SHANGRI-LA Asia Ltd, the region's biggest luxury-hotel operator, has agreed to set up a venture to invest in a US$64 million property development in Mongolia.

Shangri-La, controlled by Malaysia's richest person, Robert Kuok, will own 75 percent of the venture and Mongolia's MCS Holding LLC will hold 25 percent, Shangri-La told the Hong Kong stock exchange yesterday. The project in the capital city of Ulaanbaatar has a site area of 30,000 square meters, which will be developed into a hotel and may also include residential properties, office towers and a retail podium, it said.

MCS has an option to increase its shareholding in the venture to as much as 49 percent, the statement said. Shangri-La plans to use the net proceeds from the option to repay debt, Bloomberg News reported. Construction is expected to start in the last quarter of this year and to be completed in 2010. Shangri-La has stakes in 37 hotels with 19,385 rooms and manages 49 hotels with a combined 23,576 rooms.