Sales increase at pricey Maui project

Selling $50 million worth of condominiums in a year isn’t as astounding as $425 million in two months, but the sales team at a luxury Maui condo project is celebrating what one analyst said represents a leading edge of a broader recovery.

Honua Kai, a 700-unit condo complex that opened its initial phase in the wake of the recession four years ago, reported $50 million in sales last year.

The sum represented about 40 sales, and the marketing team said it has another 22 units under contract with buyers this year to date.

"We’re really thrilled," said Erika Alm, a principal with PowerPlay Destination Properties, a real estate sales and marketing firm retained by Honua Kai’s developer in November.

The recent transactions bring total sales at the project to about 470 units for a collective $600 million. Yet reaching that mark has been a long slough.

Canadian resort development firm Intrawest Corp. bought Honua Kai’s 38-acre oceanfront site in Kaanapali in 2003 and announced plans to build the first luxury beachfront condo in the area in more than 20 years.

The project was designed with a spa, a market and cafe, three heated pools, a fitness center and a beachside restaurant.

Condo prices for studios to three-bedroom units ranged roughly from $500,000 to $5 million.

Two months after sales were launched in 2005, all 318 units in an initial building were reported sold for $425 million.

Then in mid-2007 with the initial building under construction, Intrawest announced that sales had risen to 587 units for roughly $725 million, and that only 40 more units were available in the 310-unit second building.

But not long after that — and before any sales closed — the mortgage industry imploded and helped spark the recession. After Honua Kai’s two buildings were completed in 2009 and 2010, many buyers — close to 200 — didn’t complete their purchases despite putting down deposits of 20 percent of the purchase price.

"A lot of people who put their deposits down struggled to close," Alm said.

Through the last three years, the pace of sales has been recovering with demand mostly from California buyers and some Canadians. Pricing, meanwhile, remains down from pre-recession levels.

Alm said Honua Kai unit prices are anywhere from 10 percent to 25 percent off their peak, with large units and those with ocean views retaining more of their value than smaller units and those with inland views.

Ricky Cassiday, a local real estate market analyst, said Honua Kai is doing better than the broader condo market on Maui, which he said is still bottomed out.

Cassiday said low interest rates and rising hotel room rates are motivating more investors and visitors interested in vacation homes to consider buying at projects such as Honua Kai where owners can rent out their units for hotel use.

"Honua Kai provides insight to a leading edge of a broader Maui condo market recovery," he said.

Cassiday said the number of resort condo sales on Maui was down 4 percent last year, while the average price per unit was down 24 percent to $1.05 million from $1.38 million the year before.

Alm said prices on Honua Kai’s roughly 130 remaining units range from about $500,000 to $3.8 million. That doesn’t include a future and final phase of 72 townhouse units that previously were expected to be put on the market in 2007.

The townhouses designed to be spread out in 13 buildings are now expected to be offered for sale when sales are nearly complete for all existing units.