The wording of a new constitutional amendment on education funding is making a lot of people in Honolulu uneasy because “it fails to mention that the proposed measure could result in a tax placed on a wide range of investment property” (Stewart Yerton, Honolulu Civil Beat). Critics from the City and County of Honolulu have come up with a lawsuit asking the election officials to change the wording because it is so vague. The title is merely: “CON AMEND: Relating to Public Education and Investment Property.” We all have a chance to vote on this issue in November and it’s very important that everyone comes out to vote. This could affect many commercial properties and change the real estate landscape in Honolulu, as well as throughout the state.
As Mr. Yerton writes in his article, “Honolulu Mayor Kirk Caldwell’s administration has said that the tax would have an adverse impact on Honolulu’s real estate market since it might dissuade potential investors from investing in higher-priced properties, driving rents up higher overall.” We at The Bratton Team want to make sure even if this amendment makes it on the ballot with the current heading, we know what it could mean for the real estate market on the islands. Let’s get out there and vote in November!
Earlier this week, it was announced that Jin Air will be partnering with Island Air to offer inner-island connections from Seoul, Korea. This Korean airline will also resume their flights from Honolulu to Seoul five times a week starting May 29th. They paused this route due to maintenance on their Boeing 777 but it will be up and running very soon. We, at The Bratton Team, feel this announcement is a big step forward for Hawaiian-Korean relations especially when it comes to the commercial real estate market. As of now, Korea is our second biggest foreign real estate buyer and we are so excited that there will be flights 5 times a week directly to Honolulu. That means a lot more opportunities to sell and deal with these foreign investors, which could move Korea up to the number one spot over the next 5-10 years.
Last year, the single biggest purchase in Hawaii commercial real estate was made by a Korean investment company and this announcement will only continue this trend. We’ve noticed that our Korean investors have become more aggressive in the island market, as well as markets across the US. This partnership seems like a step in the right direction because Jin Air is going to bring so many more possible investors directly into Honolulu and Island Air will be able to connect those investors to the other islands seamlessly. As Dave Segal wrote in the Star Advertiser, “The agreement, which goes into effect today, means customers traveling on Jin Air between Honolulu and Seoul can connect to a neighbor island on Island Air, booking the reservation on a single ticket and checking luggage through to their final destination. The two airlines will have three interline routes, including Incheon-Honolulu-Kahului, Incheon-Honolulu-Kona and Incheon-Honolulu-Lihue. Jin Air will start interline sales today.” It will be an easy booking process for these potential investors and tourists. We are excited for the opportunities for the commercial real estate market, as well as the opportunities for our economy and tourism on the islands! We can’t wait to see what great things this partnership will bring to Hawaii.
Back in 2006, Honolulu lost the Mandarin Oriental hotel brand when The Kahala Hotel & Resort was changed into an independent property. On Tuesday, Mandarin Oriental and Salem Partners, a Los Angeles based investment firm, announced their return and debut respectively with a “36-story mixed-use tower across from the Hawaii Convention Center in Honolulu”. It is very exciting that we will soon see a building from Mandarin Oriental back in the Honolulu skyline. Their return to Honolulu signals growth and wealth potential in Hawaii; they couldn’t stay away for long. These two groups coming together to offer a mixed hotel and residential community is an indicator of the changing market. These companies are adapting to the fickle and ever-changing consumer wants and needs; it’s no longer enough to offer just a hotel or just a residential community. We want both.
Construction is scheduled to begin this year, says Salem Partners, and we at The Bratton Team think this property sounds pretty amazing. Duane Shimogawa at Pacific Business News describes the Mandarin Oriental property, “The project will also include a rooftop restaurant and bar, a sky lobby lounge, an all-day dining restaurant, wedding and meeting spaces, outdoor terraces, and gardens, as well as a ‘Spa at Mandarin Oriental’ that will have eight treatment rooms, a fitness center and an 80-foot outdoor swimming pool…The 400-foot-high mixed-use project is located near a planned Honolulu rail transit station, thus making it a transit-oriented development project. During construction, up to 900 jobs will be created by the project. Upon completion in 2020, up to 620 net permanent jobs will be generated by Manaolana Place. It is also expected to contribute $4.4 million annually in tax and fee revenue for the city.”
With the completion of the Honolulu Rail Line, this property will be unstoppable. It is very exciting that more companies like Mandarin Oriental and Salem Partners are investing so much time and money into Honolulu, especially based around the rail line. They will bring jobs, tax revenue, tourism, and much more to boost our economy and our beautiful city. We can’t wait to see this project through to the end. It is sure to enrich our city and change both the physical and economical landscape of it.
Last Monday, it was announced that the joint venture of Ares Management LP, Square Mile Capital Management LLC, Wafra Investment Advisory Group and Trinity Investments LLC had purchased the Ritz Carlton Kapalua for an undisclosed price. This is the second new owner in 3 years and Andrew Holm, a managing director from Ares Management, has said their plan to upgrade the resort falls in line with their opportunistic strategy for development and redevelopment.
The previous owners paid $142 million for the property, which is part of the much larger Kapalua Resort on Maui. Woolridge and Colony, the previous owners, renovated the condos and the new owners will continue their work with a planned $17 million renovation, which will focus on the hotel’s common areas and guest rooms. The resort has 297 hotel rooms, 107 condominiums, a few restaurants, a large retail arcade space, a spa, a pool, and a fitness center.
This acquisition continues the trend of large investment firms with international influence on the islands. It is an exciting redevelopment and purchase that is sure to bring more investors, tourism, business, and developers to Hawaii. Read Andrew Gomes’ Star Advertiser article here and leave a comment to let me know what you think.
Star Advertiser published an article a few days ago about the increase in spending by foreign students over the last four years. Their spending has increased by 47% over time and it seems as this trend will continue as enrollment of international students increases every year. Hawaii is a melting pot of different cultures, which attracts students of all countries and this is very good for our economy. We at Bratton Realty Advisors believe that this trend will continue to be profitable for universities, as well as other industries and developments. Apartment building owners are seeing growth from these international students because they have higher budgets and more opportunities than some of the local student population. This excites our team because we see the possibility of new developments and apartment buildings with plenty of potential renters. The international students bring a lot of influence to our market and we are seeing developers, owners, and entrepreneurs respond to this influence. It’s an exciting trend on the islands and we are curious to see how our market and the different spheres of our economy will respond.
Dave Segal at the Star Advertiser interviewed one of the executives of University of Hawaii about this growth and why students from other countries are so interested in our schools. She says, “’The best thing about having international students is what they bring to our state,’ said Joanne Taira, senior executive for international and strategic initiatives for the UH system. ‘This is a pretty isolated place in the world and the international students are just a real valuable part of the educational process. We’re a globalized economy in this day and age and there’s so much student mobility within and between Asian countries and the U.S. Having international students brings that exposure to global shifts.’ She said foreign students are attracted to UH and Hawaii because of UH’s reputation as a research university and its outstanding programs; the range of UH institutions from two-year colleges to Manoa; and the state’s multicultural mix, safety and quality of life.”
Sited in Honolulu Star-Advertiser, Air China has inaugurated its first nonstop flight from Beijing to Honolulu, three days a week. This precedes Hawaiian Airlines, which is slated for an April 2014 debut for its equivalent nonstop flight between the two cities, three days a week.
How do you see this affecting Hawaii's real estate market, tourism and its communities? What global impact do you foresee this having to the Hawaiian and Asian markets?