Rediscover the Beauty of Waikiki
BY LISA SCONTRAS
Why buy Waikiki? Lots of reasons, says Toan Doran, Realtor and partner at Prudential Locations.
“The 2008 financial meltdown lowered prices in many of the buildings in Waikiki,” says Doran. “Plus, investors can get interest rates in the low 5 percent right now, which is incredible. A few years ago, investor rates were in the low 6 percent. Owner occupants can get rates in the low 4 percent right now last year rates were around 5 percent. A 1 percent dip in interest rates is equivalent to prices dropping by 10 percent. Therefore, lowered prices plus lowered interest rates is like a double discount sale.”
Waikiki’s amenities beautiful beaches, plenty of restaurants, grocery stores, pharmacies, health clinics and world-class shopping draw investors and owner-occupants alike.
“It is a self-contained universe,” says Doran. “Some people never leave Waikiki during their vacation. I love to walk Kalakaua Avenue. When I’m there, it’s like I’m always on vacation.”
Waikiki is the center of Hawaii’s No. 1 industry, tourism, which indirectly helps to maintain the value of real estate there. Even better, the state helps to maintain the property values by spending money and resources to keep Waikiki looking beautiful, as well as promoting its virtues.
And because of Waikiki’s worldwide name recognition, renting a unit is relatively easy to do, short term or long term.
But a Waikiki unit is not your garden-variety condo.
There are some tricks to the trade when it comes to finding the best investment. Buyers will find they need to be on their toes, and the smart ones work with a real estate agent who can advise them on unique Waikiki issues such as parking, resale value and property management.
“I recommend buying a condo that comes with parking,” says Doran. “Parking is tight in Waikiki. It can cost about $100 to $160 a month extra if it’s not included. Resale value is another important consideration. How will this building hold up over time when I want to execute an exit strategy? A well-maintained and managed building will keep the maintenance fees low and the building in good condition. And, does the building allow for short-term rentals or is there a minimum days of rental required?
“Because many investors live off shore, it is important to hire a reputable management company,” he adds. “There are management companies that specialize in short-term or long-term rentals.”
Demographics vary widely in Waikiki, depending on the building. An experienced agent can find out for you what the owner mix is in a particular building.
“For example, Waipuna has more elderly who have lived in the building for a long time,” says Doran. “Allure next door has more affluent foreign owners who bought as second homes mostly investors and second-home owners. Owner occupancy rates there average in the 20 percent range.”
Overall, median sales prices in Waikiki have dropped 1.8 percent since 2010. October was a strong month, however, with prices increasing 6.4 percent from October 2010. Days on the market statistics are slightly shorter than Oahu overall, and inventory is tight.
Doran suggests that Waikiki is somewhat insulated from down markets because of its international appeal and because of the state money used to promote the area. Currently, there are a couple of buildings he highly recommends.
“Aloha Lani is a fabulous buy right now,” he says. “It is a very well-maintained and managed building with low maintenance fees. Unit prices have dropped to 2004/2005 prices, except that in 2004/2005, interest rates were in the 6 percent range.
“Waipuna, another wellmanaged/well-maintained building with low maintenance fees, has very good prices for twoand three-bedroom units,” Doran says. “The best leasehold building is Waikiki Skyliner. It has a long lease with fixed lease rent for 47 years at $29 a month.”