Las Vegas Property Market on the Upturn Finally

December 12th, 2012

The tide appears to have turned in favor of the Las Vegas property market which saw prices dropping by as much as 70 percent with the US housing meltdown of 2008. Recent statistics show that home prices are on an uptrend and new lows were registered in foreclosures in the city.

Based on figures from the Association of Realtors, the median price of condominiums sold this September rose 19.8 percent, while a 13.7 percent gain was recorded for single family homes. Significantly, sales-listed single family homes and condo units which didn’t receive buy offers for the month dropped by 63.1 percent and 35.6 percent, respectively. This decline manifests the U.S.-wide trend of lower home inventory, rising demand, and upward push on prices.

This September, foreclosure filings nationwide nosedived to a five-year low, resulting in fewer properties bound for lenders’ seizure. For the state of Nevada, a report by RealtyTrac showed that foreclosures declined by 71 percent which translates into one foreclosure filing for every 158 mortgaged homes.

Significantly, international buyers are adding to the local housing demand. An increasing number of visitors from China, Hong Kong, and Taiwan, have been noted recently, and such arrivals are expected to continue for quite some time. According to a projection by the U.S. Department of Commerce, there will be a 219 percent increase in Chinese visitors in Las Vegas by 2015. With the growing influx of foreign arrivals, Terminal 3 at McCarran Airport has been expanded.

Mandarin Oriental Las Vegas is one of the direct beneficiaries of this uptick in international visitors. Its lofty reputation, competitive pricing, and attractive rental income opportunities make the Mandarin popular among foreign buyers. Discounts of as much as a 50 percent are said to be available, making the Mandarin a competitive choice. With net rental yields at 7 percent on the average, acquisition of a unit here is indeed worth a look from foreign buyers.

Ravella, Casino MonteLago Sold for $46.8 Million

December 11th, 2012

Kam Sang Co., a California real estate firm based in Arcadia, has acquired the hotel Ravella at Lake Las Vegas and its adjoining Casino MonteLago for $46.8 million.

The casino building and the 349-room Ravella at Lake Las Vegas were purchased from Village Hospitality LLC, an extension of Deutsche Bank. The bank unit acquired the property in 2009 after the original owners filed for bankruptcy protection. Then known as the Ritz-Carlton, the hotel defaulted on a $103-million mortgage, leading to Deutsche Bank’s foreclosure on the property. The hotel was reopened in 2011 under its new Ravella name.

Kam Sang has expressed interest in the property as early as 2009, but the initial overture was rejected. This February, the company revived its purchase proposal to Village Hospitality, reportedly at a price lower than the original offer. A Kam Sang executive said their purchase timing now was great with Ravella having a nonbank owner. He added that their company has been eying acquisitions on the quality and scale such as this purchase. They intend to keep the Ravella for the long-term and consider other Las Vegas hotel opportunities, he said.

The Ravella purchase was the first acquisition of Kam Sang, a thirty-three-year-old development firm, outside of Southern California. In this area, the company owns not only hotels but also residential assets, retail shops, and restaurants as well as other mixed-use properties. The hotels in its investment portfolio include the Sheraton Hotel in Anaheim, Embassy Suites in Glendale, Courtyard Marriott in Baldwin Park, Rancho Cielo Estates in Rancho Sante Fe and Residence Inn by Marriott in La Mirada. Among its retail properties are Puente Hills East at the City of Industry, Simi Valley Town Center at Simi Valley, and Kaleidoscope at Mission Viejo. The majority owner of Kam Sang is real estate developer Ronnie Lam who likewise owns Tokyo Wako, a Southern California chain of sushi restaurants.

Economic Growth Forecasted on Strip Resorts for 2013

December 7th, 2012

On Thursday, a group of analysts said that hotels along the Strip can expect an increase in revenue as much as 5.3%. The increase in revenue is expected to come from multiple sources as the economy continues to recover. Newmark Grubb Knight Frank’s Global Gaming Group, a commercial real estate brokerage based in Las Vegas, published their predictions for 2013. The group predicted that the entire Strip revenue will have a growth of 1.5%-5.3% that is if the trend continues and the country doesn’t slip into recession once again.

The Newark Grubb Knight Frank’s Global Gaming Group said that the Strip revenue rose up to 2.5% through June. And improved to 4% in September, which is equal to a $6.2 billion increase. Operators of Strip hotel-casinos have experienced a gain in visitation rate of 1.8% during the month of September. In 2014, there’s a planned extension for additional 1,217 rooms. The project is in partnership with the SLS Las Vegas that will be located at the former Sahara site. Also additional units are also planned for the Downtown Grand that will open next year. The biggest component that’s moving the visitation rate upward is the local consumers.

