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October 13, 2009

Luxury Goes Begging At Nouvelle

After nearly two years of meager sales, units at the Nouvelle at Natick luxury condominium complex went up for auction last week, selling for as little as 36 percent of the last asking price. The fire sale reflects the ongoing general gloom in the housing market, but also some factors specific to high-end condos.

General Growth Properties, the bankrupt owner of the mall-adjacent project, had sold only 37 out of 215 condos before the Oct. 4 auction. Using Boston consulting and marketing company Accelerated Marketing Partners of Boston, it sold another 55 at the auction, and the remaining units are now on sale for the same marked-down prices.

"I've heard that the auction went better than they had anticipated," said MetroWest Chamber of Commerce President and CEO A. Theodore Welte.

Welte said he expects other condos in the complex, which offers features like a rooftop putting green and a private chef service, to sell at the new prices. Nouvelle's web site now promises deals including an 875-square-foot one bedroom, 1.5 bathroom unit marked down from $469,900 to $271,000 and a 1,167-square-foot condo with two bedrooms and two bathrooms discounted from $709,900 to $335,000.

Damian KokEnnen, the manager of Holmestead Properties, a Hopkinton real estate company that specializes in condos, said he thinks the dramatic price drop at Nouvelle had more to do with financing issues than with the housing market as a whole. These days, KokEnnen said, there are new restrictions on financing for condominiums, and most lenders won't work with condo buyers unless they can put at least 20 percent down. That means it's often only investors that are able to buy condominiums - and by definition investors only buy when they think a property is being sold for less than it's worth.

KokEnnen, who is not involved in the Nouvelle project but represents General Growth marketing a related group of affordable condos, said the Nouvelle units were probably originally priced too high for the market to bear, but the ultimate auction prices were probably below their true market value.

"They had to basically liquidate them to investors in order to get the inventory moving," he said.

A representative for Accelerated Marketing Partners said the company couldn't say how many of the auction buyers were investors.

Another real estate agent who does business in the MetroWest area, Donna Moy-Bruno, said high-end condos are having a particularly hard time selling. She said the housing market has gotten a boost from federal tax credits for first-time homebuyers, but few of them want to pay for luxury homes. Moy-Bruno said she has noticed some buyers shying away from Natick, where prices are higher than in surrounding communities.

"I've had some couples decide instead they're going to look for a townhouse in Ashland twice the size," she said.

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