OUE Limited’s Maiden South Korean Venture

Following Resorts World Sentosa owner Genting Singapore’s (SGX: G13) recent plans to enter South Korea’s tourism industry through the development of an integrated resort in the Jeju Islands, property developer OUE Limited (SGX: LJ3) has just announced that it too, has set its sights on the North Asian economic powerhouse (South Korea’s currently the 12th largest economy in the world).

OUE, working in concert with American based casino-entertainment outfit Caesars Entertainment Corporation and Hong Kong-based conglomerate Lippo Limited, has been granted approval by South Korea’s Ministry of Culture, Sports and Tourism to develop the country’s “first internationally branded integrated entertainment resort”.

Caesars has a long history (some 75 years) with the gaming and resorts industry in the USA while Lippo Limited has been involved with property development and investment, hotel operations, property management, and the likes. In light of that, OUE does seem to have strong partners for the project.

When fully developed, the integrated entertainment resort would consist of “hotel, retail and convention and residential properties” that would be built by the consortium of OUE, Caesars, and Lippo. Construction, which would cost an estimated Korean Won 855 billion (or roughly S$1 billion), is pencilled for completion by the time the 2018 Winter Olympics begins in South Korea. The entire project would see the development of over 150,000 square metres of gross floor area on a 4.3 hectares site.

OUE’s focus in the project would be on the hotels and convention centre side of things and the property developer would hold a “significant non-controlling” stake in the South Korean resort. According to Dr Stephen Riady, executive chairman of OUE, the company “brings to the project its expertise in developing and operating large-scale hospitality, retail and commercial projects.”

Riady also commented that “OUE’s participation in this landmark – in particular the hotel component and convention centre – reflects our ability to secure unique property development opportunities to drive OUE’s future growth and generate value for our shareholders.”

There are still some loose ends to tie up, which include the securing of third party financing and the finalisation of the project costs, before OUE’s participation in the project is certain.

OUE currently has a property portfolio that includes prime commercial, retail, and hospitality properties in Singapore, Malaysia, and the USA. Some of its local properties here include OUE Bayfront, Crowne Plaza Changi Airport Hotel and Marina Mandarin Singapore. If things go smoothly with the South Korean venture, it could add another feather to OUE’s cap and provide more geographical diversity for its revenue base.

Judging from the plans that both Genting Singapore and OUE have for South Korean, residents and travellers within the country would have a fair bit of exciting entertainment-related developments to look forward to.

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