But not all the resorts are gaining profit from the trend. The Stratosphere, a budget-friendly hotel casino has declined in its average room rate from $50.31 to $48.99 but on the other side of the coin the high-end Cosmopolitan hotel resort increased the rates of their rooms from $233 to $257.

One other factor that could affect the trend is China’s economy. The Chinese community comprises a large cut of high-end baccarat players. The baccarat revenue could still grow or fall by 5%, this will depend on the Chinese real estate and stock market performance. So definitely, their country’s economy is something to keep an eye on. Se Oei, director of gaming research and analysis for Newark Grubb Knight Frank’s Global Gaming Group said that the Eurozone situation and the fiscal cliff could still affect the overall trend. He stressed that although there are some concerns the group is still optimistic.

Las Vegas Home Prices Rising

December 6th, 2012

Increases in housing prices by as much as 30 percent are being posted in some submarkets of Las Vegas, but an analyst of Home Builders Research, Dennis Smith, doubts that this pace can be sustained. The research firm reported that 593 new home were sold this October at an average price of $216,614, which is 10.3 percent higher than $196,360 of a year ago.

The current price levels for new homes manifest the effect of a thinning home inventory, Smith observed. Upward adjustments of up to 30 percent were seen at some real estate sales offices in Mountain’s Edge, Summerlin, and Anthem.

Smith noted that each month, it is becoming more evident that a market correction will emerge. This, he maintained, is an eventuality that will occur despite the government initiatives to have banks and mortgage servicers help stimulate home market recovery.

The analyst monitored 4,098 resale closings this October, which brings to 41,596 the year-to-date total for a 4 percent gain from a year ago. The average resale price increased by 18.2 percent from the year-earlier level to $130,000. While the statistics do look positive, the much-segmented increases bring some concern for Smith. In the Las Vegas Valley, he noted that there are still communities under downward pricing pressure emanating from distressed residential properties. What Smith is worried about is that an unknown number of homes maybe released as “instant inventory” should banks pursue foreclosure proceedings on these properties.

The analyst cited a recent CoreLogic report showing that 63 percent of Las Vegas home mortgages are underwater, meaning that their owners now owe more than what their home is worth. The percentage of these underwater homeowners is actually lower than the 68 percent level of a year ago. But still, Smith maintained that the current percentage level is three times that of the national average. He estimated that there will be over 100,000 potential defaults if half of the 225,000 underwater homeowners hang on to their properties. In turn, half of the foreclosed housing could end up going back to the bank and eventually the market, he said.

In the meantime, the low inventory of homes for sale continues to steer the Las Vegas housing market. Competition among buyers has intensified and multiple offers go to the best-priced homes available. Cash buyers account for 48 percent of home sales, further manifesting the dynamics that dictate the current pace of the market.

Red Rock Business Center Drawing New Tenants

December 5th, 2012

The Red Rock Business Center at 6180 Brent Thurman Way acquired new life and vigor as a rental property. WGH Acquisitions, a Las Vegas-based concern, has purchased this bank-owned building and is rehabilitating the center which has been empty for two years. WGH is hoping that the building’s strategic location near Russell Road and Las Vegas Beltway will draw much-needed tenants. The building is visible from multiple directions of the Beltway, providing a unique location for the center.

Already, Keller Williams Realty, which is expanding its southwest Las Vegas Valley operation, has signed a lease for a 13,000-square-foot space at the Red Rock Business Center. More of such leases are being negotiated following the well-attended open house held recently at the center. Some sixty commercial real estate agents attended the center’s open house, and they were briefed on the improvements that are in the works for the property.

The Red Rock Business Center is undergoing a major facelift, having been vandalized in the years that it sat idle. WGH is putting in new landscaping, constructing a stone façade, and replacing windows for better energy efficiency.

The pricing for the center was quoted at $1.45 per square foot. There’s an additional 30 cents charge per square foot for the maintenance of the building’s common areas. A lease agent said that the center, as it is shaping up now, has received a lot of positive feedback. This widespread interest indicates that the center will generate good lease activity, another agent agreed.

WGH Acquisitions paid U.S. Bank $3.1 million, or slightly below $40 per square foot, for the center which consists of two building structures with a total floor area of 74,246 square feet. A WGH partner, David Garfinkle, expressed satisfaction with the purchase. He said that his company will still pour a substantial investment to complete the base buildings and institute property improvements. Notably, each building will sport its own pylon sign which is expected to be put up within the next thirty days. The buildings’ façade will also have available space for signage.

