Property Futures

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An Island Affair: Lucky Hawaii

An Island Affair: Lucky Hawaii.

An Island Affair: Lucky Hawaii

Hawaiian Pōmaika’i – America’s 50th state is a pōmaika’i (lucky) state indeed.

Hawaiichain of volcanic islands and the 50th state to join the USA, Hawaii enjoys worldwide celebrity status (not entirely unlike the island of Manhattan, but forcompletely different reasons). It is a global destination for tourism and property investment and the mere mention of its name brings to mind hula dancers with floral leis, tropical forests and other exotic flora, Polynesian cuisine, television’sHawaii Five-O and, of course, surfing.

Hawaii is more than a place for surf competitions and TV show settings, however. In fact, due to its varied and extreme topography, geologists, botanists, marine biologists, entomologists and other scientists flock to the archipelago for research, thereby adding to the already expansive rental market for short and long-term stays on the islands. Most visitors typically start on O’ahu, which is known as the Gathering Place for a reason – it’s home to the state capital, Honolulu, although both Maui and Hawai’i islands are popular destinations as well. Regardless, jetting, ferrying or boating off to any of the smaller islands is merely a matter of purchasing a ticket and jumping in line at the port (air or sea). But if you’re considering a move to Hawaii, or buying an investment property there, then the best bets definitely lie with O’ahu, Maui or Hawai’i.

 

 

 Not to be confused with the name of the largest (by area) island of Hawai’i, the American state of Hawaii is the name for the entire collection of islands.

Island  Largest City  Population 
O’ahu – The Greeting Place Honolulu (State Capital) 953,000
Hawai’i – The Big Island Hilo 185,000
Maui – The Valley Isle Kahalui 144,000
Kaua’i – The Garden Isle Kapa’a 67,000
Moloka’i – The Friendly Isle

Kaunakakai

7,000

Lāna’i – The Pineapple Isle

Lāna’i City

3,000

Ni’ihau – The Forbidden Isle 

Pu’uwai

 130

Kaho’olawe – The Target Isle

 none

 

TO LIVE OR INVEST?

For many, the price for owning a little piece of paradise is out of reach, especially if intending to actually live on a Hawaiian isle. Because it is an island and everything must be shipped in from afar, it is a relatively expensive place to live or visit. The tourism industry alone – aside from the regular industry that supports the residents – cashes in on Hawaii’s reputation as a holiday magnate. With plenty of tourist traps in the most popular areas, such as the capital city of Honolulu, hotels and entertainment are at a premium. Although clearly, with an average 7 million visitors per year, not many people are deterred from visiting. But do you want to live there?

HawaiiNo doubt that the climate, indigenous flora and fauna, and laid-back ‘Aloha’ lifestyle all surrounding some of the world’s most stunning beaches make for an enviable lifestyle, there are other considerations, such as the cost of living, job market and traffic congestion.

Petrol prices are nearing US$5 per gallon (US$1.32 per litre), which is excessive compared to state-side prices, which vary but generally hover around US$3 per gallon (US$0.80 per litre).

Petrol prices are important because of the nightmare traffic in and around Honolulu, the main business and financial centre of the state. Even a short commute can take hours, which in turn means buying even more petrol.

Supermarket prices also exceed prices in other US cities, even New York City or Los Angeles, even though NYC and LA are ranked as the first and second most expensive cities in America (Honolulu is third).

The job market is tight, with much of the available openings only in tourism or the marine, oceanography or topographical sciences industries.

Although property prices in New York City and Los Angeles, by comparison, are higher than in Hawaii, the day-to-day cost of living in Hawaii is higher, making it a tough market for permanent residency. In this case, you might be better off buying property in Hawaii as an investment, renting it out to the extensive rental market, and living someplace where a loaf of mass-produced white bread doesn’t run you US$5.

 

PROPERTY & RENTAL MARKET

HawaiiThe rental market on Hawaii and surrounding islands is almost as good as it’s going to get anywhere in the world. For niche markets and for catering to tourists or residents with the need or desire for seclusion, any of the smaller islands offer excellent circumstances for investment. To lower risk/yield ratio, however, the main islands of O’ahu, Maui and Hawai’i have such a huge draw, that it seems like you cannot go wrong. In fact, with such a large pool of potential tenants and both short- and long-term rental options, finding a tenant for your investment property is almost as easy as shooting fish in a barrel.

According to statistics database gatekeepers, Numbeo, the per-square-metre average cost of buying an apartment in Honolulu (in or out of the city centre) is about US$4,800. They also average the cost of renting of a three-bedroom apartment at about US$2,500 per month.

Property across the Hawaiian Islands averages at US$422,000, with Honolulu (O’ahu) the most expensive at US$500,000, followed by Kahului (Maui) at US$400,000 and then by Hilo (Hawai’i) at a surprisingly low US$220,000.

  • Hawaii certainly ticks most of the boxes for an investment property:
  • The tourist season is long, pretty much buzzing the whole year round
  • The climate is mild and subtropical, enticing ongoing tourism
  • Infrastructure is sound and reliable, including a major airport in Honolulu and smaller airports, as well as boats and ferries, servicing the smaller islands
  • Long-term tenants – mostly professionals and families – looking for accommodation
  • Short-term tenants – mostly tourists but some professionals – looking for accommodation
  • A tourism industry that is, in a word, vast, supporting the rental market
  • With its worldwide fame, there’s also certain amount of prestige to property ownership

 

If you’re a property investor looking for an ideal holiday home investment property, go ahead and say, ‘Mahalo, Hawaii!’

A’ole pilikia. (You’re welcome.) 

Hawaii

 

WHAT TO BUY

1 The State of Hawaii offers foreign buyers plenty of choice when it comes to lifestyle, ocean-front properties.  One of them is an elegantly remodelled condominium unit (see photo above) located in the Wailea Point, a private, gated, low-density ocean-front complex in southwestern Maui, boasts expansive views of the Maalaea Bay. This 237-square-metre unit has been meticulously upgraded with upscale Koa wood and granite countertops. Maui Island is halfway between Honolulu and the Big Island. This residence is listed at US$4.9 million.

Available from Century 21.

 

2 Anorther option is a custom-built house that has a panoramic view of Hulopoe Bay. Located on the Island of Lanai close to Manele Bay Resort and Sweet Heart Rock, this home has cherry wood, marble and granite floors; three well-appointed bedrooms; three and half bathrooms; and ample of living area. The exterior lanais are covered with trellises for shading and an outdoor kitchen looking over the Pacific Ocean for evening BBQ. This property is listed at US$4.2 million.

Available from Homes on Lanai.

 

3 For those who prefer managed estates, there’s a furnished, 2,753-square-foot, three-bedroom cottage within the exclusive Kukio Golf and Beach Club located at the Kailua-Kona area of the Big Island. It has views of the Kohala Mountains to the east and of the Uluweuweu and Kua Bays to the west. Cottage owners can avail of the resort’s topnotch amenities, such as a members’ clubhouse, a spa, a ten-hole Tom Fazio-designed short course, and Kukio’s Outdoor Pursuits programme. Listed at US$4.35 million.

Available from Kukio.

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This entry was posted on February 13, 2013 by in Future, Investment, Property and tagged , .

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