Recommended Actions

(1) REGISTER and provide contact info so we can communicate with you

(2) Email the web address for this site to everyone else you know who put down a deposit at CityCenter

(3)
Start following us on Twitter to receive updates - @CCDepositgroup is the name on Twitter



There was an error in this gadget

Welcome to the CityCenter Condo Deposit Group Forum

The group's goals include: (1) Creating a productive discussion forum
(2) Being a resource where owner's can get information on the CityCenter project
(3) Provide a mechanism to present a unified voice of the buyers to the seller
(4) MOST IMPORTANTLY, TO TRY TO ANSWER THE QUESTION, "WHAT DO THE OWNERS, AS A UNIFIED GROUP REQUIRE FROM THE SELLER IN ORDER TO MOVE FORWARD AND CLOSE THEIR CONTRACTS?"
All of the other key stakeholders involved in CityCenter have a voice - the bondholders, the shareholders, management, etc. To date, the buyers who represent billions of dollars in committments have yet to have a seat at the table. This group seeks to change that and come to a win-win solution with MGM.

Thursday, July 9, 2009

WSJ Article

Buyer's Remorse Hits Vegas Project

City Center Development Resists Requests to Renegotiate Prices of Condos Sold in Boom

One of the costliest and highest-profile condominium developments in the country -- the $8.4 billion City Center project in Las Vegas -- is facing a revolt from some early buyers.

Some buyers who signed contracts are demanding significant price reductions, and have hired a law firm to take their grievances to the project's principal developer, gambling company MGM Mirage. Others want their deposits back. Some are using a Web site, citycentercondodepositgroup.blogspot.com, to air their grievances.

So far, buyers have put down $313 million in deposits on 1,500 units in the 2,440-unit complex. Those who agreed to buy early on now fear they will take possession of condos whose market values are far below what they agreed to pay. Many of the contracts were signed in 2006 and 2007, when Vegas was booming.

Getty Images
las vegas city center
las vegas city center

The City Center project under construction in Las Vegas.

"It is simply not possible by any stretch of the imagination to close on the units at the contracted price," said Mark Connot, a partner with Hutchinson & Steffen, a Las Vegas law firm hired to represent a handful of buyers demanding price reductions. "Our position is they need to adjust the price to market value. And until that's done I don't think they will find any buyers."

MGM Mirage said it isn't offering discounts to current buyers, many of whom bought during a special promotion period for "friends and family" of MGM Mirage. A spokesman said it is too early to know how the units are valued in the current market. In Las Vegas, home-sale prices are down more than 30% from a year earlier.

The rising discontent is the latest sign of trouble to hit City Center, the colossus owned by MGM Mirage and Dubai World, the investment arm of the Persian Gulf state. The project narrowly avoided bankruptcy earlier this year, and the partners only recently resolved an internal legal feud.

The 67-acre project, due to open in November, includes 5,000 hotel rooms and 2,440 condos rising in sleek towers over the Las Vegas Strip. The development will have a public parks system, its own monorail, fire department, mall and theater.

"What we're doing is evaluating the market," said MGM Mirage Chief Executive Jim Murren, who put deposits down on two City Center condos. He added that he understands buyers "want clarity in an environment of uncertainty. In fact, that's what I want as an owner."

The City Center condos range in price from $600,000 for a smaller studio unit to more than $9 million for an expansive penthouse suite built atop of the Mandarin Oriental hotel. So far, the most expensive unit under contract is a 3,910-square-foot suite at the Mandarin for $9.4 million, or $2,392 per square foot.

[closing condos] Getty Images

It is unclear how many buyers are agitating for better deals or for deposit refunds, but real-estate analysts in the area have raised fears that a good portion of them may no longer be able to secure financing and could just decide to walk away, leaving their units empty.

How the dispute plays out has serious implications for the Las Vegas real-estate market.

"City Center is vital to everything we want to see happen in Vegas in the future," said Dennis Smith, president of Home Builders Research Inc., a consultancy firm in Las Vegas. "It will change the Strip. We don't want to see thousands of empty condo units sitting there."

The City Center units are the most expensive of the 7,000 luxury condos for sale or under construction in the Las Vegas area.

Complicating matters, many of the first to sign contracts were the company's biggest spending gamblers and its own executives who were enticed by the project's "friends and family" promotion. In addition to Mr. Murren, MGM Mirage shareholder Kirk Kerkorian is among the early condo buyers.

"You have 1,500 condo buyers right now who wish they'd never put this thing into contract and most of them have some kind of relationship with MGM Mirage," said one buyer who put a $600,000 deposit on a $3 million unit, and would like to get his deposit back. "It's tricky for MGM Mirage. You make your best customers angry."

Write to Tamara Audi at tammy.audi@wsj.com

6 comments:

Steven said...

As an early buyer of a condo unit in the Veer Towers, I am upset with the de-valuation of the real Estate in Las Vegas. If some thing isn't done to help us level out this different we may choose to walk from this contact. Some times it better to lick your wounds than continue bleeding. It is going to take decades to bring the real estate market back to the levels when I brought in the Veer Towers. I also know that an empty building does not sell new buyers.

Anonymous said...

I hate MGM just as much you guys. Some of their actions are shameless, like the 4/09 pay raise for Jim. I'm currently watching their bankruptcy status over at my website. Shameless plug.

http://www.investorgamblereconomist.com/mgm-bankruptcy-watch/

They've been going through some crazy ups and downs. Hope you get the contracts rescinded.

Audree said...

Thanks for sharing this post. Hope the problem could be resolved in time.

Audree

Las Vegas Hotel Accommodations

condo Philippines said...

Vegas is really an awesome place to go and have fun. The condos there was so beautiful!

Paula M

Olya Olegovna said...

I enjoyed reading your articles. This is truly a great read for me. I have bookmarked it and I am looking forward to reading new articles.Keep up the good work!
chalet a louer quebec

kate Louise said...

It's my dream to have my own condo at such a stunning place.Waiting to see more for condos on this blog. Keep writing.

Real Estate Services in Toronto