Jack Tyrrell specializes in Kakaako, Honolulu, Hawaii luxury condo projects.

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Flowchart for FIRPTA Withholding Effective February 17, 2016

UPDATE from our friends at First American Title Hawaii:

The new rules for FIRPTA withholding and new rate of 15%, where applicable, will take effect for closings beginning today (February 17, 2016).  Below is a summary of FIRPTA withholding in closings beginning tomorrow and a new flowchart outlining when the new rate applies. 

Many of you have asked for the definition of “resident” for purposes of determining whether the increased rate of 15% apply to real property sold for $1 million or less.  This new flyer includes that definition. 

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Market News: Why Hawaii can expect an infusion of capital from the Asia-Pacific market

Photo courtesy of Pacific Business News

In September 2015, JTC was pleased to attend the Asia-Pacific Real Estate Congress in Honolulu hosted by the International Real Estate Federation (FIABCI). One of the main focuses of the day was why Hawaii is strategically poised to expect an infusion of capital from the Asia-Pacific markets. Pacific Business News' Duane Shimogawa wrote an excellent overview of the talk, given by Steve Williams of Real Capital Analytics, below:

Hawaii is expecting an infusion of global capital from the Asia-Pacific market, and there are several reasons why this phenomenon will happen, according to Steve Williams, executive managing director of Real Capital Analytics.

Williams, who was the keynote speaker at last week’s Asia-Pacific Real Estate Congress in Honolulu, reasoned that in China, an increasingly prosperous middle-class has gradually built a reserve of 30-year savings.

He also noted that the recovery of the North American economy and the strengthening of its currency in the United States and Canada, has helped increase the interest in investments in these areas, including Hawaii.

“Asian investors see the U.S. as a strong and stable market to invest in,” Williams said, noting that in Hawaii, there’s been a nearly 30 percent increase in more cross-border capital being deployed this year compared to last year.

Additionally, he pointed out that transparency is key to markets experiencing that hope to experience an infusion of capital investments.

“The markets with the most transparency, the most data available, are the most attractive to investors,” Williams said.

In the first half of 2015, there were $400 billion in deals done in U.S., including $67 billion in capital coming via the Asia-Pacific region and $201 billion from the Americas, according to Real Capital Analytics data, which tabulated deals over $5 million in this category.

The conference, which was held in Waikiki from Sept. 10-12, examined the key issues for the real estate profession, including the need to focus on real estate development around active transportation hubs.

Duane Shimogawa covers energy, commercial real estate and development for Pacific Business News.

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Council approves Mayor Kirk Caldwell’s bill for accessory dwelling units

Last week, the Honolulu City Council approved Mayor Kirk Caldwell's bill that is expected to help ease the affordable housing crunch on Oahu. For homeowners, the changes to current zoning present an opportunity to increase your income on your property through rentals. Read more about it from KITV 4 below:

HONOLULU —Hawaii’s housing crunch is legendary, and according to a recent state report, Oahu alone needs an additional 26,000 to 30,000 units over the next decade.

Click here to watch Andrew Pereira's report.

A bill passed unanimously Wednesday by the City Council is expected to help. Under Bill 20, homeowners with lots of 3,500 square feet or more would be allowed to build an accessory dwelling unit on their property. So-called ADU’s could only be built in areas where sewer connections, water supply and transportation facilities are adequate.

"We think it provides a tremendous potential source of reasonably affordable rental housing," said Harrison Rue, the city’s Transit Oriented Development Administrator, who was hired by the mayor, in part, to help craft the legislation.

The city estimates as many as 105,000 additional rental units could be created under the bill, however ADU’s are not permitted in neighborhoods controlled by homeowners associations, for example, Mililani. Also, if your home is outside of a TOD zone, you must provide at least one parking spot on your property.

Under the bill, lots between 3,500 square feet to just under 5,000 square feet can build an ADU of 400 square feet in size. Lots larger than 5,000 square feet can build an ADU as large as 800 square feet. The measure could be a benefit not only to those looking for housing, but also homeowners looking for some extra income.

"I think there's ample room with most of the communities to expand,” said Council Chairman Ernie Martin. “I can see that once the bill is adopted and enacted into law, there will be a few neighborhoods that will take advantage of this."

Although only a small number of people expressed opposition to the bill, those who did are concerned ADU’s will strain infrastructure and lead to an increase in short-term vacation rentals. Jeanne Ohta, president of the Aina Haina Community Association, expressed pessimism regarding the Department of Planning and Permitting’s ability to enforce the bill.

“We are not confident that DPP will be able to enforce zoning codes and regulations on the new ADU's,” said Ohta written testimony to the City Council. “What is going to change in the way they enforce the rules?”

DPP Director George Atta said the greatest change under the ADU bill is that his inspectors are allowed to use advertising on the Internet or elsewhere to determine if an accessory dwelling unit is being used as a vacation rental.

"In the past we had to prove that they were being used that way,” said Atta. “This gives us a stronger enforcement tool and the burden of proof is on the homeowner, not on us."

An additional safeguard against ADU’s becoming vacation rentals is a provision in the bill that units must be rented for at least six months. Once the initial six month period is over, landlords can switch to a month-to-month lease as long as the same occupant is in the unit.

