Sales of Hokua, the first luxury high-rise condominium developed in Honolulu, represent the largest number of residential closings in Hawaii in a single day.
By Allison Schaefers, Honolulu Star-Bulletin
Sales of all 247 residential units at Hokua, the first of Ala Moana's new crop of luxury high-rise condominiums to reach completion, resulted yesterday in the largest number of residential closings in Hawaii in a single day.
The first luxury high-rise condominium to be marketed and developed in Honolulu in years, Hokua has proved that there is life in Honolulu's high-end condo market, once pronounced dead after the Japanese investment bubble burst in the early 1990s.
The 40-story tower, a joint venture between the MacNaughton Group and Kobayashi Group and A&B Properties Inc., was initiated by then-landowner Victoria Ward Ltd. as part of General Growth Properties' plan to make the Ward commercial area a place to live, work and play. When construction began in 2003, the activity stoked enough interest to generate further high-end development in the area, including the Moana Pacific, the Koolani, the Lanikea and 909 Kapiolani.
The success of Hokua is proof that buyers, especially empty-nesters and baby boomers, have been drawn in recent times to high-rise condos because of their combination of location and pricing compared with previously owned homes on the market, said Ricky Cassiday, a local real estate market researcher.
"They say the market is slowing, but I don't see it," Cassiday said. "The demand is still there, especially for new product."
Paul Brewbaker, Bank of Hawaii chief economist, said baby boomers are likely to keep the high-end condominium market afloat for some time.
"Hawaii will run out of real estate long before California runs out of baby boomers," Brewbaker said at a real estate panel earlier this week.
While the actual value of all the units that closed yesterday was not disclosed, the Hokua residences were initially offered in December 2002 at an average price of just over $1.1 million, generating an approximate value of more than $278 million, or $609 per square foot. The total development cost for Hokua was about $210 million.
From the start, Hokua had a good run. More than 95 percent of Hokua's units were sold before construction commenced in November 2003, with the closing of all units setting a new benchmark for developers, who have long been satisfied with 95 percent or better occupancy rates.
"A 100 percent occupancy rate is almost unheard of," said Cassiday, who attributes most of Hokua's strong returns to timing.
"They went out early, and they were the first ones out of the block," he said.
Hokua's design, location and price also helped attract buyers, Cassiday said.
Because Hokua developers began the project before the condominium market really started sizzling, many of Hokua's early buyers got a deal, he said.
Hokua buyers, who paid $609 or less per square foot, can now flip their properties for between $800 and $1,000 per square foot, Cassiday said.
"That's what Koolani and Moana Pacific are trading for now," he said.
The prices for newer buildings are much higher than on Oahu's resale condo market, which is expected to see continued price increases and sales declines in 2006, said Harvey Shapiro, a real estate economist for the Honolulu Board of Realtors.
During the fourth quarter, more than half of the buyers of previously owned condos paid $413.36 per square foot, Shapiro said. The median per-square-foot cost in Waikiki was $539.76 and $527.89 in the Ala Moana area, he said.
Shapiro said it is anyone's guess whether new units will continue to trade at a premium into 2006, but he added that many of the units are becoming available just as the market is stabilizing.
"The same thing happened at the end of the Japanese bubble: A lot of condominium projects got into process when demand was high, but it took so long for them to come to fruition that when they came to market, the developers couldn't sell them," Shapiro said.
In the market for previously owned homes, premium prices and multiple offers are likely to be a thing of the past, he said.
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