The price of living in ‘paradise’ is higher than ever
Hawaii has long been a dream destination for wealthy homebuyers from the United States mainland. But that has probably never been truer more than now.
“From the second half of 2020, into 2021, luxury sales volume in the state of Hawaii grew at a frenetic pace,” said Matthew Beall, CEO of Hawaii Life, a real estate firm.
“The state saw triple-digit growth in transactions,” he said, noting that his firm alone had experienced 307% growth in total dollar value.
Neal Norman, a director at Hawaii Life, said the influx of buyers from Silicon Valley had been helping to drive the market in Hawaii, which has surged, in part, because of the pandemic. People have realized that they can more readily work remotely — and if they have to go back to the office, they are only a “5 ½hour plane ride from paradise.”
Oceanfront property in particular in Hawaii is experiencing a surge in sales and prices, with bungalows and luxury dwellings fetching over $5 million. At the private Hokuli’a community, 1-acre lots start at $7.5 million. Carrie Nicholson, director of sales and marketing for Hokuli’a, said building prices would start around $500 per square foot but would more likely land in the range of $1,000 per square foot.
Residents of Hokuli’a, though, enjoy the advantage of an agriculture easement on their properties, which allows them to introduce organic farming with tax credits from the state. Nicholson said these credits could reduce property taxes to $200 per year, “leading to plenty of mango trees surrounding the properties inside the community.”
At the Kohanaiki community, which features a Rees Jones-designed golf course, homes are being built with a new emphasis on the work space.
“The home office is no longer a closet off the kitchen,” said Chuck Cary, vice president of sales and marketing. Instead, homeowners now desire expansive views of the water and the mountains with high-density insulation to ensure a quiet environment.
Cary also said that wordof-mouth was driving home sales as many owners, including two top executives of a major big-tech firm, have moved to the community and are running their divisions from afar while encouraging their colleagues to move to Hawaii.
Lifestyle is driving all of these purchases, with remote work steadily becoming a norm in many industries.
“You finish the workday here,” Cary said, “and you still have the rest of the afternoon to surf, golf and spend the day with your family and friends, not to mention taking in a sunset every evening.”
Timbers Kauai, unlike Hokuli’a and Kohanaiki, has resort facilities along with its private residences and offers fractional ownership opportunities. Homeowners get all the benefits of resort life: room service, airport pickups, concierge offerings.
The Laola residences allow ocean views from a private infinity plunge pool. These four- and five-bedroom townhomes have nearly 3,000 square feet of interior living space, starting at $6.4 million. Ownership at Timbers affords access to its extensive list of properties around the world.
The appeal of coastal Hawaii, Norman said, is that the jagged coastline makes each view unique. That same geography can limit the amount of water frontage, driving up prices because of scarcity.
Nicholson added, “It’s amazing how different each property can be, and if they aren’t what they want, they can customize.”
In part, that makes it hard to determine whether the market will finally ebb or continue to swell as inventory shrinks, although Norman noted that older homes were being bought and rebuilt with modern designers and architects.
Nicholson said the lack of inventory is what led Hokuli’a to sell front-row, or oceanfront, property.
“People have resorted to looking for vacant land so that they can build what they want,” she said. “They can customize however they want. So now we’re starting to see the market roll into land sales as well as homes.”
Citing timber shortages and supply chain slowdowns, she said, “Prices have increased, but I think what’s happening is that people are looking for more local resources as much as they can here on the island, which leads to a lot of great business opportunities for locals.”
Recently, Kohanaiki announced its most expensive listing ever: a $22.5 million home with 8,500 square feet of living space, five bedrooms and a landscaped path to the beach. Norman sold a property on the northern coast of Kauai earlier this year for $44.5 million as well as a more modest 1,200-squarefoot home for $4.5 million. Paradise was never cheap, but unprecedented times have caused a paradigm shift in how people of means live — and that now comes at an even higher price.