Billionaire pack helps with gambling empire

James Packer is tapping an exclusive circle of second-generation and third-generation billionaires to build his international gambling empire.

In Russia, he owes his major new gambling venture to his friendship with Shari Redstone, the daughter and corporate heir of US media billionaire Sumner Redstone.

In Britain, he is seeking a licence to build that country's biggest casino with Damian Aspinall, the son of his father Kerry's friend John, and in Southeast Asia he is working on casinos with close ally Lawrence Ho, the heir of billionaire Stanley Ho.

Mr Packer's entree to Russia's gambling industry came when Ms Redstone suggested him to Moscow property developer Emin Agalarov, who was seeking somebody to run what is planned to be Russia's largest casino.

Thirty-something Mr Agalarov is the son of entrepreneur Aras Agalarov, and married the daughter of Azerbaijan's President, Ilham Aliyev, seven weeks ago.

The Agalarovs have quickly ridden Russia's booming economy to a fortune estimated by Forbes at $730 million by focusing on the conspicuous consumption of newly wealthy Russians, moving from the construction industry into upmarket apartments, luxury brand franchises and Crocus City, a huge luxury shopping mall and exhibition centre on the edge of Moscow.

They plan to expand Crocus City by adding a 22-storey building containing more retail space, a 16-screen theatre complex, a hotel and a large casino on the basement level, with 15 office buildings and a yacht marina to follow.

Real estate consultant Natalia Oreshina told The Australian in Moscow the Agalarovs chose the US cinema owner and Redstone-chaired National Amusements as their theatre operator.

Mr Packer has based some executives in Moscow to work with the Agalarovs on the project, but both sides have refused to comment on the scheme.

The Agalarovs' political clout will be absolutely crucial to Mr Packer's success in a country where politicians and bureaucrats wield a heavy, and often corrupt, hand in business.

One businessman who has dealt with Emin Agalarov said he was heavily involved with at least the retail side of his father's business empire.

"He was across a lot of the detail and genuinely seemed interested in the day-to-day stuff, not like a rich kid just riding along on dad's hard work," the businessman said.

Moscow is home to 33 billionaires, allowing it to vie with New York for the title of billionaire capital of the world.

"It's widely believed there are 100,000 legal US-dollar millionaires in Moscow, and unless oil prices collapse tomorrow some people in this country are just going to get richer and richer," said Peter Grishin, an analyst withthe investment bank Renaissance Capital.

"If you just look at the expensive cars on the roads and the fact quality residential prices have gone through the roof, it is obvious there is a huge market out there for luxury items."

Crocus City had its eye on that elite market when it opened in 2002 with two sprawling floors of mainly upmarket brand stores. A 30-minute drive from the city centre along a broad but clogged 10-lane highway, the complex sits in a less than ritzy location at the junction of the outer ring road that marks Moscow's boundary.

"Nobody in the market believed they could create a luxury place out there but they managed to accomplish it and it's been a success so far," said Ms Oreshina.

Sales and profit figures are kept secret, but independent analysts and retail industry players are sceptical about the developer's claims that the site has been a major success.

"Conceptually and architecturally the mall is quite successful but I'm not sure it's worked commercially," said Maxim Karbasnikoff, the head of retail property for real estate consultants Jones Lang LaSalle in Moscow.

"The main problem is the location - it's out of the target catchment area for the luxury market, and a luxury mall is not a natural fit with an expo centre."

When The Australian visited the site on Thursday afternoon, there were few shoppers and several stores were closed.

In contrast, the exclusive shopping area located on the elite Rublyovka road, 10km away, was much busier.

"Rublyovka is a much more natural place for the upmarket shoppers they are trying to get to Crocus City," said Karbasnikoff.

Rublyovka leads to the exclusive residential area which has been home to Soviet leaders since the days of Joseph Stalin.

It is still blocked off twice each work day to allow President Vladimir Putin's motorcade a clear road to and from work.

The Packer and Redstone additions to Crocus City are apparently intended to tackle that problem by allowing the Agalarovs to pitch for a broader market.

"People travelling to Moscow for the exhibition centre will stay at the hotel, and they will be able to go to the casino and cinemas along with people from Moscow," said Ms Oreshina.

"The casino will not be aiming at an elite market. It is for ordinary people from Moscow and people who are visiting Moscow for conventions."

Mr Karbasnikoff, of Jones Lang LaSalle, remained sceptical.

"The casino might help the various things on the site fit together better, but there is still a problem with the location."

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