5 December 2012
Ian De Cotta email@example.com
JOHOR BARU - Singapore tycoon Peter Lim expanded his wide-ranging investment portfolio yesterday when he signed a joint-venture agreement to build, manage and operate the RM3.5 billion (S$1.4 billion) Motorsports City project in Johor.
He also revealed why he chose to go across the Causeway rather than invest in a similar, though ill-fated, facility at Changi.
The Motorsports City complex in Nusajaya, which is 10 minutes from the Tuas Second Link, features a 4.5-km FIA-certified Grade 2 track, a kart and drag racing track, and F&B and entertainment facilities.
The billionaire said that, in the long term, the investment by his FASTrack Autosports company will yield better returns than if he had invested in a similar facility in Singapore.
Rising costs of construction and a tightening labour market in the Republic made Johor a more attractive proposition, said the 59-year-old, who is also a significant shareholder and director of British sports car-maker McLaren Automotive and Managing Director of its Singapore office.
The company, which operates its own F1 team, flew in McLaren star Lewis Hamilton as a special guest for the exchange of documents to formalise FASTrack's partnership with UEM, a subsidiary of Malaysia's state-owned Khazanah Nasional Berhad.
Also present were Malaysian Prime Minister Najib Razak and Singapore Deputy Prime Minister Tharman Shanmugaratnam. Both leaders were in Johor Baru for the Islamic World Economic Forum.
FASTrack will have a 70-per-cent stake in the Nusajaya project on 270 acres of freehold land in the heart of the Iskandar Malaysia economic corridor.
In comparison, Singapore's plans to build a Motorsports Hub in Changi were based on land less than half the size of Nusajaya that also came with a 30-year lease.
Construction stopped late last year after Japanese consortium SG Changi ran out of funds to build it.
Although Mr Lim has the capabilities to revive the Singapore project, he noted that the potential yield was not attractive.
"It's the cost structure," he said. "With a 30-year lease, the Changi Hub is an expensive proposition. I will get a better yield for my investment in Johor because the Motorsports City will be built on freehold land and there is more scope to increase its revenue potential."
The Nusajaya facility will not be able to host F1 races. FASTrack Managing Director Barry Kan said they will instead focus on GT Saloon and off-road events and karting, drag and truck races, as well as motorbike premier series MotoGP.
But the project has now cast a shadow on the viability of building a racetrack in the Republic.
The Singapore Sports Council (SSC) is in the midst of exploring if there is interest to revive the Changi Motorsports Hub.
SSC Director of Corporate Communications and Relations Alvin Hang said they have been conducting a request for information (RFI) from potential investors and a decision will be made by the first quarter of next year whether to call for a re-tender.
Said Mr Hang: "We are aware of developments in Johor and the plans to build a racetrack there.
"The market players who are participating in the RFI would obviously have to take into account the developments across the Causeway in their calculations and proposals that they put forward in the RFI. The racetrack in Johor will provide motorsports fans more options."
SUTL Group Chairman Arthur Tay, who had previously considered bidding to build the Changi Hub but pulled out before tender closed in 2009, said Nusajaya has changed the dynamics.
"We have not dismissed the Changi project, but we need to see what is being offered should a re-tender be called," he said.
"There has to be a price advantage for us to attract people to the track and it must make financial sense in the terms of the number of years the constructor will have on the lease."