Queen’s Wharf faces opening delay and cost blow-out

Queen’s Wharf has blown its budget and fallen behind schedule, blaming bad weather and the COVID-19 pandemic for delaying completion of the casino and entertainment complex.

It was the latest blow for the casino’s would-be operator, Star Entertainment Group, which has already faced a devastating public inquiry in New South Wales ahead of a similar review in Queensland.

The Queen’s Wharf construction site, pictured on Wednesday. Star has revealed a 10 per cent cost blow-out.

In an announcement to the Australian Stock Exchange on Friday morning, Star confirmed the gigantic casino development on the bank of the Brisbane River, originally meant to open “in the first half of 2023”, would likely open in the second half of the year.

It would also prove a costly delay. Star estimated the project’s budget would blow out by about 10 per cent.

“Due to higher than average rainfall in FY2022 and the impact of COVID-19, the Queen’s Wharf Brisbane integrated resort development (IRD) is now expected to open from [the second half of the 2023 calendar year] (subject to various approvals), which represents a delay from prior guidance of mid-2023,” it said.

“Total project costs are expected to be up about 10 per cent on prior guidance of $2.6 billion due to escalating construction material costs, labour shortages, supply chain challenges and the program delay as well as the inclusion of capital equipment required to open the IRD.

“Pre-opening and other operational readiness costs would be in addition to this estimate.”

The cost of the entire Queen’s Wharf precinct has previously been estimated at $3.6 billion, $2.6 billion of which was the integrated resort component. The rest of the cost was for associated residential towers.

A Destination Brisbane consortium spokesman confirmed the cost blow-out announced on Friday only applied to the integrated resort and casino component.

Star said its Destination Brisbane joint venture partners, Chow Tai Fook and Far East Consortium, which both hold 25 per cent shares, would fund the majority of the increased costs.

“The remainder is expected to be funded from future operating cashflows,” Star said.

“As previously disclosed, Destination Brisbane Consortium is in ongoing discussions with Multiplex regarding purported claims for additional costs, extensions of time and damages, with which DBC disagrees.

“The construction contract has provision for liquidated damages payable on key milestones (as adjusted in accordance with the contract).

“The expected additional costs may be adjusted depending on the outcomes of the ongoing discussions with Multiplex, including regarding liquidated damages.”

Comment has been sought from Multiplex.

Star, which will soon led by former Tyro chief executive Robbie Cooke, told the market it expected revenues of $1.53 billion in the 12 months to June — a drop on the $1.55 billion it reported in 2021.

The company’s casinos saw a strong recovery in the June quarter, with The Star Gold Coast’s revenue up 48 per cent on pre-COVID levels.

The full-year numbers will be impacted by a loss in the first half due to operating restrictions, “as well as costs associated with the regulatory reviews and increased investment in regulatory and compliance functions”, the company said.

Shares closed flat at $3.07.

with Emma Koehn.