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 Elena Moya |
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| Deutsche Bank's gamble on the Cosmopolitan casino in Las Vegas has already cost it nearly half a billion pounds in writedowns – but now the development is well and truly underwater. The blighted project on the city's glitzy Strip, which the bank inherited when the original developer went bust, reached a new low point when builders hit the city's natural water aquifer. The German bank, which owns the 3,000-room casino, has had to build containment walls and a pump system to stop the water from flooding a planned underground car park. The city's water table is naturally high, sometimes only about 10 or 15ft below ground. The flooding is the latest in a string of problems that the bank has encountered with the project, which has given new meaning to the term casino capitalism. "Together with our partners, we are committed to building a world-class facility that will benefit the local economy, create jobs and give an attractive, long-term return," said a Deutsche Bank spokesman in New York. He declined to comment on any possible water damage. The Cosmopolitan project is well above budget, with the last estimates putting the cost at $3.9bn, up from an initial $1.8bn. The 8.5-acre complex, originally due to open in mid-2008, is now scheduled to be complete next year. The two-tower development will host a 75,000 sq ft casino, VIP access to a rooftop beach club, restaurants, nightclubs and one-bedroom condo-hotel units, according to a promotional web page. When developer Ian Bruce Eichner began construction in 2006, the 600-ft glass towers were designed more as a classy Manhattan skyscraper than as the typical Vegas casinos such as The Mirage or MGM. But months later, the credit crunch started hitting the gambling capital of the world as fewer tourists flew into town. The tourism-dependent "sin city" offers more than 140,000 hotel rooms – at one point, more than London and New York combined. Revenue on the famous Strip fell more than 12% this year through September and 11% last year, according to Bloomberg News. Residential property values have plunged by 55% since August 2006. After Eichner defaulted on his loan, Deutsche Bank decided to carry on with the project to avoid a fire sale at the bottom of the market. The Frankfurt-based bank is also one of the lenders to Fontainebleau, another casino where creditors are taking legal action. Banks around the world are ending up with thousands of businesses unable to pay the huge sums borrowed during the years of cheap and ample credit. But, unlike Deutsche Bank, few have to deal with projects such as the building of a 500-seat cabaret. |
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