Las Vegas Sands Corporation (LVS) has yet to receive government approval to develop more than half of the parcels of land it has commenced developing in Cotai.
The company does not have all of the paperwork in order for the development of land across the six-lane road from its first project in the area, the Venetian Macao, it said in its annual report which was released yesterday.
“We have commenced construction or pre-construction for the projects on parcels 5, 6, 7 and 8 on the Cotai Strip for which we have not yet been granted land concessions,” the report stated.
The almost 22 hectares of land stretches from the edge of Melco PBL Entertainment’s City of Dreams site to the southern edge of the Cotai strip.
More than 12,550 hotel rooms and retail malls are planned for the sites. Two Shangri-La Hotels and Resorts are being built on parcel 5 in addition to a St Regis branded hotel. Sheraton branded hotels are intended for parcel 6 and Hilton, Conrad, Fairmont and Raffles branded hotels and serviced apartments are planned for parcels 7 and 8.
It is not uncommon for developers to commence project work prior to finalising all necessary land agreements with the government.
Melco PBL Entertainment announced last month it had finally received the necessary approvals for its Cotai site which is due to open in the first half of next year.
LVS is currently negotiating the agreements for parcels 5 and 6 and will soon move on to the final two parcels, the report said.
If the final concessions are not approved LVS will lose the money it has so far invested in the project.
“If we do not obtain land concessions, we could forfeit all or a substantial part of our USD 623 million in capitalised construction costs related to these developments as of December 31, 2007,” the report said.
LVS is also hoping for more advantages taxation regulations in Macau that will make it more feasible to provide direct credit to its customers.
Currently gaming concession holders must pay tax on the revenue they earn from all customers, without a provision for deducting bad debts, unlike the Nevada jurisdiction of the USA.
“If we extend credit to our customers in Macau and are unable to collect on the related receivables from them, we have to pay taxes on our winnings from these customers,” the annual report stated.
As a result, direct credit lending to customers in Macau has been “on a very limited basis” and is unlikely to increase unless the laws change, the company said.
The company’s planned development for the mainland island situated between Macau and Zhuhai also looks some way off. Although it has a “non-binding letter of intent” with the Zhuhai Municipal Government for a leisure and convention centre and is working “actively” with the Zhuhai Government’s Project Co-ordination Committee, the idea still requires further government approvals.