Make Sure Your High Rise is Low Risk!

There are currently over 100 Las Vegas high rise projects approved by the Clark County Commission and more on the way as developers from all over the world are vying for a spot along the hot Las Vegas Strip. Fueling the Las Vegas condo market are retiring baby boomers who are purchasing second and even third homes in warm climates with low or no taxes, as well as an emerging generation of young urban professionals who prefer the low maintenance high rise as a counterpart to their harried business lives. Fears of overbuilding have been put to rest by millions in market studies showing that only the tip of the burgeoning condo market has yet been realized.

But despite brisk sales, Krystle Sands, a 568 unit luxury high rise condominium project scheduled to be built in a premium location on the site of the former Algiers Hotel, closed its doors. The land was adjacent to a parcel zoned for a new hotel and casino already owned by Turnberry Associates, and Turnberry ended up purchasing the project when its development proved unfeasible. Several previous projects, most notably the Versailles and the Magestic (which reopened and then closed down again), suffered the same fate. And Las Vegas real estate experts predict more to come.

Conversely, investors in the sizzling Cosmopolitan Resort and Casino experienced spectacular gains as over 1200 units were sold in little more than a month. And buyers in this luxury project have more windfalls to look forward to as the second tower was just released and the general public is just beginning to realize how incredible the proposed $4 billion dollar MGM City Center directly to the south is going to be.

The difference? Developer Bruce Eichner of the Cosmopolitan had final financing in place before the first units were even put on the market. Eichner had already proven himself previously in both the Miami and New York markets. Investors who placed reservations with Krystle Sands will eventually get refunds on deposits that were held in escrow, but they have lost months of valuable time and possibly over a hundred thousand dollars in appreciation that investors in Cosmopolitan garnered during the same period.

According to Victor Altomare, developer of Ivana, “Unless a residential condo is at $600-$800 per foot, I question the project's viability. Construction costs the same next to the Bellagio or on an old downtown redevelopment site. Although land is expensive, it's content is minor compared to construction costs. A hotel condo needs to be forward priced at $800-$1,200 per foot, or it's just not viable. Land and construction costs are skyrocketing, which inevitably means fabulous capital gains for the buyer upon delivery. In the short to medium term (2-5 years) capital gains in Vegas are assured. The risk for buyers is the knowledge, experience and judgment of the developer in forward pricing accurately. The trick for buyers and their estate agents will be to buy in a project where the developer has charged enough in the first place!”

How can would-be investors cash in on the profits? Pick an experienced real estate agent who knows the market and has researched the developers! “We’re happy to say that we did not have a single customer in the Krystle Sands development,” said local Las Vegas Realtor Judy Campbell of the Tonnesen Team at Prudential Americana. “We had researched the project and were just unsure of the developer’s ability to deliver, so we tried to give our clients better alternatives. We were lucky to be able to reserve over 100 units for our customers in the Cosmopolitan so far, and we have more waiting for the second tower.” Some of the Tonnesen Team top picks for current developments include Cosmopolitan Resort, the Residences at MGM Grand, Hard Rock Hotel and Casino, Las Ramblas, Streamline Towers and the Palms. For information and reservations on any of these Las Vegas preconstruction condos call your Las Vegas high rise real estate experts from Prudential Americana at 702-596-7821.