‘Bird of the Pacific’
is back

Giant cranes are transforming
Honolulu’s skyline

Paula Harris remembers driving around Honolulu in the 1970s and admiring all the cranes in the sky.

"They used to say that was the proud bird of the Pacific," she said.

Today the giant steel cranes are back and are quickly changing the city's skyline, transforming parking lots, weed-filled vacant parcels and dilapidated structures into shimmery, luxury condominium towers.

"It hasn't happened since then, so people are really enjoying the moment," said Harris, president of The Harris Co., a Honolulu-based real estate consulting firm.

At least a dozen condo projects within a three-mile stretch of Honolulu from downtown to Waikiki are under construction or in the early planning stages. When completed, the new high-rises will add roughly 4,000 new units to the market, not including the many hotels being converted into vacation "condotel" units in Waikiki.

Despite taking years to build, the new condos have created a flurry of buying, with thousands of people seeking their own piece of paradise. Most developers are now using a lottery system because of the high demand, eliminating the free-for-all and camping out that occurred when it was first-come, first-served.

And there's no blue-light special on condos.

Of the seven new condo projects tracked by The Harris Co. from April to June, the average price for the smallest units was $460,714. The average for the largest units was $2 million. The most palatial penthouse units were priced at about $4 million.

Besides the nonnegotiable sticker price, buyers will also have to pay hefty monthly maintenance fees that range from $400 to $1,200 a month.

"The units are meeting the demands of the buyers," said Harvey Shapiro, research economist for the Honolulu Board of Realtors. "In other words, they are selling. If they were overpriced, they wouldn't sell."

The buyers are putting down the required big deposits without ever seeing the inside of their units for several years. They often are buying based on a vacant lot, the model of the building and a sample kitchen or bedroom layout in the condo's sales office.

But that hasn't discouraged buyers.

As of early July, 1,912 of the 2,076 units in the seven projects were in escrow.

Real estate insiders say the high demand for high-rise housing is a result of the strong local economy, low interest rates and the severe shortage of housing in the urban Honolulu area. Before the condo boom, most home construction on Oahu was on the less populated west side of the island in the developing communities of Makakilo, Ewa and Kapolei.

Also, construction of high-rise condos in Hawaii ground to a halt more than a decade ago, when several real estate deals collapsed after the Japanese real estate and stock market bubble burst in the early 1990s.

"So this recent surge is as a result of this pent-up demand, and now the developers can come back in and earn a reasonable profit," said Herb Conley, managing partner of Coldwell Banker Pacific Properties, the largest residential broker in Hawaii.

Besides locals seeking to live in an upscale home in town and invest in a red-hot real estate market, the new projects have also attracted retirees, investors and the affluent from New York to California.

All the projects have reserved at least half their units for owner-occupants, requiring them to live in them at least a year to weed out speculative buyers.

The condos are going up near restaurants, shops and movie theaters, near the beach and downtown offices. Aside from location, there's another key selling point -- spectacular views of the cityscape, lush green Koolau mountains and the deep blue Pacific Ocean.

Conley, who estimates isle residents are purchasing about half of the units being sold at the eight properties, said he doesn't see the demand or prices weakening any time soon despite the addition of thousands of new units.

Harris said more wealthy Americans are buying vacation or second homes in the United States instead of investing abroad because of the unrest in the world, such as terrorism.

"The type of person who used to buy a pied-a-terre in Paris, something in London, or an estate out in the Cotswolds, they're not sure they want to do that now," she said. "Consequently, places like Hawaii, South Beach in Florida, San Francisco, L.A., San Francisco ... they're just getting hotter and hotter."

Even real estate mogul Donald Trump has set his sights on capitalizing on Hawaii's strong housing market. Trump has been working on a deal to develop a luxury condominium tower in Waikiki.

The New York billionaire and star of the TV reality series "The Apprentice" has arranged to buy a parcel in the middle of Hawaii's famed tourism district to build a Trump tower with more than 300 residential units.

He will join the mad dash of developers trying to build their towers before the feverish buying wanes.

Last week, the planned 42-story Keola Lai condominium opened its sales office next to the 2.7-acre parking lot it will eventually occupy, luring thousands of prospective buyers. About 500 applications are expected to be submitted for today's lottery drawing for the first phase, with release of 85 of the planned 352 units.

Construction is expected to be completed in spring 2008.

Meanwhile, how long the condo boom continues is anybody's guess.

"It's so tied into the fragility of the economy," Harris said. "As long it's humming and that little engine is purring, then everything is cool and people are dying to get their hands on something."