November 2006 - Las Vegas Real Estate High Rise Report - Supply is Limited
Posted by Bruce Hiatt - November 3rd, 2006
Categories: High Rise Condos
The luxury high rise market in many ways has become a more normal market, especially in sharp contract to the saturated Las Vegas single family homes market. How can Las Vegas have two distinct real estate markets? What impact is the media’s doom and gloom US-wide reporting having on the Las Vegas real estate market? Keep reading to find out.
Is it all doom and gloom for the single family housing market in Las Vegas? What do the next 9 months look like in that particular market? Read more about what to do next in the crazy single family home real estate market at SummerlinHomesBlog.com for all the details.
So how does the weak Las Vegas single family housing situation relate to the luxury high rise market here?
In contrast to the single family home market in Las Vegas, the luxury high rise market has a small supply of luxury condominiums. We know you keep hearing about the 90,000 or whatever number of the week you hear from various “experts” but most of those planned condo units will never get built. The barrier to entry is just way too high for inexperienced high rise players to execute successfully in this market. That is clearly evidenced by cancellations of Las Ramblas, ICON, the Curve, Vegas 888, Hard Rock condos, Krystle Sands, Aqua Blue and many more high rise projects.
In comparison to Miami, where brokers tell us they have inventory levels of 50,000 or more high rise condos and another 50,000 condos in the pipeline, at the end of 2006 in the prime area of the Las Vegas Strip, we will have a total of 895 high rise residential luxury condos in existence. The number of residential occupancy type condo-hotel units at the end of 2006 in the prime Strip area will be 1,407. So where’s the fire that the media keep saying about Las Vegas? At the end of 2007 for the same areas, the number of residential high rise luxury condos in existence in the prime Strip area will be 1,622 and the number of residential condo-hotel units will be 1,983. Doesn’t sound like Miami to us!!
In contrast to our luxury single family homes market, the luxury high rise market in Las Vegas is not a local or regional one. Unlike the single family home market that is primarily driven by California buyers, the luxury high rise market is global. Many of our high rise buyers come from New York, Miami, London, Hong Kong, Tokyo, Taiwan, Russia, China, South America, and Canada. To an investor in Europe or Asia, when you factor in the US$ currency exchange, our Luxury Condo Market is a good opportunity. Of course, no one can predict the future but trends do give us guidance.
Given the current real estate market conditions however, we do suggest if your intention is to flip your luxury condo or condo-hotel in Las Vegas that such a decision is risky. We are currently projecting nine to twelve months to sell a luxury condo or condo-hotel which is basically a normal market for luxury real estate in Las Vegas. Renting or holding onto your luxury condo investment for the long term if an investment property we believe is a better idea until market conditions change.
As Sky, Panorama, MGM Grand Residences - Signature, Allure Tower One, Trump Las Vegas, Turnberry Place Tower Four, and Turnberry Towers - Tower One in the prime Strip area go live over the next eighteen to twenty-four months, we believe the media will use such statistics to declare the Las Vegas market is doom and gloom. In the short term it may appear that way but look at what’s in the pipeline being built behind it in the prime Strip area. Not much.
Other than MGM Project City Center, there are no other real residential high rise projects being constructed for some time and we believe it will be increasingly difficult for such projects to obtain construction financing in this current economic climate. Articles in the media just this week continue to discuss the ever rising cost of construction with MGM’s Project City Center already forecasting a total project cost of $7 Billion. That’s $2 Billion higher than originally projected. Clearly, unless you are an experience player in this high rise development world, your odd of success are getting more difficult over time.
So while we have heard for years about location, location, location don’t forget about supply versus demand. The luxury condo market in Las Vegas is overall not a large supply compared to major cities of similar size as Las Vegas. Demand is global and once the media declares the bottom of the market has occurred, buyers will jump off the sidelines and hunt for what we believe will be limited supply in Las Vegas.
Thinking about buying a condo-hotel? Consider the following scenario. From 2006-2009, Stardust will be gone (to be imploded in early 2007) and will be replaced with the $4 Billion dollar Echelon that will take years to build. Westward Ho is shut down and will become a new property sometime in the future. Tropicana has been sold and the losing buyers are looking seriously at the Sahara and the Riviera as there’s not much left in the prime North Strip to buy. Boardwalk has been imploded as the first step in building MGM’s $7 Billion dollar Project City Center. Imperial has been sold and will become part of a new project. Frontier will be imploded and its new design that compliments Trump Las Vegas will once again elevate the North Strip to a higher level.
Add all of these events together and you have a major reduction in room inventory for about three to four years. If you bought MGM Signature, Trump or Cosmopolitan condo-hotel you will be in the prime of this time period as they will be the ONLY true residential condo-hotel units delivered in that timeframe (timeshares or short stay condo-hotels like Platinum do not count as you cannot reside in them on a permanent basis). We can still get you into these projects so don’t delay your decision to buy.
With all the media attention that the sky is falling in real estate, we know many of you are looking for a great deal in a luxury condo or condo-hotel. We have answered your needs. Our newest addition to our many websites is http://www.luxurycondodeals.com/ and that is your great resource for such opportunities. This website will contain deals, foreclosures, and opportunities to join as a partner with a buyer with equity sharing. It also has the ability to tell us what high rise condo or condo-hotel real estate you are ready to buy in Las Vegas based on the criteria you define.
Speaking of Sky, the ultra residential luxury condominimum is the only high rise so far on Las Vegas Blvd. City Center will create the second one on Las Vegas Blvd but not until close to 2010! Luxury Realty Group from November 1 - December 31 is offering a special incentive to buyers who purchase a Sky condo from Sky’s remaining inventory during this time period. The incentive is part of a Sky Las Vegas special promotion. We can also tell you during this time period, only 10% down is required a time of contract. Contact us for details. These incentives are not applicable to existing Sky condos under contract.
To facilitate the more than 8,000 new Las Vegas residents a month with luxury high rise information, our innovative http://www.luxuryrealtygroup.com/ website lets you find luxury Las Vegas high rise resales by tower. You can also see floor plates and map locations for pre-construction high rises. Now, you can search by specific floor plan for a luxury high rise in resale status and see the luxury condos for sale that match that floor plan. No other brokerage has implemented such advance marketing technology and we continue to be your best choice when it comes to listing you luxury high rise condo or condo-hotel. A lot more is coming and we know of no other Las Vegas luxury high rise brokerage who can currently match these services. Contact us at (702) 456-7080 PST if you would like to discuss selling your Las Vegas luxury high rise condo or condo-hotel.
Bruce Hiatt, Broker, CRS can be reached at 702-456-7080 x201.
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