People are still betting in Vegas

Posted by: Chris Palmeri on January 12, 2007

The Las Vegas Strip is still reeling them in, despite a real estate slump elsewhere in the city. MGM reports that its massive $7 billion CityCenter mixed use project has taken deposits on half of the 2,500 units offered for sale on Jan 1. The deposits are only $10-25,000 depending on the unit. Prices start at $500,000 for the smallest condos. The most popular building so far has been The Mandarin Oriental Hotel, where condo/hotel units start at $1.5 million. The 4,100 square foot penthouses are selling for $12 million. MGM hopes to average $1,100 per square for the 2,700 total units in the project.

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Times are less flush in other parts of Sin City. Devin Reiss, president of the Greater Las Vegas Association of Realtors, told the Review-Journal there were only 372 condo sales in December. That was a 36% decrease from the same month a year ago. The median price of a condo or townhouse is down 4.4% to $195,000. The inventory of units for sale has nearly doubled 4,800. Sounds like the real bargains to be had are off the Strip.

Reader Comments

Toby Munk

January 13, 2007 12:46 AM

So $1100 per foot. I call that a double layer. It takes 9 hundred-dollar bills to cover a square foot. I would predict that they should be glad if the average a single layer in the end.

With good Manhattan real estate hovering around $1000.sqft I would think that a place where people spend on average a few days visiting and getting the hell out right after that can not compete.

Price inflation combined with real estate that serves very little purpose is a recipe for failure. Go ahead and throw good money after bad. I am betting on Aspen real estate where there is no more supply and prices are also just now starting to be "double layers"

Nagel

January 13, 2007 9:18 AM

It goes to show that prime location + luxury housing will rarely been prone to a slow housing market.

Bruce Hiatt

January 13, 2007 10:04 PM

For Las Vegas, one point not so clear in your article is the new price per sq foot ceiling being achieved. As a VIP luxury real estate brokerage selling City Center, Luxury Realty Group is experiencing high demand for this project. The very popular Mandarin Oriental City Center project within MGM City Center is being reserved with penthouse units setting a new price ceiling at nearly $3,000 a sq foot!! Buyers are sitting on the sidelines for luxury condos on the Strip in Las Vegas priced in the $500 to $900 a sq foot thinking those prices will come down. Isn't going to happen anytime soon based on the extreme sales popularity of City Center that is clearing raising the price per sq ft bar for Strip located luxury condo properties.

dominic gump

February 6, 2007 12:57 PM

$10K - $25K deposit on units ranging in price from $500,000.00 - $12M?????....thats not a presold unit; that "deposit" is less than 1% its a hedge for a resale - easy money to walk away from. Alternatively, such a low deposit can indicate a delevoper advacing such monies as "presales" to create an artificial demand.....don't count on these units trading anything close to 1,000 per sf --- you can still buy at turnberry or sky for half that amount.

bruce pyle

April 26, 2007 12:54 AM

The $1000 sq/ft price point is reality. But that reality is for Condo-Hotels, not high rise condos. One has income, the other is just a vanity purchase for most people. With a hotel occupancy rate in Las Vegas at 92.1% for all 90,000+ hotel rooms year-round, hotel-condos are here to stay and honestly they are long, long overdue as an investment vehicle.

If you find anything under $1000 sq ft, buy it. Because you won't be able to buy in two years from now since it costs more than $500 sq ft just to build it if you got a great deal on the land and that doesn't factor in any profit for the builder or shareholders.

The demand is on the high, high end. And many of these people have absolutely no expectation of making income on these units. They certainly shouldn't. But there is still at least one bargain on the Strip. If your 'real estate expert' can't find you a new hotel for less than $600 sq ft, get a new expert. Otherwise, chance the ultra-high on projects like City Center. There is always a market for that level of luxury. But its for the quality, not the cash flow.

dominic gump

July 21, 2007 12:22 AM

...anything under $1,000.00 buy it????? you should go to the Allure and buy the 44 units that they have been trying to unload for the last several months at $500/sq.ft (these rooms have great unobstructed views of the Strip).....in fact, Fairfield, the developer/owner is not building the second tower and is "bailing" on all its west coast condo projects....Sky Las vegas is around $600 with several available......the condo market is dead in Las Vegas, LA and SF....the NYC investment banks which back these projects pulled out two years ago when Related and Lehman abandonded the Las Vegas market....

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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