Po’ipu: ‘Beverly Hills of the Pacific?’

With 3,000 units planned, huge pent-up demand for properties in paradise, and planned house-and-lot packages of $1.7 million to $3 million seen as bargains, the South Shore could turn into the “Beverly Hills of the Pacific” in the next three to five years, according to James G. “Jim” Pycha.

The owner and broker of RE/MAX Kauai also said that, with 380 people coming forward with checks of $50,000 each to be included in the exclusive, 125-member founders’ club at Kukui’Ula, Po’ipu could easily be headed for exclusive-escape status like the Colorado burgs of Aspen, Vail and Telluride.

“The level of quality” planned for homes at Kukui’Ula and some of the other residential developments indicates to him and others in and out of the real-estate industry that there is little chance of a slowing of the island’s white-hot real-estate market.

“Developers aren’t stupid.” They wouldn’t be putting millions of dollars into development without more than just an inkling that property values will continue to rise, said Pycha (see the chart).

Officials at DMB, who along with leaders of Alexander & Baldwin, Inc. are partners in the development of Kukui’Ula, recently flew several of the island’s top-producing agents to Arizona to check out DMB developments, so they’ll have a better idea of what the Kukui’Ula lots will look like once they have homes on them, Pycha said.

Several RE/MAX agents were among those travelers, he added.

RE/MAX, with offices at Koloa and Princeville, was the third-busiest realestate firm on the island last year in terms of sales volume, with over $160 million in sales.

Pycha, asked if 2006 would see the continued upward trend in sales prices, said, “of course, that’s everybody’s question. The answers are typically always the same: ‘Nobody has a crystal ball,’ (and) ‘looking at (the) incline (in sales prices), why shouldn’t it?'”

The optimists, who include Pycha, point to the “burgeoning baby boomers” approaching retirement, cashing out retirement plans and buying Kaua’i properties now before they retire, knowing they can count on “excellent rental potential” and “good income,” marketing their properties as vacation rentals now before they retire and move here, as one indicator sales prices aren’t likely to drop any time soon.

“Vacation-rental numbers have gone up substantially,” and since the terrorist attacks of 2001 many people who leave to vacation away from the Mainland are coming to Hawai’i instead of international destinations because it is part of the United States, there are no language barriers, and the state is perceived as secure and comfortable, he said.

Naysayers argue that, with 6,000 units planned on the island, including those 3,000 on the South Shore, that makes for “an incredibly diluted market,” Pycha said.

He has seen “a real slow-down” in Princeville, where of the 27 homes for sale, 20 of them have price tags over $1 million, “and people aren’t paying over $1 million” right now, he said from his Princeville office.

And three of the island’s leading escrow companies are reporting a “notable slowdown” in numbers of new escrow accounts, but that could just be beginning-of-the-year, seasonal lagging, he said.

The optimist (“That’s me”) in Pycha doesn’t even think that the island’s lagging infrastructure (roads, water, sewer systems, etc.) can be a detriment to ever-soaring property values, he said.

“I don’t think that the lack of infrastructure is going to stop development, and I don’t think that the lack of infrastructure is going to stop the demand,” said Pycha, who talks about potential buyers as similar to big-game hunters, “laying in wait, waiting,” for homes to come on the market.

Some even plunk down their hard-earned even before homes become available, engaging in pre-construction purchasing where they can secure a piece of paradise with 5 percent or 10 percent down, he explained.

As for some of the RE/MAX highlights of 2005, one agent, June Crane, closed a $6.7-million sale at ‘Anini, and a back-to-back sale of the former Slippery Slide property in Kilauea, formerly owned by Nan and Joel Efrien, for $4 million, and then $5 million, Pycha said.

Besides the infrastructure concerns, there is at least one other that is even bugging the optimist Pycha.

“There is a concern for the local people, and our children,” he said. “Whose children who you would want to be able to live on Kaua’i have the ability to buy a house on Kaua’i?”

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