<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD>Mar. 30, 2006
Copyright © Las Vegas Review-Journal
[FONT=verdana,arial]LV land prices drop 47 percent in fourth quarter [/FONT]
[FONT=verdana,arial]Average cost for acre hits $376,200 [/FONT]
[FONT=verdana, arial]By HUBBLE SMITH
REVIEW-JOURNAL [/FONT]Housing prices are flat, high-rise condo projects are canceling sales, and now land values have dropped by almost half in Las Vegas, local research firm Applied Analysis reported.
The average price for an acre of vacant land in the valley was $376,200 in the fourth quarter, down 47 percent from the previous quarter and down 28 percent from the same quarter a year ago.
Several factors contributed to the decline in land prices, Applied Analysis principal Brian Gordon said Wednesday.
Foremost is the sale of 2,675 acres in North Las Vegas by the Bureau of Land Management. Olympia Group paid $639 million, or about $239,000 an acre, for the land.
Secondly, there was a shift in investment activity toward other Las Vegas Valley locales that have below-average pricing, Gordon said.
"We saw significant investment in the north and northeast part of the valley that traditionally carry lower-than-average prices," he said, "so with the shift in the mix of property sold, that also contributed to a lower valleywide average."
Among the transactions were a $55.1 million purchase of 106 acres ($365,600 an acre) at Craig Road and Fifth Street in North Las Vegas and a $28.8 million for 80 acres ($345,600 an acre) at Tropical Parkway and Donovan Street in the north submarket.
Looking at the fourth quarter of 2004, Gordon also saw high-density condominium sites being sold at a premium that did not occur a year later. One noteworthy land transaction in the fourth quarter was a 0.84-acre site on Las Vegas Boulevard north of Sahara Avenue, the site of the canceled Liberty Tower condo project by Australian developer Victor Altomare, that sold for $5.5 million.
Land prices that shot up by as much as 99 percent during the past 18 months are "clearly unsustainable," Gordon said.
"The economics of land pricing, escalating development costs and modest increases in interest rates will not allow for average land valuations to reach well beyond the recent peak, at least not in the near term," he said.
Jeremy Aguero, founder of Applied Analysis, said parcels that have the ability to capitalize on density and develop "new urbanism" projects will allow pricing levels to reach in excess of $1 million an acre. Creative, risk-taking developers will likely hold land values up early this year, while speculative investors are finding it difficult to "make the leap," he said.
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Copyright © Las Vegas Review-Journal
[FONT=verdana,arial]LV land prices drop 47 percent in fourth quarter [/FONT]
[FONT=verdana,arial]Average cost for acre hits $376,200 [/FONT]
[FONT=verdana, arial]By HUBBLE SMITH
REVIEW-JOURNAL [/FONT]Housing prices are flat, high-rise condo projects are canceling sales, and now land values have dropped by almost half in Las Vegas, local research firm Applied Analysis reported.
The average price for an acre of vacant land in the valley was $376,200 in the fourth quarter, down 47 percent from the previous quarter and down 28 percent from the same quarter a year ago.
Several factors contributed to the decline in land prices, Applied Analysis principal Brian Gordon said Wednesday.
Foremost is the sale of 2,675 acres in North Las Vegas by the Bureau of Land Management. Olympia Group paid $639 million, or about $239,000 an acre, for the land.
Secondly, there was a shift in investment activity toward other Las Vegas Valley locales that have below-average pricing, Gordon said.
"We saw significant investment in the north and northeast part of the valley that traditionally carry lower-than-average prices," he said, "so with the shift in the mix of property sold, that also contributed to a lower valleywide average."
Among the transactions were a $55.1 million purchase of 106 acres ($365,600 an acre) at Craig Road and Fifth Street in North Las Vegas and a $28.8 million for 80 acres ($345,600 an acre) at Tropical Parkway and Donovan Street in the north submarket.
Looking at the fourth quarter of 2004, Gordon also saw high-density condominium sites being sold at a premium that did not occur a year later. One noteworthy land transaction in the fourth quarter was a 0.84-acre site on Las Vegas Boulevard north of Sahara Avenue, the site of the canceled Liberty Tower condo project by Australian developer Victor Altomare, that sold for $5.5 million.
Land prices that shot up by as much as 99 percent during the past 18 months are "clearly unsustainable," Gordon said.
"The economics of land pricing, escalating development costs and modest increases in interest rates will not allow for average land valuations to reach well beyond the recent peak, at least not in the near term," he said.
Jeremy Aguero, founder of Applied Analysis, said parcels that have the ability to capitalize on density and develop "new urbanism" projects will allow pricing levels to reach in excess of $1 million an acre. Creative, risk-taking developers will likely hold land values up early this year, while speculative investors are finding it difficult to "make the leap," he said.
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