Rich and famous find ‘perfect’ playground

The idyllic island of Kauai has become a playground for the ultra-rich. Kauai, known as the Garden Isle, has attracted in recent years more than two dozen billionaires and celebrities who are acquiring large swaths of mostly undeveloped land.

In the past year alone, three billionaires purchased nearly 5,000 acres in the rural island community with a population of nearly 70,000, or 7 percent the size of Oahu’s.

"Billionaires are discovering Kauai," said Mike Hamasu, director of consulting and research for Colliers International, whose research shows that major transactions on Kauai have outpaced sales on Oahu, Maui and Hawaii island over the last few years. "It’s an interesting or unique trend that Kauai apparently has increased in popularity among the rich. How many tropical islands are there where you can you buy thousands of acres, have a stabilized government … and a pristine, untouched, tropical paradise-type of environment?"

There have been no transactions valued at $100 million or more on any of the other islands, with the exception of Larry Ellison’s reported $300 million purchase of Lanai in 2012, according to Colliers.

The recent $343 million sale of Hawaii developer Jeff Stone’s 1,100-acre development in Princeville on Kauai’s north shore to Chinese billionaire Chanchai Ruayrungruang topped Colliers’ list as the largest transaction on the island in decades.

"It’s almost like the perfect environment," said Stone, the majority stakeholder of 9,000 acres in Princeville. "It has the best fresh water and the best air in the world. If you have all the money in the world but you’re breathing bad air every day in New York, L.A. or San Francisco, it doesn’t matter where you’re at. Whatever you breathe in and whatever you eat in the end, that’s what you live and die on. They know they can literally have their own (clean) environment and they can protect themselves from any of the world’s disasters."

Earlier in the year, billionaire Brad Kelley purchased nearly 3,000 acres of agricultural land near Lihue from Grove Farm. Kelley is one of the largest private landowners in the U.S., with more than 1.5 million acres of mostly agricultural land in Tennessee, Kentucky, Texas, New Mexico and Florida.

The latest headline-making purchase involved Facebook founder and CEO Mark Zuckerberg, who acquired two large chunks of vacant land totaling 700 acres on Kauai’s north shore in October. The acquisition reportedly cost Zuckerberg more than $100 million.

Besides its inherent beauty, the reason for Kauai’s allure is its small-town charm where the rich and famous generally blend in with the locals and are able to live simple lives, Stone said.

"We call them the Birkenstock rich," he said. "They’re different than your typical billionaire. They really don’t dress up. They really don’t look for the glitz and glamour. They actually look for the nature and the beauty. They are simply a group of people who don’t need anything more than what the locals like, which is blending."

Stone added: "You will not find a Rolls-Royce anywhere or Ferrari or Lamborghini. These people drive trucks. You live in this world where you really can’t tell who’s rich and who isn’t. It’s a very unique gift they have on Kauai."

Stone said he has helped many of the island’s billionaires in their quest for the perfect piece of paradise. Most recently, Zuckerberg flew in a helicopter from the private Princeville Airport around the island before buying Pilaa Beach, an isolated 393-acre property with a beach, and the adjacent Kahu‘aina Plantation, a 357-acre former sugar cane plantation.

"My advice to him and his people were, ‘Every morning come to the airport, fly around and look down, and you’ll find your piece of heaven,’ " Stone said.

Other billionaires and celebrities who have owned property on Kauai in recent years include Pierre Omidyar, Steve Case, Pierce Brosnan, Julia Roberts, Ben Stiller and Bette Midler.

While the Hawaiian Islands have long been a haven for famous faces, Kauai has become the go-to isle for the wealthy in recent years as Maui — formerly the island of choice — has become overbuilt, said Kauai Realtor Paul Kyno, who is based in Lihue.

Maui’s celebrity residents include Oprah Winfrey, Clint Eastwood and Steven Tyler. On Hawaii island, actress-comedian Roseanne Barr owns a 50-acre macadamia nut farm and billionaire Michael Dell reportedly has a mega-home in the exclusive Kukio development.

"Kauai holds a lot of the future ahead. That is where the big money is coming. There’s no doubt about it," Kyno said. "There’s a finite amount of the type of land these folks look for. Maui is overbuilt and it’s hard to find properties that appeal to people with money. Over here people are buying hundreds of acres and total privacy. That’s why Kauai is probably a good island for people to be looking."

Investing in high-end real estate pays off because land values generally don’t change much, and real estate is not volatile like stocks and other commodities that can fluctuate rapidly, Colliers said.

"Land in Hawaii, it always goes up," Kyno said. "It might level off or go down a little for a few years. (But) it always appreciates. A lot of these properties are purchased for cash. When you list a property like that you sort of throw it out there. You basically put a price on it because it’s hard to find comparable sales. It’s more done on feel than actual market conditions. They’re playing with Monopoly money. These people actually create the market."

The lush island known for its scenic locations and many waterfalls also has helped boost the state’s entertainment industry. It has been featured in a host of major movie productions including "Pirates of the Caribbean," "Avatar" and "Jurassic Park."

The impact of the wealthy becoming major landowners on Kauai means more investment in the local community and a boon to Hawaii’s economy, but it also places a "huge amount of control" of the future of the island in the hands of few individuals, Colliers’ Hamasu said.

"You have capital flowing into the island and they tend to be more aware of environmental and cultural preservation issues," he said. "(But) it also means because they have all this access to capital that the potential for development is there. On the flip side, they appear to want to monetize some of this acreage by building out homes or resorts and provide a private enclave for themselves and maybe their rich counterparts. They’re business people. They usually don’t just go out and buy a piece of land and leave it fallow. It raises a lot of questions and probably some concerns, but at this point there’s not much a person can do about it."