Group Manages to Pull Off Desert Flip in Arizona

A venture led by two real-estate investment firms has shown that it actually is possible to make money on land speculation in the Phoenix area. The group bought a 1,200-acre assemblage in San Tan Valley, roughly 50 miles southeast of Phoenix, early this year for about $23,000 an acre, according to people familiar with the matter. Now the venture—led by Harvard Investments of Scottsdale, Ariz., and San Francisco-based Rockwood Capital LLC—has sold 208 acres of the land to Central Arizona College, which plans to build a new campus there. The price: $8.9 million, or $43,000 an acre. That still is a far cry from the market's peak, when raw land was selling in Phoenix's southeast suburbs for between $100,000 and $200,000 an acre, according to Land Advisors Organization, a Scottsdale-based land brokerage. But market bulls believe those days will return. The college's purchase is "a sign that things are changing here," says Nate Nathan, the broker who arranged the deal. "Within five years, this place is going to be exploding."

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