(Home mortgage loans) Hawaii Real Estate

October 6th, 2008 admin Posted in realestate |

By markbratton

Hawaiian Hospitality

The record air passenger arrivals and the increasing popularity of timeshare and resort residential developments have boosted recent interest in building new resorts in Hawaii. New, exciting concepts from family-oriented to ultra-luxury resorts are entering this market with plans on widening the breadth of service offerings for the islands visitors.

Topping this list is the recent announcement of Disney Resorts selecting Ko Olina on the island of Oahu for its first stand-alone hotel development not associated with a theme park. Its plans are to build an 800-unit hotel that encompasses the Disney Vacation Club timeshare concept that has more than 350,000 members. Disney paid $144 million to acquire the property, which is situated on 21 acres of oceanfront land. This is a unique concept for Disney and a great opportunity for Hawaii to benefit from Disneys marketing and brand name.

On the other side of the hotel development spectrum are the plans by Starwood Capital Group to build an upscale Baccarat Resort. Capitalizing on the Baccarat crystal and jewelry luxury brand, the planned resort will demolish the former Wailea Rennaissance Hotel on Maui and replace it with 193 one- to four-bedroom residences. All units will have ocean views and include access to personalized concierge services. Architectural design and interiors are being directed by HKS Hill Glazier Studio and by world-renown interior designer Yabu Pushelburg. The planned opening of the Wailea Baccarat is 2010.

Similarly, an affiliate of Montage Hotels and Resorts purchased 122 acres on the North Shore of the island of Kauai. Overlooking picturesque Hanalei Bay, Montage has no immediate plans, but intends on eventually building an ultra-luxury resort.

Timeshare Development

Most hotel and resort developments are focused on the luxury marketplace as rising construction costs and land prices dictate the need for higher hotel room rates. In fact, most resort developments have had to incorporate a timeshare/fractional ownership component as well as a resort residential component to subsidize the development of a hotel.

Timeshare sales continue to be healthy with projects in Waikiki, Ko Olina, Wailea, Kaanapali, Kapalua, Waikoloa and Poipu on the drawing boards. Developers are capitalizing on the Hawaii brand and its unique appeal. In fact, many timeshare operators realize the importance of a Hawaii location as a way to bolster their appeal to timeshare investors, many of whom are willing to pay a premium for a vacation resort in Hawaii.

Hotel Transactions Record Volume

Hotel revenue and operating success bred increased interest from institutional investors seeking prized resort properties for investment. Sales transaction volume for commercial real estate increased fivefold from $850 million to a 2005 record of $4.3 billion. For 2007, hotel properties constituted the majority of the total transaction volume by contributing nearly $1.4 billion in activity. Topping the list were two major properties the Hyatt Regency Waikiki sold for $475 million and the Makena Resort on Maui sold for $575 million. On the market and projected to close in the near term are two Resort Quest Hotels and the Fairmont Orchid on the Big Island of Hawaii.

Hawaii Hotel Market Analytics

For year-to-date October 2007, the Hospitality Advisors LLC industry report noted that Hawaiis hospitality industry continued to post solid RevPAR and ADR gains. Average hotel room rates rose from $186.17 to $198.82 as RevPAR grew from a statewide average of $150.24 to $151.33 in the past year. Overall, Hawaiis hotels ranked second in RevPar growth only to New York City. Percentage increases in the past year in average daily room rates for mid-priced hotels surpassed luxury and upscale hotel brands by posting an 11 percent increase, compared to 5.5 percent and 7.7 percent, respectively.

Despite these financial gains, hotel occupancy rates fell from the prior year. As of October 2007, the year-to-date occupancy rate for Hawaiis hotels decline from 80.7 percent to 76.1 percent. This decline coincides with increased economic concerns over the drop in residential home appreciation rates, rising fuel costs and decreased personal income being encountered in the United States.

After growing to 7.5 million air passenger arrivals for 2005, capacity constraints limited our growth in 2006 and 2007. Both Hawaiis hotel inventory and airline seats reached a level near capacity. After 4 solid years of robust growth in air passenger arrival counts and visitor spending, Hawaiis hospitality industry posted only marginal growth in the past year.

