The smart money's on Las Vegas
For investors looking to build their portfolio, the gambling capital could be a good bet, writes Eoin Quinn. As the US flounders in a housing slump, a Dublin firm believes it has found an oasis of potential in the desert state of Nevada
Friday February 15 2008
Las Vegas can produce millionaires overnight, but these days the smart money isn't to be found on the blackjack tables -- it's in the pockets of property investors, eager to cash in on the turmoil in the American real estate market.
Among them is Dublin-based Harcourt Developments, the property firm headed by Mike Murphy and Pat Doherty, who believe they have found a sure bet in the form of an $800m (€545m) village development that has just begun construction in Las Vegas.
Sullivan Square is a 16.5 acre community in West Village, just six miles from the Strip, which includes 1,300 apartments, office buildings, a 1.5 acre park, and 25 shops. It is modelled on neighbourhoods in New York, Chicago and Montreal.
The development will have two 20-storey towers and a range of low-rise buildings. Prices start at $327,000 (€223,000) for 641sq ft studio apartments and rise to $1.8m (€1.2m) for 1,900 sq ft two-storey penthouses.
The project is scheduled for completion within the next five years.
"This is not for tourists," says Harcourt Developments director and former RTE presenter Mike Murphy. "This is not a casino. This is for people who are moving to Las Vegas. It is for residents, so we believe it will appeal."
It's a big leap of faith for Harcourt's first foray into the US market: North America is undergoing its biggest housing slump since World War II and Nevada has the highest repossession rate in the States, with one out of every 61 houses in foreclosure, according to industry analysts RealtyTrac.
But the Irish firm responsible for Dublin's Park West development and the €1bn Titanic Quarter regeneration in Belfast believes that the fundamentals in the Las Vegas economy are strong enough to give the city a bounce factor that won't be seen anywhere else in the US.
The gambling centre of the world is enjoying a $19bn investment in new casinos, huge hotels and retail malls that will drive a population increase of 400,000 over the next five years. Las Vegas has registered 7,000 new residents every month for the past five years.
All the new residents require roofs over their heads and, with geographical constraints capping the availability of development land, investors believe that Las Vegas will defy the sub-prime crisis that has paralysed the rest of the American real estate sector.
Harcourt Developments is funding the entire $800m construction cost of Sullivan Square, which has been masterminded by its joint venture partners, Las Vegas-based developers Glen, Smith and Glen, which has led several billion dollars worth of projects since it was formed in Las Vegas six years ago.
The project is a highly personal one for the firm's president, Kenneth Smith, whose experiences have shaped the unique nature of this development.
When the Los Angeles native relocated to Las Vegas after his divorce seven years ago, he found himself viewing home after home that failed to provide him with the type of life he had enjoyed in New York and other major metropolitan areas.
"When I came here, I was looking to live somewhere other than a stuccoed building in a subdivision single home because I didn't want to live in the suburbs in a gated community. My experience looking for a home coloured the decision to buy the land where Sullivan Square will be based."
The tradition of mixed-use residential developments in the US has been to build a retail mall and then nest homes around it.
Smith says that is doing things backwards: he wants to build a community, with homes that have the services within them in a high street-style development -- common enough in Europe but unheard of in Las Vegas.
"What Sullivan Square is bringing forward is a very old concept that grew up naturally in urban areas where you had these villages on each street, and the guy at the coffee shop knew your name and order and the butcher knew your usual cut.
"We didn't lose the village lifestyle when we moved to the city, we lost the village when we moved to the suburbs, and to me a community has diversity and a sense of place," he says.
Amenities will include a 1.5 acre community park, a separate 'dog park' (for taking Fido for walkies), 24-hour concierge and valet service, gym, pools, tennis courts, guest suites and covered parking. Sullivan Square will reclaim 45m gallons of water every year for use in its landscaping projects.
With the strength of the euro against the dollar, international selling agents Future Properties are confident of high levels of investor interest from here.
However, investor sales will be limited to 30pc of the development.
"Our average purchaser is a person who is building a portfolio or wants to add to a portfolio," says Henry Sherwood of Future Properties.
"And because the product is dollar-based and competitively priced, there is considerable room for growth."
Need to know
Sullivan Square development
- Sullivan Square is an €800m joint venture between Irish developers Harcourt Developments and Las Vegas-based firm Glen, Smith and Glen. Completion date is 2013, with the first units to be delivered in 2009.
- The development will have 1300 residential units in high-rise condominiums, brownstones, townhouses and Chicago-style loft units.
- Sullivan Square is named after turn-of-the-century modernist architect Louis Henry Sullivan, the son of an Irish emigrant renowned as "the father of the skyscraper" whose designs have shaped the identities of many US cities.
- The development is in Las Vegas, six miles from McCarran International Airport. Flights from Dublin to Las Vegas are mainly via Chicago, Los Angeles, or Heathrow. Carriers include Aer Lingus, American Airlines and US Airways.
Contact Joanne Murphy of selling agents Future Properties, Fitzwilliam Hall, Fitzwilliam Place, Dublin 2. Tel: (01) 669 4652. email: Ireland@futureproperties.com
- Eoin Quinn
