By mid-2006 Las Vegas should see the first condo-hotels opening. The units can be purchased for individual use or be placed in a rental pool, and are proving to be a popular concept for both developers and buyers. At present there are some 19,000 condo-hotel units proposed or under construction for the Las Vegas Valley, but less than a quarter are expected to be built within the next five years.

Spiralling construction costs from rising building material prices are expected to continue this year and have caused some developers to capitalise on rapid land appreciation that was as high as 99% in some areas over the last year. Several planned tower projects have been cancelled and land resold. Some high-profile developments, including George Clooney’s Las Ramblas Resort Complex and the Ivana Trump Tower, have been or are likely to be abandoned. There may be plenty of speculators but hard sales are another matter and consequently many projects do not get off the ground.

Not all is doom and gloom, however. Residences at MGM Grand, a three-tower condo-hotel, has sold out its first two towers and three-quarters of the third. Units are priced between US$600,000 and US$ 2 million plus. The Platinum, a condo-hotel expected to open in June, was sold out in just over a month. It seems that the desire to own a second home, a poorly performing stock market and possible rental income has driven the recent expansion of Las Vegas condos and hotel-condos.

Higher development risks from rising construction costs mean that finance for projects will be harder to come by. It usually can take up to two years to sell a building but such an extended sales period can spell the demise of a development when the construction costs overtake the unit sales price. One thing is certain in booming Las Vegas; the demand for land and residential property is unlikely to diminish in the foreseeable future. (E-01.09.06)

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