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Condo-hotels can’t catch a break, at least among the real estate media. Last weekend, two publications focused on the struggles of current condo-hotel developments and the ramping up of lawsuits from fed up buyers. And in some cases condo-hotel buyers might not be readily able to sell their units.
The Palm Beach Post looked at two possible class action lawsuits involving owners at the Resort at Singer Island. It is estimated that one of the lawsuits could cost the developer, WCI Communities, an estimated $138 million. The newspaper also reported that Florida’s condominium ombudsman is now fielding a growing number of complaints from such buyers. His take? “It’s a mess.”
Out west, Las Vegas is seeing its own condo-hotel backlash. While the city has seen the opening of the Palms Place and the Trump International this year, In Business Las Vegas reports that there are some unhappy owners at other projects. Some 40 buyers at the Platinum and Signature, developments from a partnership between MGM Mirage and Turnberry, have been disappointed with the revenue generated from the rooms and are now suing claiming they were defrauded by sales agents who they say promised profits from rental income. While some existing projects face difficulties, Vegas real estate watchers are eyeing Vdara, the condo-hotel project at the much-lauded CityCenter project to see if this concept really is dead in the water.
The In Business article notes that condo-hotels going forward may have a much smaller role at new developments because they are both difficult for a developer to finance and, in a rocky real estate market, they are an even tougher sell. In some Florida markets, lenders won’t touch the projects so mortgages are nearly impossible to secure, while in Las Vegas other projects are facing possible foreclosure proceedings. One Las Vegas real estate analyst doesn’t see condo-hotels returning to the limelight until 2015 or 2016. He told In Business, “I think we are looking at the end of an era now.”
Reader Feedback
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From: Tahoe InterestMonday, April, 21, 2008 at 05:56 AM
Amy - Any word on how The Chateau at Heavenly Valley in South Lake Tahoe is doing?
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From: donna taylorThursday, April, 24, 2008 at 07:36 AM
--what about the Rosarito Beach Condo Hotel project in Rosarito Beach Mexico?--any specific info re: this project?--please advise--thanks--
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From: amygFriday, April, 25, 2008 at 03:32 AM
Thanks for your comments. Halogen Guides will continue to look into new projects in both Lake Tahoe and Mexico. Stay tuned!
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From: Tahoe InterestFriday, May, 23, 2008 at 08:30 AM
As predicted: http://realestate.halogenguides.com/archives/1149-more-condo-hotel-woe
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From: lassieThursday, July, 24, 2008 at 02:49 PM
I would like to hear from other people who may have purchased a Trump condo unit in Rosorita Beach, Mexico. We purchased in the first tower and have paid $250,000 in deposits well over two years ago with a promise of completion this year and they have not even started with no idea how many years before we have a condo. Help! I need to hear from other involved people or someone who can tell us how to get our money back!
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From: Trevor SmithFriday, November, 07, 2008 at 08:03 AM
The Chateau at heavenly was "on hold indefinitely" due to the construction lender pulling out as about 60 days ago. Shhot me an e-mail for more info Trevor@Ttahoe.com
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From: RidiculousMonday, April, 21, 2008 at 05:46 AM
Condo Hotels appear to be a benefit for the developer and management company. Don Trump Jr was recently on Fox Business and CNBC boasting how they were selling units in Trump SOHO for $3,000 a foot (with only 120 days of occupancy). Effective cost per square is over $9,000. Oil money? Russian commodity money? How about just plain foolish!