DOMESTIC SPOTLIGHT: HONOLULU

by Patrick Veling, Industry Analyst & Consultant at Real Data Strategies, Inc.

 

"Honolulu is going to see luxury sales numbers never seen before"

 

Pristine beaches, blue waters and slow-paced island life

have long made Honolulu one of the world’s most sought-after vacation

paradises. But the city is more than just a temporary escape. It is also

Hawaii’s largest city and state capital, known as the “Gateway to the Pacific”

with a thriving culture of international business, military and as of late, luxury

real estate.

 

Those who do view Honolulu as a safe haven continue to leave their

footprints on the high-end marketplace. For instance, in the fourth quarter of

2013, sales activity for both single-family detached homes and condos in the

$1 million and up range was 8.3% above the same quarter last year and 61%

above the same quarter two years ago. As the pace of sales appears to be

moderating after a robust recovery in that price segment, so too is the

average luxury sale price in the last quarter of 2013. This is not what it

seems, however, and is more likely a result of more properties selling at

prices closer to $1 million, when they would have sold for less than that

benchmark two years ago. In essence, a million dollars does not buy what it

used to.

 

“Looking at the annual numbers, the sweet spot for Honolulu remains the $1

million to $2 million price range,” notes Patti Nakagawa, senior vice president

broker-in-charge, Coldwell Banker Pacific Properties. “We have seen a lot of

strength in this price range, as it appeals to all buyer segments: local, U.S.

mainland and international buyers. In the higher price ranges, particularly $4

million and higher, the buyer profile changes to a stronger share of buyers

from the U.S. mainland and abroad.”

Honolulu continues to face a lack of inventory.  Properties that are turn-key—and on the

ocean—naturally remain in highest demand—especially in Honolulu’s most

sought-after neighborhoods such as Kahala, Diamond Head, Portlock,

Kailua, Waialae Iki and Hawaii Loa Ridge.

 

Affluent buyers in these areas tend to seek out single-family homes that

offer an indoor/outdoor lifestyle—large lanais and walls opening to pools,

gardens or ocean views. Square footage and lot size (not always in

abundance on the islands) are also highly desirable amenities. These driving

forces could create an interesting dynamic in Kahala—one of Hawaii’s most

prestigious ZIP codes. Kahala Avenue, a famed stretch of road that has been

called the “Beverly Hills of Oahu,” is in the midst of a renaissance as efforts

are underway to sell several valuable parcels of Kahala land once owned by

a Japanese billionaire that had previously fallen into disrepair.