Luxury Real Estate

By: Tony Illia
Courtesy of: Bruce Hiatt of Luxury Realty Group

Condo hotels see 'severe' downward drop in value as credit for mortgages disappears

Checks are in the mail for Cosmopolitan Resort Casino homebuyers. On Feb. 23, Clark County District Court Judge Elizabeth Gonzales approved a class action settlement refunding partial homebuyer deposits at the $3.9 billion, still under construction Strip development. The move essentially eliminates residences at the twin tower high-rise complex, on 8.5 acres, at 3700 Las Vegas Blvd., South.

"Many legal experts said a settlement agreement was unlikely, and I'm glad our fight paid off," said Marquis & Aurbach managing partner Terry Coffing, whose Las Vegas law firm represented 100 units. "The refund checks are scheduled to be cut in April."

The 490-unit East Tower settled at 68 percent of homebuyers' deposits, which ranged from $115,000 to $350,000 per unit depending on size and location. Attorney's fees were 7.82 percent of that amount. Escrow deposits typically represent about 20 percent of the final purchase. Homebuyers can opt out of the settlement before March 29.

The deal follows a similar action last year on Cosmopolitan's 1,322-unit West Tower, which returned 74.4 percent of homebuyer deposits. A court settlement ordered the owner to payback roughly $140 million. Marquis & Aurbach had represented owners of 430 units inside the West Tower, or 32.5 percent of the total building. A sold-out East Tower could generate $112 million or more in down payments. Homebuyers had claimed numerous breaches of contract, including unmet completion deadlines. Several lawsuits were eventually combined into a single case.

"Those units have to be 35- to 40-percent upside down. What is the catalyst to now close those units?" said Marquis & Aurbach associate Nick Crosby. "There isn't a credit market for condo hotels."

Cosmopolitan homebuyers have been scrambling to get out from underneath their purchases, as many face challenges securing mortgages amid a frozen credit market. It makes the project's plans for condominiums unlikely moving forward. Plans had called for two glass hotel-condo towers with a combined 3,000 units perched atop a multilevel retail, casino and entertainment podium.

Deutsche Bank AG, which bought the distressed property during a foreclosure sale in 2008, recently wrote down the project value by $103 million. It marks the second write-off in less than a year for the Cosmopolitan. The development is tentatively scheduled to finish construction in December. Perini Building Co. is the general contractor, with Related Cos. the project manager.

Calls to Deutsche Bank spokesman John Gallagher for comment were not returned by press time.

Luxury condominiums are being valued differently today than a few years ago during the real estate boom. Rising unemployment and a deepening recession are fueling more widespread financial conservatism, as once bullish investors delay, defer and cancel large capital expenditures. It has largely seized condominium sales, say industry observers.

"It's probably the most dramatic property drop we have ever seen. We are starting to see 30 percent drops in condo hotel prices. The downward trend has been quite severe. It appears Las Vegas has not yet reached bottom for the hotel condo market," said Bruce Hiatt, owner of Luxury Realty Group Inc., a Las Vegas-based high-rise condominium brokerage company. "Today's buyer is much more aware of the current resale marketplace and those price points, which are very different from what they were a few years ago."

PROJECTS

Las Vegas Paving Corp. recently broke ground on a $246.5 million I-15 widening project from Tropicana Avenue to just south of Silverado Ranch Boulevard in Las Vegas. The design-build project will widen the freeway, add collector-distributor roads and redesign five interchanges. Other work calls for 26 new bridge segments, 35 miles of retaining walls and 1.5 miles of sound walls. The job will employ 70 designers and 300 people during the peak of construction activity. The Las Vegas Convention and Visitors Authority is providing $250 million in bond-backed financing. The project is scheduled to finish in March 2012.

SEATTLE, WA - (May 2009) - The 7^th Annual Luxury Real Estate Spring Retreat was recently held Sunday, April 26^th to Wednesday, April 29^th, at the Four Seasons Hotel in Las Vegas. Keynote Speakers were Mary Whipple, 2008 Olympic Gold Medalist, and Peter Tongue, Metaphysics and Management Consulting Expert.

