A Japanese company last year paid the highest price ever for a condominium residence in Honolulu — $10 million for a unit in the new ONE Ala Moana tower that shattered the old $5 million record. Now, a bunch of speculators and developers are trying to push — really push — the envelope again.
How high?
Try $25 million for a two-story penthouse in Kakaako’s 9-year-old Hokua tower.
This "incredible opportunity" was listed in March featuring a "nostalgic elevator" and a food lift connecting the "main kitchen" to a banquet room in the 6,964-square-foot residence.
Not to be outdone, a neighbor put their somewhat smaller Hokua unit described as the "premier penthouse in paradise" on the market in May for $35.9 million.
The listings have raised eyebrows in the local real estate market.
"I was rather surprised when I saw it," said Jack Tyrrell, a broker who has sold more than 40 penthouses in Honolulu over the past nine years.
The mega-priced penthouses, brokers generally say, are likely being inspired by two ultraluxury Honolulu condo projects that are under construction and have their most exceptional units priced at $20 million and up.
These two projects are Waiea at Ward Village and the nearby Park Lane Ala Moana at Oahu’s largest shopping center, with features including a wine bar, golf simulator and pools and elevators for individual use.
Sachi Braden, a luxury condo broker in Honolulu, said developers have decided to produce something that had not been done before in Hawaii — urban condo residences with designs, materials and amenities desired by the ultrarich.
"Developers said, ‘OK, we’re going to pump up the luxury,’" she said. "There has not been anything like this (in Hawaii) for the very rich international buyer. These people — they’re willing to pay anything they want. We’re kind of seeing the threshold of how much."
To be sure, the upper reaches of luxury condo values in Honolulu are still being tested by eye-popping asking prices that have yet to be converted to sales.
At Park Lane, which began sales in January for the 215-unit midrise on much of the makai side of Ala Moana Center, buyers have snapped up about 140 units, or 65 percent, of the project. But no one has yet taken one of five "grand penthouses" that range in price from $18.8 million to $28 million.
Bonnie Wedemeyer, project sales director, said purchase contracts have been signed for two of nine regular penthouses at about $11 million and $13 million while another buyer agreed to pay $15 million to combine two nonpenthouse units into one unit.
Wedemeyer said the pace of sales in six months has been amazing. "The units overall at Park Lane are sailing," she said. "The momentum is stronger than ever."
The developer of Waiea, Howard Hughes Corp., recently reported that as of April 30 it had binding sales contracts for 148 of 177 units representing 86.5 percent of the tower since sales efforts began early last year.
Waiea’s average sale price was $3.7 million. The highest published list price for a Waiea penthouse is $19.8 million. Hughes Corp. officials declined to say whether this unit has sold.
There also is a "grand penthouse" envisioned to span Waiea’s top two floors and occupy 21,182 square feet if you include a 3,661-square-foot lanai fronting an infinity-edge pool. However, Hughes Corp. won’t discuss what it wants for this unit, which one prospective buyer claimed is just under $100 million while others have said it is closer to $50 million.
Hughes Corp. recently began promoting two more planned towers being shaped by two renowned New York design professionals, architect Richard Meier and designer Tony Ingrao. The project called Gateway Towers will set a new precedent for architecture in Ho- nolulu and deliver "an unrivaled level of craftsmanship and attention to detail," according to the developer.
Braden expects prices at Gateway Towers will top Waiea based on her understanding that one unit near the bottom of one tower is expected to be priced at $6 million.
Such pricing appears to have led some owners of penthouses in existing towers to rationalize that — or perhaps test whether — what they own has suddenly become a lot more valuable.
The owner of the Hokua unit priced at $35.9 million is Alii B Partners LLC, an entity that includes members of the Kobayashi Group that helped develop Hokua with another local developer, the MacNaughton Group.
Alii B bought the 40th-floor Hokua penthouse for $5 million when it was brand new in 2006, according to property records.
Kobayashi Group and MacNaughton Group are also developing Park Lane, and were involved in developing ONE Ala Moana with Hughes Corp.
Another big investor in Honolulu’s condo market testing penthouse price boundaries is Takeshi Sekiguchi, a billionaire Hawaii hotel developer from Japan who owns the Shirokiya department store at Ala Moana Center and started the discount real estate brokerage firm SRE Matrix Inc. last year.
Sekiguchi, through TSA LLC, is the owner of the 40th-floor Hokua penthouse listed by SRE Matrix at $25 million. TSA bought the two-story unit for $5 million when it was new in 2006.
Sekiguchi also bought two penthouses in the 25-year-old One Waterfront Towers condo project in 2013 and put them on the market in March through SRE Matrix for $25.5 million after renovating and connecting the units. This penthouse spanning the top two floors of One Waterfront’s mauka tower is in escrow for an undisclosed price.
According to property records, Shirokiya bought the two units from separate buyers in April 2013 and June 2013 for a combined $4.9 million then sold them to Vintage Cave Estates LLC, another Sekiguchi company, for a combined $11.8 million in December 2013.
Representatives of Kobayashi Group and Sekiguchi were not available for comment.
Some observers wonder to what degree ultrahigh condo prices will affect Ho- nolulu’s primary housing market.
Ricky Cassiday, a local housing market analyst, said there shouldn’t be much impact because the number of units around or above $20 million is very small compared with the overall market.
"Importantly, there are on balance a few more superwealthy buyers than superexpensive units," he said. "But not enough to spill over to the rest of us.
"This is not like the Japanese bubble (in the 1980s) when on the demand side you had many individual Japanese buyers motivated by a cheap currency and a government encouraging them to spend. And when, on the supply side, you did not have a whole host of high-rise developments that targeted the high-end market going up. The Japanese bubble conditions then caused a trickle-down, ripple-through wave of buying.
"So," Cassiday continued, "I do see record prices being achieved at the high end for Kakaako, but no ripple-down."
