Strip condo sales ‘anemic’

One gaming analyst said MGM Mirage is facing a tough task when the company moves ahead with the planned sales closings of its luxury high-rise condominiums at the $8.5 billion CityCenter development later this year.

In a report to clients Las Vegas-based Union Gaming Group said it evaluated eight-and-a-half years of high-rise residential data from 16 Strip projects, five of which are condo-hotel.

“As one might expect, our findings would certainly indicate a market that is anemic at best,” Union Gaming Group principal Bill Lerner said.

Union Gaming said prices have not declined significantly at the Palms Place or Trump International (anywhere from 8 percent to 18 percent), but at the three MGM Signature towers, where all sales are either resales or repossessions, pricing is down 70 percent.

“Quite simply, sales have been almost non-existent,” Lerner said. He added that condominium projects are selling at an average of two units per month.

“Difficulty in acquiring financing is part of the problem, therefore we believe most current buyers are cash buyers,” Lerner said.

So what does this mean for CityCenter?

In looking at all the data collected totally on its own, Lerner said it seems MGM Mirage would need to cut condo pricing by as much as 50 percent to close any sales. However, he thought the prices could be sliced at most by 30 percent and still offer the company a level of success.

“The company will likely have some success at this magnitude relative to the consensus expectation of not creating any value from residential,” Lerner said.