The Conference was hosted by John Brian Losh, Chairman and CEO of Luxury Real Estate, (LuxuryRealEstate.com and Who’s Who of Luxury Real Estate), a membership-driven luxury brokerage assemblage based in Seattle, Washington. The network includes the most prominent global luxury brokers and meets three times each year, nationally and internationally, to discuss current real estate trends.

The recent conference in Las Vegas covered multiple topics of great interest to those who serve the high net-worth demographic. An ongoing theme, covered at each of the conferences, is the state of the luxury market around the world. In addition, discussions focused on coping with Short Sales and Foreclosures, expanding real estate business through social networking, and being creative and fearless in a down market.

The highlight of the event was a Black Tie Dinner and Awards Presentation, honoring the career of Shari Chase with the Lifetime Achievement Award. This prestigious award is given twice annually to the Luxury Real Estate member who has set an example for the real estate industry and displayed excellence throughout their career. “Known for high-profile properties and clientele, her firm continues as one of the industry’s pacesetters,” states John Brian Losh. “What others talk about – Chase does.”

About LuxuryRealEstate.com

LuxuryRealEstate.com is the most-viewed luxury real estate specific website in the world. The Who’s Who in Luxury Real Estate network includes 1,500 of the world’s finest real estate companies with properties in 98 countries. Participation is strictly invitation-only by CEO/Publisher John Brian Losh. In Ultimate Homes’ 2008 issue, the network represented more than twice the number of top 1,000 most-expensive properties in the country than any other network. The Who’s Who in Luxury Real Estate network is governed by the Board of Regents.

By Jim Walberg of Caribbean Islands Realty

The Four Seasons was the venue where Jim Walberg   participated in the 7th Annual Luxury Real Estate Spring Conference as a panel member of Effective Social Networking & Blogging Tools For Realtors.

Imagine being with some of the brightest and best minds in real estate for three days! Well, that is what the Luxury Real Estate’s Spring conference was like this past week. The sharing of best practices with such a high caliber of professionals and business owners is an enviable experience for any Realtor. I was not only privileged to be a delegate at this conference, I also gathered some incredible business ideas that will continue to improve the customer experience for our clients, and grow our business in this shifting markets.

The featured presentation was the panel on how to use internet tools to dramatically expand your real estate business by increasing your lead generation results - the Strategies & Tactics of Top Real Estate Professionals regarding social networking, blogging, Facebook, Twitter, and LinkedIn. Victor Lund from the WAV Group was the moderator. Jon Larrance from Perry & Company, Bruce Hiatt from Luxury Realty Group and me from The Bay Area Team, were the panelist. The interaction with the audience demonstrated that it was THE topic that they wanted to explore most in the 2009 world of social networking.

In addition to the various breakout sessions during the conference, one of the keynote speakers was Mary Whipple, the Olympic Gold Medalist from the 2008 Games was the featured presenter before lunch. It was an inspiring presentation about the steps required for the U.S. women’s eight rowing team to prepare and win the gold metal. She translated the attributes to accomplish such a feat to what it takes to have a successful real estate Brokerage.

Tuesday night was the elegant black tie evening honoring Shari Chase, founder and president of Chase International, with the LRE Lifetime Achievement Award presented by John Brian Losh. The impact Shari has made by growing eight real estate offices in the Tahoe, Reno, and now London, has created a result of over a billion dollars of real estate sales through her company. At this evenings elegant evening I had the pleasure of sharing dinner with Jose Ribes from Spain, and with Bente Matdsen from Luxury Real Estate.

The closing session of the conference featured Peter Tongue as the keynote speaker. The subject of his presentation was Heart-Centered Real Estate. Peter’s message was focused on tapping into the acknowledgement of higher energies that attract good things into their lives - embracing abundance, awareness and positive energy. It was another example of how Luxury Real Estate always delivers quality member services.