WGH also purchased another building at Rainbow Sunset, a four-story edifice with a floor area of 108,000 square feet. The company is also negotiating for the acquisition of the mothballed ManhattanWest condo project on Russell Road also near the Beltway. Garfinkle said that these initiatives manifest their confidence on the long-term economic prospects for Las Vegas.

Las Vegas Home Market Gains Noted

December 4th, 2012

A study covering the inclusive period of October 2011 to October 2012 indicated that the ailing U.S. home market might have entered a stage of recovery. The analysis, which appeared on the monthly housing summary of Realtor.com, showed that listed home prices in sixteen major metro areas across the United States rose by double-digit levels during the one-year period. Notably, even some of the areas hardest hit by the real estate meltdown, like Las Vegas, appear to be gaining some stability.

The Realtor.com market reading covered 146 U.S. metro areas. Several market data were factored into the analysis, among which are total number of listings, median list price, and median age of inventory. The monitored asking prices of residences for sale indeed indicate that the sellers engaging the market are showing a higher level of confidence. Increases in the median list price were noted in over one-half of the studied cities.

Las Vegas, one the cities hit the earliest (as well as the hardest) by the mortgage foreclosure in 2006, may have reached a turnaround point earlier this year. According to the Realtor.com study, the average listing price in this metro area gained 12.41 percent from October 2011 to October 2012. This increase was traced to home investors hunting for bargains as residential prices started to level off and showed signs of stability.

Curiously, the state of California which led in the housing boom and bust as a result of subprime mortgage lending, now appears leading the U.S. home market out of that debacle, as Bloomberg observed. Eight California cities are in Realtor.com’s list of top sixteen metro areas which posted double-digit spikes in home asking prices.
Sacramento topped this listing with a gain of 31.01 percent, a hefty increase that was reflected even on a month-to-month gain. The median list price rose by over 14 percent for this metro area from September to October this year, the only U.S. locality to have achieved such a monthly double-digit gain.

Median home list prices Santa Barbara, which came in second in the listing, rose 27.03 percent. Significant reductions in housing inventory have been registered in this California metro area for the past two years. Another California city topping the Realtor.com list, San Jose, at fourth place, experienced a 20.49 percent increase in the average asking prices. Several months ago, Zillow ranked this metro area as the No. 1 sellers’ market in the U.S. Realtor.com also tagged San Jose as a “top turnaround town” where the homes listed for sale have fallen already by 44 percent.

Hsieh’s $350M Development Project Pumps-up Tech Jobs in Downtown Las Vegas

November 30th, 2012

Las Vegas is now one of the country’s emerging markets for tech jobs according to a report from the Jones Lang LaSalle on Tuesday. Tony Hseih, chief executive officer of Zappos.com has just infused $350M into downtown development. In 2011, Las Vegas was ranked 2nd on the Jones Lang LaSalle’s high-tech employment growth with a 22.9% increase from the previous year. San Francisco was still ranked number 1 with an annual growth of 28.6%.

One great factor that will probably appeal to a lot of young entrepreneurs is the low cost of living in Las Vegas. Another key ingredient is the active 24-hour workforce in the area.
This Downtown Project will introduce a big change into Las Vegas City. The city will transform into an ideal platform for a lot of startup companies. The total venture capital for high-tech companies spiked to $15.5 billion in the last four quarters up to June of 2012. These high-tech services are responsible for the 17% of the annual employment growth but comprises only 8.6% of the of the office jobs in the country.

There is a steady increase in capital activity in Las Vegas and support for startup activity is also steadily rising. These will likely boost up future jobs and create new companies. Zappos.com’s top executive Hsieh is helping nine start-up companies with a $50M technology fund. The relocation of his Zappos home base to the former Las Vegas City Hall from Henderson is also expected to draw in a thousand of tech workers next year.

Due to the general optimism in the marketplace there is a constant demand for qualified workers. After 12 months that ended in Aug. 31, there was a growth of 4.6% for the high-tech services section while the overall office-using employment increased 2.3% due to the addition of jobs during the same time frame.
Viney Singal, founder of Valtus Capital Group said that Las Vegas is indeed a land of entrepreneurs because it has the right blend of technology, gaming, hotels, and hospitality.

Local Developers Buying Unfinished Buildings in Las Vegas Valley

November 29th, 2012

Las Vegas Valley is full of a lot of half-finished buildings and structures that were shelved during the real estate bubble. But local developers are seeing potentials behind these unfinished projects and are buying them. These developers have the intention of finishing the projects themselves and hope to gain big profits behind these deals. These structures are being sold with discounted construction costs and cheap prices.

