Video: Bust town

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CNBC
updated 5/22/2006 2:02:04 PM ET 2006-05-22T18:02:04

One year ago everyone agrees Las Vegas was in a frenzy over luxury condos, with the sort of money being thrown around you usually only see at the tables.

About 100 projects were approved, including one from Ivana Trump. She had her name put on an 80-story project, what would be the tallest building in Las Vegas. She had put up some of her own money, but mostly the building was being bankrolled by developer Victor Altomare.

We interviewed her on “Morning Call” last August about the seeming glut of supply coming onto the market.

“Why do I think prices are going to hold? There are 40 million tourists which are coming to Las Vegas every year. And next year we expect 46 million people. We will definitely have $1 billion in sales,” Trump said.

Nine months later the project was 40 percent sold, but The Ivana Las Vegas sales office is closed, the project is off, and buyers are getting their deposits back. The developers are now selling the land for $50 million, and Applied Analysis, a local research firm, says out of the 100 projects planned, only one in five has broken ground and only two in five may start before the end of the decade.

“So many people threw money at projects. They saw the money coming in and said ‘hey, now the land’s worth more, let’s just ditch the whole thing,’” says Jacqulyn Richey of lvrealty.net.

While Ivana’s tower isn’t happening, her ex-husband’s — the Trump International Hotel and Tower — proceeds.

But other big-name projects are gone or up in the air. At the site of the Las Ramblas — which includes George Clooney as a partner — deposits are no longer being taken and there is nothing going on.

Chris Sullivan is handling the sale of the Ivana property. He says the problem isn’t a lack of demand — and there are bargains to be had. People are still willing to pay from $500 to $1,400 a square foot.

“The demand is very high. In fact right now you have about 10,000 units that are being constructed. And 90 percent of those are sold out already. So I don’t think there is a shortage of demand. I think what there is, is a shortage of labor, and the problem goes back to increased building costs,” says Chris Sullivan of Sullivan Realty.

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