Old Koloa Mill by Brad Dawber

As a long time Kauai Real Estate Broker, my days invariably involve driving the circumference and back roads of the Garden Island positioning properties for sale or presenting another Brokers listing to my client. With just a few roads across the island, I cant remember the last time that I referred to a map. Instead, directions are given island style.Look for the mango tree, take a left, locate the third mailbox on your right, drive down a gravel road, don’t hit the chickens, and stop at the flower farm.With directions like that well who needs a street address?

During the month of May, directions on the Garden Isle become more colorful i.e. Look for the mango tree with the big mangoes. In May the island is abloom with tropical hues popping across every tree limb and the scent of incredible flowers spanning the distance between each town. On the first of May, each island in the State of Hawaii, celebrates our magnificent floral history with lei competitions where professional judges preside over each masterful creation. Growing up in Hawaii, I learned how to string lei as a child. During May I learned to cherish viewing the creations of the masters at the onset of the month and then strung my own at the end of the month to offer at any number of high school graduation ceremonies. At graduation, lei are stacked high, redefining the shoulder and facial structure of each graduate, and intertwining to create a glorious original perfume that defines the rite of passage.

Within Poipu Beach the plumeria trees are full of white, red, yellow, and pink blossoms. The Royal Poinciana Trees along Poipu Rd, fronting Kiahuna Plantation, are ready to burst into full bloom soon, and the shower trees of gold and rainbow colors that populate Koloa will follow. In the meantime, the Koloa Mill, a historic fixture and ever present reminder of our roots in agriculture, sits nestled among miles of little yellow flowers.

Indeed summer is here. Visitors who come for Koloa Plantation Days over July 17-25 http://www.koloaplantationdays.com or The Kauai Marathon http://www.thekauaimarathon.com during Labor Day weekend, September 3-6 will absolutely delight.

Welcome to our blog. For this first posting we summarize a decade of extraordinary luxury real estate. The luxury sector pulls the remainder of the market with it. Consequently we may view the tempo and direction of the overall market through the luxury lens.

2000 to 2007
By the year 2000, Hawai‘i’s luxury market took off moving to price points found within premier worldwide destinations. Whereas, the island of O‘ahu previously lead the state to new highs, the millennium brought the islands of Maui, Hawai‘i (The Big Island) and Kaua‘i to the luxury forefront. The prime resort destinations on Maui of Wailea and Kapalua, along with the South Kohala Coast of the Big Island, aligned their luxury hotel mixes very effectively with the branding and sale of luxury real estate. With strong brands such as Four Seasons, dotting revered beachfront locations on both islands, a new standard of luxury emerged. This standard moved decidedly away from selling aloha to living aloha and finally, managing with aloha. In fact, a top selling book during this time by Rosa Say was “Managing with Aloha: Bringing Hawai‘i’s Universal Values to the Art of Business” (still a great read!). Guests and seekers of this authenticity bought in and there began the birth of lifestlye marketing.

The new luxury brought Buyers who demanded authenticity. For the first time in fifty odd years, both architectural and interior design celebrated the relaxed and somewhat eclectic nature of an island home. Native woods, perfect maintenance, amenities, and spaces that brought family and friends together in an indoor/outdoor lifestyle were desired. The perfect dining experience lay on the back lanai versus the corner table at the restaurant. Prices went higher and the style dial did too.

Kaua‘i followed suit albeit without the distinction of a six star lodging accommodation. As a result, whereas high price points on Maui and Hawai‘i were often found in droves off of the oceanfront, Kaua‘i’s luxury sales pointed to oceanfront properties and acreage. Prices on Kaua‘i remained considerably less than the neighbor island counterparts, and not surprisingly, the keynote sales proliferated on the South and North shores.

As offered by Rickey Cassiday of Data @Work the average luxury market pricing trend from 2000 to 2007 moved markedly higher (see chart). Sample sizes are considerably larger from the other major islands making average pricing more relevant; however, the points made above are quite evident.

2008 to 2009
With the severe economic adjustment, the State of Hawai‘i’s luxury sales adjusted off of 2007 highs by 20% or more. Many recognized that list prices hit unsustainable increases over already accelerated comparable sales, and construction pricing peaked. Lenders pulled out of the state; those who remained, tightened lending guidelines on jumbo loan properties, working with the most select. Everyone ran for cover. The result of swift market changes saw the true luxe properties as prime acquisition targets, whereas “also-ran” properties, of lesser distinction, were quickly discarded. The first and second quarter of 2009 remained quiet at the high end; yet, the third and fourth quarter of the year popped significantly. Early on, everyone watched waiting to see who would make the first move. Smart developers of luxury inventory held prices firm allowing Owners within their communities to set the market on their personal inventory. By refraining from developer price erosion, perceived long term value within these better communities stood, and Buyers entered in flocks to pick up the buys. Individual Sellers of better real estate located outside of planned communities, assessed their properties determining if their holdings represented the true definition of a luxe property, looked to comparables to adjust pricing, considered staging, perfecting property maintenance, and negotiating at 2004 to 2006 levels.

Future

As the 20-teens loom, what will we see? According to RJ Kirchner, a premier appraiser of true luxe and world class level inventory, the time to buy is in 2010 and 11. “Our state’s real estate success has much to do with the perception that Hawai‘i is not as remote as it used to be. Thanks to technology, the world has become a smaller place. People can conduct business here while living their desired lifestyle, all within the best weather in the world. This was next to impossible in the 90’s. Frankly, right now is a buying opportunity with a recovery already visible at Hualalai and deals to be found across the state. There are a lot more Buyers lurking and participating. In fact, there were over 70 private jets at the Keahole Kona Airport over Christmas! This adjustment was needed, and I only see better in the 20-teens.” We agree.

Aloha and welcome to my new blog, part of the Aloha Living Blog Network. I look forward to sharing with you both a professional and personal perspective on real estate in this area. Stay tuned!