Boomers spur growth
in second isle homes
The Big Island stands to gain
the most from new resort projects
 |
|
Demand for second homes and residential investment properties by an aging baby-boomer population has spurred a wave of development at Hawaii's resort communities from Oahu to the Big Island that developers expect to ride for at least two more decades.
As the 78 million baby boomers, born between 1946 and 1964, begin to enter middle age and look to retirement, many are gaining wealth by becoming empty-nesters or through inheritance.
Peak hotel occupancy rates, rising hotel room prices and a healthy visitor industry have also fueled the second-home market by creating economic conditions that have allowed Hawaii's resort and second-home developers to offer a slew of new inventory to the aging baby boomer population.
"Many of the wealthy baby boomers have been coming to Hawaii for decades, and they are looking to slow themselves down," said Ricky Cassiday, research director of Prudential Locations. "Their interest in second homes here is going to hold strong through 2030."
More affluent baby boomers coupled with positive market conditions have led to booming residential resort development on the Big Island, where resort homes make up as much as 35 percent of the total residential sales revenues, Cassiday said. Resort sales make up about 20 percent of Maui's residential sales, 15 percent on Kauai and 10 percent on Oahu, but there is room for more development.
"This is about as good as it gets for developers," said Mark Richards, president of the Maryl Group Inc. The company is developing several luxury resort residential projects, including the $115 million Waiulaula at Mauna Kea Resort, which was announced yesterday.
Sales are expected to be brisk at the 102-unit development, which comprises single-family estates and luxury condominiums built in the upper highlands of the resort, located north of Kailua-Kona. Units, which will go on the market in October for pre-sales, will range in price from just less than $1 million to $3 million.
"Demand for quality homes remains high, and this is a spectacular location to own a new home in Hawaii," Richards said, adding resort development also appeals to military buyers and white-collar resort workers.
The new homes at Mauna Kea join projects at several other Big Island resorts -- including the Mauna Lani Bay Hotel, Fairmont Orchid Hawaii Hotel and Resort, the Outrigger Waikoloa Beach Marriott Resort, Hilton Waikoloa Village and Four Seasons Hualalai Resort -- which will put 1,200 to 1,500 units on the market in the next five years.
"We're at the heart of the sweet spot on the Big Island with most developable projects already in the pipeline," Richards said.
While there is a proven demand and many homes are selling to satisfied buyers on the Big Island, the pace has created pockets of road traffic as the island's infrastructure struggles to keep up with its rising population.
"Clearly, (Kona is) the place to be," Richards said. "From about 3 p.m. to about 5:30 p.m., it's stop-and-go traffic coming into town from the airport."
Despite its rising popularity, the Big Island is still a far cry from being like Oahu, and even the Big Island's most crowded roadways do not match Oahu's H-1, he said.
"There's still plenty of room for development on the Big Island, while development in Maui is more difficult due to density issues," Richards said.
Oahu's second-home market, which had slowed down after being an active market for years, has plenty of room for growth in Ko Olina and at Turtle Bay, he said.
"There is plenty of room for reinvestment, conversion and new construction in the resort community," Richards said.
On Kauai the second-home market is so hot that one of the newer developments, the Waipouli Beach Resort, sold out all but a dozen of its 190 units in a weekend, said Keith Singleton, vice president of Waipouli Beach Resort LLC.
"We're right at base of a cresting wave," Singleton said. "There's a pretty good future in the second-home market."
And it is only going to get better as long as Hawaii's visitor industry stays healthy, said Mike Hamasu, research consultant with commercial real estate firm Colliers Monroe Friedlander.
"As long as occupancy rates and room prices remain high, investment in resorts is going to remain attractive," Hamasu said. "There aren't many new hotels being built, so that means investors will have to turn to second homes, condos and time shares."