The master-planned Kukui’ula community, which is in early development stages on Kauai, is moving forward with its visitor lodging component, signaling confidence that demand is returning for new luxury vacation property in Hawaii.
An affiliate of Kauai-based contractor Unlimited Construction Services Inc. has begun building the first of 15 plantation-style cottages for sale at $2.35 million apiece. The units are intended as vacation accommodations, and buyers can rent them out through a management company.
The cottages represent an initial phase of vacation accommodations at Kukui’ula, which is planned for 1,200 mostly residential homes over 1,010 acres between Poipu and Lawai Valley on Kauai’s southern shore.
Unlimited Construction plans to build the fully furnished cottages in groups of four, taking a conservative approach that nonetheless is a bet that buyers are re-emerging as lingering effects of the great recession dissipate.
"It’s still a scary market … but we feel good about moving forward," said Todd Lang, Unlimited Construction’s director of business development. "There’s confidence to put the toe in the water that far."
Lang said the company has commitments to buy two of the first four cottages. Construction on the next four cottages is projected to get under way in the summer.
The new addition at Kukui’ula is a key piece of the community master-planned by a joint venture led by Honolulu-based Alexander & Baldwin Inc.
Dubbed Kukui’ula Club Cottages, the 2,200-square-foot units are being built next to a $100 million private club and spa that opened recently to serve as the community’s social and recreational centerpiece.
Developers expect the 15 Club Cottages will help entice visitors to buy their own homes at Kukui’ula after experiencing club amenities — including golf, the spa and pool — otherwise reserved for homeowners.
"It’s a very, very big deal for the project," said Brent Herrington, president of Kukui’ula Development Co., the master developer made up of A&B and Arizona firm DMB Associates. "It will allow people to visit and broaden the exposure for Kukui’ula."
Residential owners at Kukui’ula may rent out their homes, but their guests aren’t entitled to the same use of amenities and are limited to minimum seven-day stays. Cottage guests receive club access like owners and may rent units for a little as one night.
The Club Cottages are expected to restore some momentum to the project after initial sales were stifled by the economic downturn.
Infrastructure development at Kukui’ula began in 2006 along with sales of residential lots. But only a fraction of sales resulted from 300 nonbinding reservations for lot purchases.
Through the end of last year, 81 lots have been sold for an average $1.4 million, with the vast majority of sales occurring before 2008. Sales efforts were suspended for all of 2009 and resumed last July. One sale was made last year.
Slow sales created financing difficulties for DMB, which led A&B to take on a greater share of Kukui’ula’s estimated $900 million total development cost.
A&B and DMB slowed construction but continued building amenities including a retail complex, recreational clubhouse, spa, an 18-hole Tom Weiskopf golf course and golf clubhouse. The spa is slated to open next month. The other amenities are complete and are intended to help promote lot and home sales.
Unlimited Construction is the general contractor for Kukui’ula, which gave the company an economic stake in the prog-ress of development. That stake is now increased with the role developing and selling the Club Cottages.
Another local developer adding inventory to Kukui’ula is Big Island-based developer Maryl Group, which began building 15 homes about a year ago and has finished the first two in the collection called Makai Cottages at Kukui’ula.
Among individual lot buyers, six have begun building their own custom homes, and the first is expected to be completed in May.
Completion of homes and the lodging cottages will finally begin to populate the community. Full build-out is envisioned to take 10 to 15 years.