Is the Ritz getting less—Ritzy?
Chris Woronka, leisure industry analyst with Deutsche Bank Equity Research notes that late Monday, Vail Resorts announced price reductions on all 71 Ritz-Carlton Vail residential units, including prospective price cuts on those units already under contract (which we believe to be 47). Prices on all unsold units are being cut by 20%, to an average of $1,624/sqft, Woronka writes. Prices on units already under contract will be cut by about 15%, to an average of $1,406/sqft.
Wait, there’s more: New and existing buyers will be given a complimentary social membership to the Arrabelle Club (which retails for $50,000). Buyers who already have units under contract must execute certain amendments to those contracts. Vaild did not specify exactly what the amendments are, but Woronka believes that they could relate to the timing/volume of down payment requirements and/or new restrictions on listing units for re-sale prior to delivery.
The move does not come as a large surprise, he says. Vail did not sell any units during the entire ‘08-‘09 ski season. “We believe real estate market conditions in Eagle County have continued to deteriorate to the point where some sort of meaningful adjustment on Ritz pricing became inevitable,” he wrote in a research note. “Although the project could still end up being profitable(assuming the remaining units are sold), we think any profits are now likely to come in meaningfully below the $45m we’ve been modeling for 2011.”
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.