But getting them off the market is not that simple. Sometimes the procedure can take too long and can be too costly. According to Mike Montandon, Former Maryor and managing director for Voit Real Estate Services, there are times when the process can even seem next to impossible.

The procedure for buying out these kinds of properties in Las Vegas Valley involves the “buyer” identifying the “seller.” This may sound simple enough but can be a bit complicated especially if the property had been foreclosed by the bank and already been auctioned off. Another thing the “buyer” must check the property’s debt load and find out “who owes who what?”

Safety is another concern; the buyer should see how sound the structure is to continue with the project. Other issues will be the piping, wiring connections, and validity of the construction permits. And naturally, the buyer should need to check on the demand for the finish product.

Las Vegas is known to have a very dry climate and very low humidity, this help minimize sun damage to open and exposed construction sites. Although rust can still attack the metal, it’s easily scraped off or sandblasted. Another issue is rain; this can cause corrosion, mold and raise other concerns. Theft is also another issue on the list. Some piping or wiring connections will attract thieves because of their value so these unfinished projects are usually fenced off.

The mothballed projects across the valley are mostly residential projects. Some of these projects with still unknown futures include the St. Regis Residences, a 68-story Faontainebleau, a 113-condo Mercer project, the 400-luxury-unit Spanish View Towers.

Big Come Back for Las Vegas as Real Estate Prices Steadily Rise

November 27th, 2012

Las Vegas used to always make the headlines for being the “Foreclosure Capital” of the country for several years. But now it is slowly making a comeback. Last year, there were about 12,000 short sales listed on MLS. Today, as of November 15, 2012, there are only 375 listed MLS for sale.

There are two groups of real estate in Las Vegas; under Group A are short sales, new construction, and some foreclosed properties at current market value. Under this group, the properties are selling like hot pancakes, they move very quickly; Group B is composed of properties that are still yet to recover from the real estate collapse from a few years ago. These are the properties that are difficult to sell and are not being sold because the sales price is almost double what they’re worth in the current market. Homeowners are still trying to hold on to these houses with the hope that the market will recover soon enough for them to have a good return on their investments. However experts don’t see this coming anytime soon despite the rise in real estate prices in Las Vegas.
The booming prices back in the early 2000s up to 2007 went way above and beyond the 3-4% annual growth but after that prices suddenly steadily fell. Presently the prices are gaining steady footing. And they are right where they should be. New construction is now being added to the Las Vegas housing market, which is something unheard of for the last several years due to the high rate of foreclosures. Houses back then where being foreclosed and sold for less than their replacement value.

Now that prices have risen back, new homes are being constructed because the new rates make it more possible for developers to compete with the prices of foreclosed homes in the market. But despite the real estate situation in Las Vegas, it still continues to be an ideal investment destination for investors and entrepreneurs.

Downtown Las Vegas Chosen Site for “Life is Beautiful” Food and Arts Festival

November 26th, 2012

The “Life is Beautiful” festival to be held in the fall of 2013 is expected to draw thousands of visitors and locals to Downtown Las Vegas. The festival is spearheaded by Another Planet Entertainment, the Aurelian Marketing Group, and MAKTUB Marketing and Downtown Marketing. CEO of Aurelian Marketing Group, Rehan Choudhry said that they are excited about the unique partnership that has come together because of this spectacular festival.

The Aurelian Marketing Group is a seasoned company composed of highly trained and experienced brand strategists, expert producers, and creative directors. These experts all have track records of conceptualizing branded entertainment and events.

Another Planet Entertainment will be the partly responsible for handling the stage production and music booking for the festival. This outfit also produces the Treasure Island Music Festival and the Annual Outside lands Music and Arts Festival held in San Francisco. They were also the ones behind the promotion and production of events and artists such as Dave Matthews Band, Neil Young, Radiohead, Tom Petty & The Heartbreakers, Metallica, Kanye West, and Paul McCartney.

Joey Vanas, Executive Director of the First Friday Foundation and MAKTUB Marketing and also managing partner of First Friday Las Vegas, said that they’re bringing the event to Downtown Las Vegas because of its active community that’s aiming for real change. They are working hand-in-hand with the community to transform it to become the world’s largest community-focused city. They are hoping to make this great event an integral part of the neighborhood.

The goal is to direct investments to real estate, education, residential development, small business and startups, and a well-meshed urban core. Vanas is the one who has seen the development of the First Friday Foundation, a non-profit institution dedicated to backing civic and local art. It has drawn the attention of around 20,000 people and created awareness for the arts scene in Downtown Las Vegas. It successfully paved the way across the country and the world.