Malaysia might add a casino to boost troubled $100 billion mega-development Forest City
- Malaysia may add a casino to Forest City, a mega-development that has turned into a ghost town.
- The casino, which would be the second in the country, could rejuvenate the struggling property.
Malaysia's Forest City mega-development started with big ambitions and big money.
Announced in 2006, the luxury housing project in the south — easily accessible from Singapore — would house 700,000 people and feature a waterpark and hotels. The whole project cost its developers $100 billion.
But, eight years after construction began, only a few thousand people live there. The project has turned into a ghost town — and a major liability for its developer, which is facing sizable financial issues elsewhere.
Now, Malaysia is in talks with several high-profile investors to add a casino to Forest City, people familiar with the matter told Bloomberg on Wednesday.
The southeast nation's Prime Minister Anwar Ibrahim met with the heads of a Malaysian property development firm and a resort company at Forest City last week. A representative of Malyasia's billionaire king, Ibrahim Iskandar, also attended, the people told Bloomberg.
King Ibrahim owns more than 20% of Forest City as part of a joint venture with Chinese real estate developer Country Garden, Bloomberg reported. The king took the throne in January for his five-year term and said last month he is ready to "begin my real way of ruling." The other partner, Country Garden, is facing significant financial issues from China's floundering property market and had nearly $200 billion in liabilities at the end of last June.
The two tycoons who met with the prime minister last week own some of Malaysia's most prominent businesses. One of the companies is Genting Group, a resort and theme park operator that owns Malaysia's only casino, located in a central Malaysian hill town. Genting operates other casinos in Singapore, the US, and the UK. The other, Berjaya Corp., runs hotels and develops properties, among other businesses.
The casino talks are in early stages and it is unclear if Prime Minister Anwar will allow such a business. Malaysia has a Muslim-majority population and those following Islam are prohibited from gambling.
Forest City did not immediately respond to BI's request for comment.
Expensive, empty apartments
A casino — which would only be the second in Malaysia — could help struggling Forest City.
While advertised as a "popular short-haul tourist destination," the complex, which includes apartments, hotels, a waterpark, and a mall, only sees a few dozen visitors each day, Business Insider reported in April. Those who do come are typically on a budget and don't spend much.
As of last year, only about 15% of the planned property had been completed, local media reported.
Most apartments look like they've never been lived in, a BI reporter who visited earlier this year observed. They're almost twice the price of other apartments in the city, and wealthy people prefer to buy single-family homes, BI reported in April.
A new casino could attract tourists from Singapore. Singapore's government disincentivizes gambling by taxing residents 150 Singapore dollars, or $110, to enter local casinos. Singapore is connected by a one-kilometer bridge to the state of Johor, where Forest City is.
Cities around the world are similarly looking to add casinos to boost tourism.
The United Arab Emirates, another majority-Muslim country, is betting big on gambling. Earlier this year, it launched a federal-level gaming authority, and plans are in place to create an "Arabian Strip," an Emirati version of the Las Vegas Strip of hotels and casinos on the island of Al Marjan.
New York City is also looking to cash in. In April last year, the state government authorized up to three casino licenses for downstate New York, which includes the city and surrounding counties.