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Best of Howard Stutz

Gaming Guru

Howard Stutz

CityCenter developers cut prices on high-rise condos

18 April 2012

LAS VEGAS -- CityCenter developers are announcing a renewed effort to sell high-rise condominiums at the Strip development, discounting prices by about 25 percent in hope of jump-starting an otherwise stagnant market.

The remaining 602 condominiums in two CityCenter projects -- 441 units in Veer Towers and 161 units in Mandarin Oriental -- will have their initial face price marked down by 10 percent. CityCenter is also offering prospective buyers another 15 percent in incentives, such as reductions in condo association fees, over a three- to four-year period.

The desire, said CityCenter Executive Vice President Tony Dennis, is to spur interest in a luxury high-rise residential market that may have hit bottom.

"The economic indicators we have seen over the past six months indicate the bottom is here," Dennis said Tuesday. "That why we made the decision to relaunch sales efforts with a price adjustment. We believe the timing is right."

A Veer Towers one bedroom will start at $315,000 while a one-bedroom Mandarin Oriental unit starts at $880,000.

CityCenter, which is a 50-50 joint venture by MGM Resorts International and Dubai World, initially cut prices on the project's condos a few a years ago. CityCenter also allowed owners to place units in a rental program.

The development once planned to sell roughly 2,400 condos in four of CityCenter's five mixed-use projects. However, construction defect issues canceled the 200-unit Harmon tower. Meanwhile, developers took the 1,400 condominium-hotel units at Vdara off the market. The building is now a nongaming hotel.

CityCenter's condos, once carrying values of more than $1,000 per square foot, now start at $463 a square foot at Veer and $750 a square foot at Mandarin.

CityCenter sold 292 units between the all-residential Veer and Mandarin Oriental, which also has 400 hotel rooms, collecting $294 million.

Dennis said other high-rise condo markets, such as Phoenix and Miami, have seen a slow comeback in sales. He said Las Vegas lags behind those cities.

In January, CityCenter partnered with Sotheby's International Realty to market the Mandarin Oriental and Veer condos to overseas buyers.

As an additional incentive, CityCenter is offering brokers a new 5 percent commission on new sales closed by June 30, nearly double the standard rate.

"By offering co operating brokers a 5 percent commission, in conjunction with new price reductions and buyer incentives, we're further increasing their earning potential and CityCenter's appeal," Dennis said.

MGM Resorts has written down roughly $2.3 billion in the value of its 50 percent CityCenter ownership since December 2009. The CityCenter joint venture has written down more than $700 million in residential sales.