Buyers of newly built, luxury residences generally expect fairly high standards: lush landscaping, top-line appliances, granite counter tops, swimming pools, unobstructed views and the like.
On Hawaii’s island of Maui, buyers of million-dollar properties appear willing to pay a premium for a two-car garage.
Or an elevator – inside their home.
Like everything in American culture, houses and condominiums have blown up to Hummer-sized proportions. And Hawaii’s upcoming luxury real estate projects are no exception.
Two luxury-end projects in the resort community of Wailea put on the market this past year and nearly sold out showcase the features that their targeted buyers sought. Both have yet to be built, so they have largely sold on the basis of their design plans and locations. No actual, full-fledged spec-models were constructed on site.
Kai Malu, a 150-unit gated residential community is being sold in four phases. Half the units are being sold to owner occupants, requiring minimum one-year primary residence occupancy, and half are being sold to investors or second-home buyers, in accordance with legal requirements.
The first phase went on the market in December 2004 with prices in the vicinity of $970,000 to $1.5 million, not for a home, but rather for a two-story condominium divided among 75 duplex buildings. Situated on 25 acres of prime Wailea real estate, the Kai Malu residences are marketed as condominium homes. The condos are large: 3-bedroom, 2.5-bath units with an average 1,800 square feet living area and an additional 800 square footage from the two-car garage, lanai (patio), and covered areas under the roof.
Down the street Ho’olei, 120-unit, two-story condominiums in six-plex buildings, came to market in April 2005. Initial prices ranged from $1.6 million to above $3.3 million. The 3-bedroom, 3.5-bath units, each with a private interior elevator, provide approximately 2,500 to 3,300 square feet of internal space, plus about 800 to 1,000 square feet from lanais and an attached one car garage and private covered carport. Ho’olei is marketed as hotel condominiums reflecting the 30-acre development’s hotel zoning as well as its resort affiliation with the Grand Wailea Resort Hotel and Spa.
“The market wanted condos that live like homes,” said Martin Quill, president of CMI Group, the developer of Ho’olei. Apparently so.
Similarly, Kai Malu advertising pitched the residences as homes that offer maintenance-free living. (Of course, there are maintenance fees.)
The fourth and final sales phase for Kai Malu is slated for September and prices had not yet been set for the 28 remaining units, according to project spokesperson Robyn Schaefer. Judging from the success of the prior phases, interest will far exceed the supply. A lottery system instituted for the owner-occupied units beginning in Phase II in March registered 116 applicants for the 26 units. By Phase III in May, 80 applicants had registered for the 18 owner-occupant units and 254 participants for the 18 units in the investor lottery.
Since coming on market in April 2005, Ho’olei had 85 of its 120 units under contract, four pending in escrow, Quill said. The property was taken off the market for four to five weeks, he said, and remaining unit prices have been adjusted to $2.2 million to $3.6 million.
Bang for the million bucks
What are buyers getting at these prices? A list of super-deluxe amenities, including onsite property managers, community centers, fitness centers, swimming pools, men and women’s locker rooms with steam rooms – as well as highly appointed interior spaces. Not to mention some of the world’s best island views and a year-round temperate climate.
In addition, Ho’olei struck an agreement with the Grand Wailea Resort, directly across the street, to provide its owners membership access to the resort (a $25,000 membership value and first-year club fees of $2,400 pre-paid.) The arrangement affords guest usage of the resort facilities, featuring its renowned recreational pools. Moreover, as the last hotel-zoned division in Wailea, Quill said, the units can be leased as vacation rentals. To that end, Ho’olei signed a long-term contract with the resort’s owner, KSL Resorts.
As a residential development, Kai Malu permits only long-term rentals of six months minimum. Neither can the owner occupied units be rented in the first year.
“The exciting, different thing is we have a formal relationship with the Grand Wailea,” Quill said.
A portion of the current buyers are already Wailea residents, he noted. Others possibly will make it their Maui home or second home. But overall, a small percentage are buying them to live in them, he said.
“A large group of people are buying these as an investment,” he said. The owners will be able to come over and use the place and take advantage of the vacation rental program “and get a return on investment to help pay for the acquisition of a home on Maui,” he said. The rental income will help ease the burden of carrying the units, until some of the buyers can be here more time, he added.
Then, there is the undeniable gleam of the interior and exterior amenities: top brand flooring, kitchen appliances, laundry machines, custom cabinetry, tropical pool with a swim-through waterfall feature, two whirlpool spas, concierge services, and, of course, golf course privileges.
“Each unit has its own private elevator,” Quill said. “We wanted to maximize views from the great room and kitchen with the reverse floor plans.” The master bedroom suite and second bedroom are on the ground floor. The elevator allows people to easily tote themselves and their belongings to the second main level, a consideration for the average age of the clientele, or the age they will be in several years, Quill remarked.
Similarly, Kai Malu’s marketing notes “an array of standard features that are considered upgrades in other communities.” It provides an onsite manager, nearly 10-foot-high and vaulted ceilings, shower and soaking tubs, wide open lanai, large windows affording ocean and mountain views, a common pavilion with a 75-foot infinity edge-pool, fitness room, and male and female steam and sauna rooms. The development is surrounded on three sides by a golf course.
The design style is described as a fusion of the classic kama’aina beach house estate (rather than the classic Hawaiian plantation home) with contemporary, modern cleaner lines. The effect is to bring the beautiful outdoors in.
Two-thirds of the models have the master bedroom suite positioned on the top floor, the other third on the ground floor. The latter plan presumably appeals to disabled people or elderly retirees, or those who hope to retire here eventually.
There are also pool, spa or barbeque optional packages. “A lot are opting for pools,” Schaefer said.
But it is the two-car garage that some buyers covet.
“Not just to protect your car but to have storage space,” said one buyer, who, like a number of future residents, will be relocating from a neighboring condominium project decades older and minus a garage.
“The number one thing is it is brand spanking new,” the buyer acknowledged. She intends to capitalize on the immense appreciation of her current condominium to minimize or even eliminate the need for a new mortgage.
The buyer passed on the private pool option, given the access to the community pool and the added expense otherwise. She stated the pool would cost $59,000 to install, or $50,000 for the spa, and also would add $200 a month to her $800 maintenance fee.
For now, she waits and dreams of her move-in date, projected in June 2006. Kai Malu broke ground in June this year and the entire project is targeted for completion in 2007. In the meantime, the developer Armstrong Builders in partnership with the landowner A&B Properties, has tailored certain design features in response to its future residents’ requests. Wailea Realty Corp. is the principal broker in conjunction with Armstrong Properties.
Nearby, Ho’olei begins site work this month. The Wailea Group LLC is managing the real estate sales. CMI Group Hawaii Project acquired the property in April 2004, expects to finish its first buildings in the first quarter 2006 and complete the entire project in the second quarter of 2008. Who knows how much the luxury-end residences will be worth by then.
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