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NTUC Club abandons plan for S$45m resort development in Sentosa

By Imelda Saad, Channel NewsAsia
Posted: 23 July 2009 1919 hrs

SINGAPORE: The labour movement's recreational arm has scrapped plans for a S$45 million resort development in Sentosa.

Palawan Resort was touted as a quality high-end resort for the working class. It was to have opened its doors by the end of last year.

But the development faced several delays since it was announced in 2005 by former NTUC Secretary-General Lim Boon Heng.

A 3-hectare disused carpark on the resort island of Sentosa was where Palawan Resort would have stood. The plans were for a 200-room resort.

In a report, NTUC Club said it will boast state of the art facilities including a luxurious spa and a mirage pool.

Channel NewsAsia found out that room rates would have been S$150 on average, with discounts for union members.

As at September last year, the fate of the resort was still unclear. NTUC Club had said then that with the announcement of the Integrated Resorts at Sentosa, it was reviewing the concept and plans for its own Palawan Resort and that the development will be done in a sustainable manner.

Responding to queries from Channel NewsAsia, NTUC Club said Palawan Resort was conceived as an engagement tool for the labour movement. But plans had to be shelved due to "rising land" and "construction" costs. After reviewing initial plans, it concluded the project is "no longer viable".

It added: "The Palawan Resort project on Sentosa by NTUC Club Investments (NCI) was conceived as an engagement tool for the labour movement, to allow members to have an additional option for affordable leisure and entertainment.

"Due to the rising land premium and construction costs, NCI had reviewed the initial plans and concluded that it is no longer viable to continue with the project.

"NCI and Sentosa Development Corporation (SDC) have a good understanding about the decision and the site will be reviewed for future developments by SDC."

Construction costs for commercial or sports and recreational spaces have risen by up to 15 per cent year-on-year.

But one analyst said the cost of land on Sentosa has remained relatively stable. The development charge rates that is the tax paid to the government for the development of land at Sentosa has not changed over the past six months.

Nicholas Mak, property analyst, said: "We should bear in mind that since September when the sub-prime crisis in the US spilled over into the global financial crisis, the real estate market in Singapore has also taken a beating.

"So land premium in many types of real estate has actually either stayed unchanged or because of lack of transactions, it has actually decreased."

Both NTUC Club and landlord Sentosa Development Corporation declined to reveal details on the land arrangement. Sentosa would only say that there were no rental payments made. NTUC Club added that the project "never went beyond a Memorandum of Understanding".

It is understood that land arrangements between parties could take several forms including an upfront lump sum downpayment to reserve the land or a higher payment to the landlord at the point the land is developed.

Mr Mak said there is still value proposition to an affordable Sports & Recreational facility on Sentosa despite the presence of Resorts World and its world-class amenities.

He added: "I think the Sports & Recreation space that can be developed at this particular site at Sentosa can cater to young people or to family members where they may be part of the spillover demand from the IR.

"For example, some people may go to the IR to enjoy the Universal Studios theme park, but the second visit there they may want to try something else at Sentosa and this Sports & Recreation space may be that particular destination."

Union members Channel NewsAsia spoke with said they would have liked to have seen the project take off.

K Karthikeyan, Gen-Sec, United Workers of Petroleum Industry, said: "We like to have more resorts. The more the merrier, but of course it must be viable. What is needed is the right location and the right environment and people will come in and use it."

Vice-President of the Healthcare Services Employees Union, T.Thanaletchimi,
added: "With the IRs coming up, NTUC Club can look into some niche areas in trying to partner the IRs to attract union members to make use of their facilities like the theme parks and restaurants."

Union members also hope to see an additional recreational facility in the Western part of Singapore.

One member, who declined to be named, said: "Hopefully, NTUC Club will look into more alternative high-end facilities for PMETs (Professionals, Managers, Engineers and Technicians) and other members, but at affordable rates."

NTUC Club is the biggest local resort operator, managing three budget family-themed resorts. Two are located at Pasir Ris and one at Sentosa.

Source: http://www.channelnewsasia.com/stori...444310/1/.html