Baby boomers fueling run on luxury condos in Hawaii
In Hawaii, million-dollar homes are as common as coconuts. But a $6 million condominium?
Multimillion-dollar condos are sprouting up across the state, from bustling Waikiki to the intimate island of Lanai.
Several developers, including real estate mogul Donald Trump, are trying to cash in on the soaring demand for ritzy condominiums in Hawaii, constructing new projects with eye-popping price tags.
The high-end condos are more spacious than the average single-family home in Hawaii and feature marble counters, Sub-Zero refrigerators, high ceilings and walk-in closets about the size of a garage.
Many of the swank condominium high-rises have business centers, pool-side cabanas, around-the-clock security, concierge service, theaters and spas.
A three-bedroom condo in Honolulu, listed at nearly $6 million, recently went into escrow and is expected to close this month.
Real estate agent Perry Kunishige, who listed the 3,000-square-foot unit on the 37th floor of the Hokua building fronting Ala Moana Beach Park, said new construction is generating some of the strong demand for luxury condos in Hawaii.
"If you don't have supply, you won't even know if there are buyers out there," he said. "Since we built these larger condominiums, buyers are coming out of the woodwork."
The $6 million unit has an office, 180-degree ocean views and a monthly maintenance fee of $1,138. The buyer is an unidentified businessman from Asia who could've bought a home anywhere in the world but is spending top-dollar for a piece of paradise.
"This is paradise, right?" Kunishige said. "We're in the center of the Pacific Rim and part of the United States. So this is the place to be."
Real estate insiders say most of the buyers are foreigners or baby boomers from the mainland who want to work on their golf handicap instead of their yards.
In many cases, it's their second, third or fourth home.
"These are folks who inherited a great deal of wealth or have earned wealth -- and there are millions of them," said Scott Higashi of Prudential Locations, the largest locally owned real estate company in Hawaii. "Their behavior is that of a spender, rather than their parents' generation, who lived through the war and are savers."
Buyers of pricey condos are typically seeking resort-like amenities and the finest appointments like custom-designed kitchens. Condo living also provides them the freedom to come and go without worrying about who's going to mow the lawn while they're away.
"It's so much more convenient. You can lock the door and leave," Kunishige said. "If you have a house, you have to worry about all the problems that come with a house."
The planned 460-unit Trump International Hotel and Tower Waikiki Beach Walk will include a library, wine cellar, lobby bar, cafe, fitness center, spa, concierge service, 24-hour room service, valet service and separate lobbies for the residents and hotel guests.
"My partners and I look forward to setting a new standard for luxury in Waikiki," Trump said in a statement.
Sales reservations are scheduled to begin in September, with construction starting next year. Prices have not yet been announced, but news reports say prices could reach $7 million.
On Maui, units at the Residences at Kapalua Bay, which is scheduled to be completed in late 2008, range from $4 million to $7 million. The property, managed by The Ritz-Carlton Hotel Co., will feature housekeeping, a private beach club, recreation area and access to Kapalua Resort's golf courses, restaurants and spa.
Units at the Beach Villas at Ko Olina, marketed as Oahu's first beachfront condo project in two decades, are being offered for nearly $1 million to $3 million. The project includes a total of 247 units in two towers.
Castle & Cooke, which owns 98 percent of Lanai, had a grand-opening celebration on July 8 for The Palms at Manele, a posh 28-unit oceanview project fronting the 18th fairway of a Jack Nicklaus-designed golf course. The three- and four-bedroom units run from $2.3 million to $2.8 million.
"I don't know if the developers all set out to build luxury condominiums, but clearly, the developers today know there's a market for the multimillion-dollar client," Higashi said.
Last year, 350 condo units in resort master-planned communities sold for $1 million or more in Hawaii. That's more than a threefold increase from the 103 sold in 2000, according to local real estate analyst Ricky Cassiday.
Many more have been sold in areas like urban Honolulu or Waikiki. Cassiday predicted rising interest rates wouldn't curb demand for the high-end condos because the financial elite have a lot of cash. But there will be increased competition for their business from resort areas around the world.
"The amount of demand is going to grow, just based on demographics," he said. "The baby-boomer generation is retiring and getting their inheritance."
But not everyone supports the posh, exclusive developments dotting coastal communities in Hawaii.
Some residents and lawmakers have expressed concerns about beach access, strained resources, higher taxes due to rising property values and increased traffic. They also point to the changing personality of the islands.
"I'm very concerned with Lanai. It's become an island of have and have-nots," said state Sen. J. Kalani English, who represents the island. "They've created a class-society there where super wealthy come and stay in these segregated communities."
About 3,000 people live on Lanai, nicknamed the "Pineapple Island," for its agricultural roots. The island is 98 percent owned by Castle & Cooke and is where Microsoft Chairman Bill Gates married in 1994.
"If the gap becomes too wide on Lanai between the wealthy and the poor, the wealthy will not want to come," English said. "To maintain the economic engine that they're building there, they have to make sure the poorest are helped."
Some companies are listening. Besides the luxury Palms development, Castle & Cooke has partnered with the state to develop a 48-unit affordable rental complex on the island to be completed in November 2007.
Mary Hakoda, principle broker of The Palms, said buyers are "seeking a laid-back, tranquil lifestyle," and want to preserve the peaceful Lanai lifestyle, just like the longtime residents.
Ultimately, the biggest selling point for Hawaii's multimillion-dollar condos is not what's inside or even manmade. It's the blue skies, warm waters, colorful sunsets and priceless views.