Forecast 2008

Investors continue to remain enamored with Hawaiis hotels and resorts. Shortage of prime vacation resort properties worldwide attracted institutional investors throughout the world to Hawaiis shores. Japanese, Korean, Chinese and Australian as well as North, Central and South American firms are scouring the islands for attractive resort investment opportunities. The recent purchases of resort land bode well for increasing Hawaiis hotel inventory and allow for continued growth in air passenger arrivals and visitor spending.

Despite Hawaiis isolated location, it is not immune to the subprime woes and credit crunch that stirred concerns of a possible U.S. recession. Many transactions are likely to be re-traded or be faced with increased scrutiny of financial statements and projections by lenders. Investment sales transaction volume will slow through 2008 as investors reappraise their asset allocations into real estate. Those institutional investors willing to capitalize on this lull in activity by conducting thorough due diligence will find that Hawaii hotels and resorts remain a lucrative investment opportunity.

Mark Bratton is President of Bratton Realty Advisers, Ltd., and exclusively contracted with Colliers Monroe Friedlander, Inc., Hawaii’s largest commercial real estate organization. Specializes in the sale of investment properties in Hawaii. Visit http://markbratton.com for more info.

Consumers Benefit From A Renters Market
By zoltrifoot

There was a time when it made more sense to buy a home as apposed to renting. The idea was to build equity in a home to create financial stability. That was then, this is now. Consumers are realizing that for now they are better off financially to rent instead of buying.

Despite the fact that rents continue to rise due to the housing shortage, consumers are still finding out that it is cheaper to rent than to have to make mortgage payments. In fact, some renters are able to save between 40 to 50% on monthly payments.

When property values where starting to rise, buyers where snatching up homes without batting an eye. Now, two years later, they discover they have to sell at a much-reduced rate just to recoup the balance they own on their mortgages.

Renters are just not willing to pay more money than a home is worth.

Even renters who are able to qualify for mortgages just do not feel as though they are getting enough home for their money, especially when they can often rent a comparable or even larger home for less.

Due to the ever changing market, experts are quick to point out that today the market is no longer either a buyer or sellers. Instead it is a renters market.

For those who can afford to purchase a home, many are holding off because they feel the market has not yet hit the lowest point. Why buy, when six months from now their homes may be worth even less. There are several factors that fuel this concept of renting instead of buying.

One is that the market has shown no indication of turning around anytime soon.

Employment layoffs and job shortages have also contributed to uneasiness. Natural disasters and unrest have also played a part especially if one cannot afford adequate insurance. The last thing that new homeowners want to face is credit problems and possible foreclosures.

While some areas are experiencing a deficit in supply of rental properties, in other areas homeowners have recognized the wisdom of holding off on selling their homes. They, too, are reluctant to sell their homes now when it seems more prudent to wait and see when the market will stabilize. To help make ends meet, many of these homeowners are willing to rent out their homes to the scores of renters lining up to take advantage of the opportunity. Even homes that are on the market for sale are also available for rent. While renters must accept the reality that the home in which they are living must be available for showings, they still feel the trade-off is quite worth it.

Would-be investors who attempted to get in on the quick profit potential of flipping homes have also discovered that it makes more sense to rent out their properties right now instead of trying to sell them. In some cases, investors are discovering they simply do not have any other options when they must meet mortgage payments every month and are unable to sell their properties. In some cases, this means renting the properties at a loss, creating a negative cash flow.

In fact, this situation has become so much of a problem that landlords in certain niche markets are finding they must cut rents in order to create even a small amount of cash flow. These investors have quickly discovered that it is far better to rent right away at a loss than wait several months to try and attain the amount of rent they really need. Although landlords are often upside down on most of these properties, renting them out has proven to be the safest method; at least for now.

With the economy the way it is today one of the greatest threats facing homeowners is foreclosure. Knowing what to do if faced with foreclosure is half the battle, learning how to avoid it in the first place is the other.

The Foreclosure Survival Handbook is what every homeowner should not be without. It describes in detail just what to do within the first 10 minutes of receiving a foreclosure notice. Plus what you can do right now to prevent it in the first place. To learn more please visit us today.

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