Luxury Condo Sales Subside on Isle

Houston Business Journal, August 10, 2007,
by Allison Wollam


GALVESTON —A prolonged high tide is turning for sales of luxury condominiums in Galveston.

A subsiding market has produced a glut of high-end projects on the island, and a number of developers caught in the slowdown are delaying new construction.

The Regatta is on hold. Developer Global Royal Investments has informed early buyers that the four-tower luxury condo complex scheduled to break ground in
January is now being retooled.

Centex Destination Properties has slowed the pace of construction on Pointe West, an 1,800-unit
project on West Beach.

Galveston developer Miguel Prida is delaying and reshaping his Island Grove condo development.

"It's definitely a buyer's market and not a seller's market right now," says the owner of Prida Construction Ltd. "We're focusing now on building units that people can afford, while still offering some luxury amenities."

Refunding deposits

Buyers who had put down deposits on The Regatta recently received a letter informing them that the 247-unit luxury condo project has been canceled and they would receive refunds.
Global Royal Investments wrote: "Planned construction of The Regatta-Tower I has been canceled due to a change in the development plan resulting from the tepid sale of the units, higher than originally anticipated construction costs and delayed regulatory approval of the acquisition of adjacent land."

As of Nov. 2, 2006, more than 25 percent of Tower I
at The Regatta had been reserved, according to
Global Royal Investments.

Ratan Jha, a principal with the Houston-based firm, says the letter was a legal formality.

"By law, we had to send out that letter," says Jha.
"The entire project has not been canceled," he says. "We're making major changes such as offering smaller suites, as well as making sure every suite has an ocean view."
The suites were originally slated to range from 1,595 square feet to 2,087 square feet. Now the largest suites will be about 1,500 square feet, says Jha.

The units originally averaged about $289 per square foot and Jha says the new prices have not yet been determined.
"We think the suites will sell better as smaller units," says Jha. "We're learning the hard way about what type of units to offer. It's much more competitive than it was two to four years ago because there's more choices and buyers are looking more for value."

Centex Destination Properties also is experiencing sluggish sales at Pointe West.

Original plans called for 1,800 luxury condo units and commercial space on 950 acres at the western tip of Galveston.
"We're still selling at Pointe West, but we've adjusted the pace of development to accommodate local market conditions," says Eric Bruner, director of public relations
for Dallas-based Centex Corp.
Bruner says the pool, clubhouse, restaurant and
other amenities are already operating.
"Centex is managing this local project according to evolving market conditions," he says. "We're committed to doing what's right for this project at the right time."
The sale slowdown hasn't completely halted new construction.
Island developer Prida is proceeding with plans for his third condominium project in as many years.

Playa del Sol, his newest project on Galveston's west end, will include 180 units in five midrise buildings with Gulf views.
The units of 500 square feet will be priced from $159,000 to $183,000 for a penthouse unit.
Prida also developed the 11-story Ocean Grove condominiumsand plans to build the 13-story
Island Grove on Seawall Boulevard.

Crews are currently clearing land for the Island Grove site, but Prida is delaying construction for several months.
He says the island is currently packed with tourists and he doesn't want to block the Seawall with construction crews.
He adds that even though the project hasn't broken ground yet, he's already sold 30 percent of the units. Says Prida: "A lot of developers have announced plans for new projects, but I'm the only one who is really getting building permits and clearing land."