Chinese enjoy real Hawaii
Pacific paradise is experiencing a rapid rise in mainland and HK buyers, writes Peta Tomlinson
The mainland has its "Chinese Hawaii" - the tropical, palm-fringed Hainan Island - but Hongkongers and mainlanders are developing a taste for the real deal. Hawaii is expected to have 96,000 visitors from China this year, and that number is tipped to double by 2015.
As they come, so too they buy - not just souvenirs, but property. According to an analysis of public records by DataQuick, Chinese, including Hongkongers, are now the third-highest foreign buyers of homes in Hawaii, accounting for a 5.7 per cent market share.
The primary object of their desire, and one of the top 10 United States hot spots for foreign buyers, according to property publication Inman News, is Honolulu, the city with the lowest vacancy rate for all housing markets surveyed, at 8.3 per cent.
Local agents, who are winging their way to Hong Kong and mainland cities to woo potential buyers, say the Chinese have recently found Hawaii.
Mei Pang, of Prudential Advantage Realty in Honolulu, began fielding inquiries from Chinese buyers about four years ago. At first, most were only looking at properties as one of their tour activities. This has changed in past two years, though, when Chinese started actively buying.
Shanghai-born Pang, who moved to Hawaii in 1996, says the reasons behind their purchasing decisions vary, but are primarily driven by their travel habits.
"Most Chinese have been to Asian tour destinations, such as Thailand and Singapore, but now they are travelling further," she says. With limited opportunities for property investment on the mainland, where buyers can own a maximum of two properties, investors are looking further afield. And the US, despite its recent history, has always been the number one destination for tour and immigration thanks to its political stability and financial strength, Pang says.
Interest has been accelerating, with Pang citing an easing of visa restrictions as a major factor. "The US government, at federal and state levels, has recognised the purchasing power of Chinese consumers, and it has since eased policies on tourist visa and immigration rules," Pang says. "A second factor is the convenience in distance. Direct flights between Shanghai and Honolulu started last August and have generated a higher volume of Chinese tourists."
Then there are Hawaii's inherent attractions: its perfect weather and charming natural conditions. "We have no industry here, minimal pollution, and a quality water supply. We can get up in the morning, jump into the ocean, and turn on the water faucet and drink, all year around. There's hardly another place in the world that offers such quality and luxury," Pang says. Hawaii's geographical location between Asia and the US is another favourable factor.
Because of this demand, Pang travels to Shanghai and other mainland cities at least once a year. The preference among Chinese clients is for "single family dwellings with an ocean frontage or view".
Eric Bricker, broker-in-charge of Century 21 All Islands, says Chinese investors are also attracted by the stability of the market. "The Hawaii market has remained strong, where elsewhere in the US has seen drops in value of half or more," he says. "Arizona has had homes on the market lately for US$89,000 that sold new for US$327,000 in 2006."
He notes the history as well. The Chinese, being among the first workers to come to the islands to work in the cane fields, settled into the culture and have invested in Hawaiian property for many centuries. Today, the exchange rate is favourable.
"Maybe one of the most desirable aspects for foreign investors is the fact that our money has a lower than normal value right now," Bricker says. "So when they invest their money in our nation's real estate, they not only get the increase in the value of that property, but they also benefit as the value of our dollar increases as the economy strengthens."
Patricia Choi, president and principal broker of Choi International, is another Honolulu-based broker who travels to Shanghai and Hong Kong annually, and Korea, to meet existing clients and court potential buyers. She says these meetings "are successful and justify our travel" and adds that she may include Taipei next year because the US no longer requires a visa from Taiwanese visitors as of this month.
In Choi's experience, word-of-mouth sells. "Hawaii presents an easier lifestyle in which to live and raise families, including the children's education. I believe Chinese buyers will increase their property purchases in Hawaii, especially those from the mainland. They are cash buyers and there is great competition among cash buyers. Some buy here because their friends are buying."
Like Pang, Choi notes a preference for upmarket properties.
"Chinese investors seek out the most prestigious neighbourhoods, either on the ocean front or with ocean or hillside views. They want to be close to shopping and fine restaurants and entertainment. These buyers prefer to purchase the land in Hawaii because it is freehold land rather than leasehold," Choi says.
Choi would not be surprised if a Chinese buyer snaps up her present offering of three contiguous oceanfront lots in the most prestigious neighbourhood of Kahala - known as the Beverly Hills of Honolulu - with 350 linear feet of ocean frontage and 120,000 sq ft of land. It is the largest assemblage of land on a prestigious stretch of oceanfront, and the asking price is US$45million. The most expensive house sale on Kahala Avenue was US$29.5 million.
What you can buy for US$1 million
A fixer-upper home in Kahala, the upscale neighbourhood where the CEO of eBay resides, with no view. Or a nice home (2,000 sq ft interior on a 7,000 sq ft lot) of about 10 years or younger on the west of the island of Oahu with ocean view.
What you can buy for US$100,000
A vacant 0.4-hectare site in the equestrian gated community of Puu Lanu Ranch, 20 minutes north of Kailua-Kona. Owners have use of a clubhouse, equestrian centre and tennis courts.