Typically, free cars and other high-value goodies that developers sometimes offer to new-home purchasers as enticements are rolled out during bad times in a housing market.
So it might seem odd that a developer in Honolulu that said it is pleased with new condominium sales would add incentives to attract more buyers. But that’s just what Howard Hughes Corp. has done.
The company developing Ward Village in Kakaako recently began offering consumers a new Mercedes-Benz for three years (leased) if they buy a unit in one of three towers.
Hughes Corp. also is trying to give real estate agents extra motivation for getting customers to buy Ward Village condos, offering to advance brokers 75 percent of their sale commission. Normally, such commissions are paid after a sale and tower construction are completed, which is more than a year away in the case of one Ward Village tower.
“We think that’s pretty exciting,” Bill Pisetsky, the developer’s senior vice president of sales and marketing, told a room full of local real estate agents last month during a conference organized by Honolulu brokerage firm Luxury Homes International.
A third Hughes Corp. incentive offers to pay for the sale commission expense of a homeowner who sells their home and buys a Ward Village condo. Pisetsky said there are some limits on the commission amount in case the condo buyer sells a home worth far more than the condo they purchase.
Hughes Corp. said the incentives apply to units at Waiea, which was completed late last year; Anaha, which is slated for completion by September; and Ae‘o, which should be done late next year or in early 2019.
In the broad view of Oahu’s housing market, which is tilted in favor of home sellers because demand is running hotter than supply, what Hughes Corp. is doing seems out of place. But softness exists at the condo market’s high end, and that led to another developer’s cancellation of a planned luxury tower in Kakaako called Vida at 888 Ala Moana.
Local real estate brokers and analysts said Hughes Corp. likely is trying to wrap up sales at its earliest towers so it can concentrate its effort on its upcoming A‘alii tower, where sales are expected to begin in August with average prices under $1 million for 751 units, and on a tower dubbed Gateway Cylinder that is slated to start construction this year following sluggish sales that began in mid-2015 for 125 units priced up to $23 million.
“They are their biggest competitor,” said a broker who asked not to be named out of concern that Hughes Corp. might respond unfavorably toward the broker’s business.
The same broker and others in the industry noted that incentives such as cars, gift certificates, maintenance fee breaks, closing cost credits and mortgage interest rate reductions are universally favored by developers over reducing sale prices. Sale price cuts are loathed because they can make earlier buyers feel like the value of their units has been reduced.
Ricky Cassiday, a local housing market analyst, agrees that there is still weakness in Honolulu’s ultraluxury condo market and that Hughes Corp. may also be trying to attract more local buyers and continue reporting sales momentum to investors in the Texas-based company’s publicly traded stock.
“It’s amazing that they’ve gotten this far, but it’s also not surprising that they have some (unsold condos) left,” Cassiday said.
Hughes Corp. has a master plan that envisions development of 16 towers with 4,300 homes along with 1 million square feet of retail and restaurant space on its 60-acre property long known as Ward Centers. The company recently reported that it’s almost sold out at Waiea and Anaha while Ae‘o is about two-thirds sold.
About 10 units priced from $4.4 million to $36 million are available at Waiea, which has 174 units. At the 317-unit Anaha, about 15 units remain for $2.9 million to $14 million. And at Ae‘o about 175 of 466 units remain unsold and are priced at $800,000 to $2 million.
“As we move into sales of our new projects, we will always be on the lookout for fresh and innovative ways to market our existing inventory,” Andrea Galvin, a Hughes Corp. spokeswoman, said in an email. “The continued success of sales in Ae‘o, Anaha and Waiea remains strong.”
While the incentives at Ward Village are fairly unique, they are not the only ones being offered by a homebuilder on Oahu. At least one other developer, D.R. Horton, is trying to goose sales. At Ho‘opili, a new project in Leeward Oahu, Horton is offering buyers one year’s paid membership at the Salvation Army’s nearby Kroc Center. And at its Kailua town-home project Ka Malanai, it is offering six months of paid maintenance fees.
