In our analysis of 2007 Wailea and Makena sales results, one of the characteristics that struck us was the widening valuation gap between properties in up-to-date condition and those not in up-to-date condition. For example in 2006, on a per square foot basis, there was no appreciable per-square-foot valuation difference between oceanfront condominiums that had been recently upgraded, and those that has been upgraded in the past. Properties in need of an upgrade obtained per square foot prices 42% lower. In 2007 however that dynamic changed and oceanfront condominiums up to 2007 luxury standards obtained per square foot prices 21% higher than those that had been remodeled but less recently. In 2007, there was no appreciable per-square-foot difference between units needing upgrades and units with older upgrades. This dynamic was similar for non-oceanfront condominiums and for single family homes in Wailea and Makena as well.

What buyers were saying is “We want the convenience and ease of a unit in up-to-date condition and if a unit is only in good condition, we are going to remodel it anyway so will only pay the same as if the unit needed an upgrade.” That data seems to indicate that new projects in Wailea and Makena then should be more highly valued than older ones. We are now seeing enough resales of new projects like Ho’olei, Kai Malu, Wailea Beach Villas and Kanani Wailea to make that comparison. What does the data show? In the first four months of 2008, new, non-oceanfront complexes obtained per square foot values 7% higher than older ones. We believe that understates the gap somewhat as Wailea Point represented an unusually high percentage of sale thus far in 2008. In non-oceanfront complexes, the-per-square-foot gap was a more robust 29%. What does this indicate? So what should owners of Wailea and Makena properties take away from this summary analysis?

• Buyers are increasingly expressing a preference for newer product
• That remodeling older units is essential to maximizing value
• That non-recent remodels will likely not be priced much differently than units in original condition
• Non-remodeled units for sale will be forced to compete largely on price

What should buyers take away from this analysis?

• The competition for the “best in class” properties remains aggressive
• Being willing to buy and remodel one’s self can often create equity in a Wailea-Makena property

To discuss this further, contact REAL ESTATE’S LEADING EDGE!