allow a second land-based casino in Forest City due to their geographical proximity,” they wrote.
“If Berjaya is awarded the license, we think Genting Singapore’s parent company Genting Bhd will be negatively impacted, too, as it consolidates Genting Singapore’s revenues and earnings. If the government proceeds with the idea, given Forest City’s status as a Special Financial Zone, it also remains to be seen if the gaming tax structure here will be lower than in Peninsular Malaysia, which can make returns on any new casino development more attractive.”
Kay Hian, an analyst at Malaysian bank UOB said: “Genting Singapore has a different landscape and customer profile. Cannibalisation from a potential Forest City casino will eventually be digested.”
