Trumps Wage Battle
In Las Vegas Market

Real estate mogul Donald Trump is going head-to-head with one of his ex-wives - this time in the real estate arena. Trump and ex-wife Ivana have both jumped into the volatile Las Vegas market, where each is simultaneously building competing luxury condominium projects.

The success or failure of the dueling Trump developments may be the latest litmus test on whether the turbulent Las Vegas market, which saw prices plummet during a pricing debacle last fall, is back on track.

The Las Vegas housing market, which saw home prices rise more than 50% in the span of less than a year, ground to a halt last fall when home builder Pulte Homes Inc. (PHM) was forced to drastically slash prices after moving them up too aggressively. The pricing controversy caused speculative buyers to abandon contracts and demand to dry up as home buyers opted to sit on the sidelines while prices corrected.

There has been much talk about speculative buyers jumping into the condo market with the intention of flipping units for a quick profit or renting them out. Fitch Ratings director Dina Treanor recently expressed concerns about the Las Vegas condo market, describing it as overheated and predicting 10% of those loans could go into default.

Some condo projects, such as former NBA superstar Michael Jordan's planned Aqua Blue Las Vegas development, have been scrapped before the shovel even touched the ground.

Still, Trump and Ivana are pushing ahead with their projects.

A groundbreaking ceremony will be held Tuesday to begin construction on Donald's 64-story Trump International Hotel & Tower Las Vegas, adjacent to the Fashion Show mall on the Strip and across from the Wynn Las Vegas resort and golf course.

Further north at the end of the Strip, his ex-wife is trying to trump this by putting her name to a development, called the Ivana, that she's touting will be the tallest residential condominium in Las Vegas at 80 stories. She has invited about a thousand brokers to meet at the Bellagio hotel the same day as Trump's groundbreaking to discuss sales plans. Her project's groundbreaking isn't slated until next summer.

The pair seem undaunted by the debacle that caused Las Vegas home prices to plummet last year - as both hunker down in a determined bet to outsell the other.

"We're totally sold out," Donald Trump said of his project. "If anyone drops out, I have 2,000 people to take their place."

Although Las Vegas has seen a surge in condo and condo-hotel developments, Trump isn't worried. He said he hasn't had any problems getting the prices he's requested.

"The market has been terrific for me - I can't speak for other people," said Trump. "It's like in New York, I put my name on a building and it sells faster and better than anything else."

Trump admits many of his buyers are purchasing units as a second home or investment. "I think you have a lot of investors. I think you have a lot of people who are going to live there, and I think you're going to have a lot of people who want to rent their units out," through his management company, he said.

There have been growing concerns in the market that the escalating number of speculative buyers and those purchasing properties as second homes could cause the market to collapse. Even Federal Reserve Chairman Alan Greenspan commented that he noticed some "froth" in certain markets.

Is Trump worried that the surge in speculative buyers in Las Vegas could cause the market to collapse?

"You're asking me the most negative questions ... You know, it's amazing. ... I'm totally sold out," he said. "And I have over 1,000 people on a waiting list."

When asked about Ivana's rival development, Trump's competitive side came out.

"You know, I hope she does well," he said, although he repeatedly questioned whether her developers - Victor Altomare and his team - would be able to get financing for the project, given its location and other factors.

When asked if he thinks Ivana is trying to capitalize on his name, Trump emphatically said, "Yes," adding, "I'm not thrilled."

Trump noted that Ivana had married somebody after divorcing him and still went back to using his name. "But she reverted back to the name 'Trump' - which just shows that she's not stupid," he said.

This isn't Ivana's first foray into real estate. She lent her name to a residential development, called Bentley Bay, in Miami. However, the developer, Italy's Riccardo Olivieri, miscalculated construction costs and wound up filing for Chapter 11 bankruptcy protection in 2004.

Konnel Peterson, a Re-Max broker in Las Vegas, said there are many new developments under construction in Sin City, but demand is also there.

"(Developers) that have not had a track record might experience some problems, but I think overall there's a huge demand in Las Vegas" due to the city's weather, tax climate, job growth and proximity to California.

Peterson said the market did experience a correction last fall when a flood of investors "created a demand that was artificial," causing prices to escalate to a point where homes were no longer affordable. However, he said it "is more balanced out (now), and the market has definitely rebounded and is starting to increase pretty aggressively again."

"(The correction) didn't eliminate the investors, but it definitely slowed them down," Peterson said.

The dueling Trump projects also may cater to different buyers: Trump is in the heart of the Strip, which could be appealing to gamblers, while Ivana's is away from the hustle and bustle of the Strip for those who don't want to be in the middle of the action.

Ivana Trump was out of the country and unavailable for comment. It's not known if she is putting any of her own cash into the Las Vegas development or simply her name.

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