For more information on ADUs, check out the Hawaii Appleseed Center's fact sheet here.

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August sees Oahu home prices rise by 7.5% on 6.5% increase in sales

Pacific Business News reported earlier this week that Oahu home prices rose 7.5% in August on 6.5% increase in sales. Find the article below:

The median price of a single-family home on Oahu rose by 7.5 percent last month to $699,000, while August also saw a 6.5 percent bump in sales compared to the same time last year, according to statistics from the Honolulu Board of Realtors.

There were 344 single-family homes sold last month, a 6.5 percent jump from the 323 that were sold in August 2014. Meanwhile, the median sales price of single-family homes rose last month by 7.5 percent to $699,000, from $650,000 during the same month last year.

That’s still lower than this year’s record $710,000 median sales price that was reached in July.

“August single-family home sales showed healthy gains over last year,” Honolulu Board of Realtors President Jack Legal said in a statement. “We were pleased to see the inventory of homes increasing, and pending sales are up almost 9 percent, which indicates a strong trend heading into September.”

Although the number of condominium sales fell by 3.6 percent last month to 428, compared to the 444 that sold in August 2014, the median sales price of those condo units rose slightly to $354,000. That was an increase of 1.1 percent from the $350,000 median sales price for condo units sales during the same time last year.

Year-to-date, a total of 2,270 single-family homes on Oahu were sold between January and August, an increase of 5.1 percent compared to the same eight-month period last year, when 2,160 single-family homes were sold. The median price of a single-family home for the first eight months of the year was $693,000, which was 4.2 percent higher than the median price for the first eight months of 2014, which was $665,000.

Year-to-date condominium sales also rose, with 3,312 sold between January and August, an increase of 3.7 percent compared to the 3,194 condo units that were sold on the resale market during the same eight-month period last year. The median condo price for that time period rose 2.4 percent to $358,250, from $350,000.

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New Luxury Condo Project: Aloha Kai will start construction in early 2016

Yet another new condo project is coming Honolulu. This time a new project has been announced on the former YMCA Honolulu central site on Atikinson Drive across from Ala Moana Center. Construction is set to begin in early 2016, and is expected to take two years to complete. Though prices are still being determined, they are expected to start at $1,400 per square foot.

Here is the project website:  http://www.alohakaihonolulu.com/index.html

The article from Pacific Business News

The 117-unit, 37-story “Aloha Kai” condominium project planned for the site of the YMCA of Honolulu Central branch on Atkinson Drive across from Ala Moana Center is expected to start construction by early 2016, the developer of the project confirmed to PBN Tuesday.

California-based MB Property Acquisitions LLC has partnered with the Japanese firm Tama Home on the development.

Michael Blumenthal, president of MB Property Acquisitions, told PBN that the project, which will include a new 30,000-square-foot YMCA Central branch with no residential units, a swimming pool and a sophisticated aqua facility that will cater to seniors, will have five levels of parking, with units being built atop those levels of parking.

Aloha Kai encountered a delay after the developer asked for a zoning change that included increasing the its height limit to 350 feet from 150 feet.

“It has taken a while, but we are moving forward,” Blumenthal said, noting that the demolition of the YMCA Central branch should begin in about five months. “It took a little more than a year to get the zone change, but that enhanced the economics of the deal.”

He also pointed out that the focus of the entire project has been on dealing with the YMCA Central branch at first, which will be redeveloped into a three-story, 30,000-square-foot facility.

“The plans for the YMCA [are] 95 percent complete, in terms of the working drawings,” Blumenthal said. “We really focused on designing the YMCA before jumping into the condo tower.”

The conceptual drawings for the condo tower are nearly complete, withArchitects Hawaii Ltd., Swinerton Builders and Locations LLC working on the project.

The project, which will encompass about 150,000-square-feet of net saleable square footage, will have four units per floor, with a boutique-like, very private type of feel, according to Blumenthal.

The pricing of the project is still being determined, although he said it is probably going to be around $1,400 per square foot, meaning that a one-bedroom unit of roughly 600 square feet unit would be priced around $840,000. Aloha Kai also will have a rooftop pool and all units will include lanais that overlook the ocean. There will be no commercial units in the project.

Blumenthal said he was one of the few bidders of the YMCA site to have given the nonprofit organization a portion of the site to build a new branch.

A little more than three years ago, MB Property Acquisitions announced its purchase of about 1.5 acres of the YMCA’s 1.77-acre lot for an undisclosed amount. Blumenthal said he expects to close on the purchase in about three months.

“We have substantial approvals,” he said. “We worked hard to provide a nice facility for the Y.”

The condo part of the project is expected to be completed in about two years.

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Jack Tyrrell in the news: Demand is strong for new Honolulu condos

Mahalo to Darin Moriki for quoting me in Friday's Pacific Business News. The article, below:

As sales for luxury condominiums in Honolulu's Kakaako area begin to ramp up, those working with prospective buyers say the demand seems to be steady and will likely mirror or exceed those for nearby projects that have come online in recent years.

The Howard Hughes Corp. reported that about half of the 234 owner-occupant units in the Aeo mixed-use residential high-rise in Ward Village were sold over a four-day period last week after a public lottery for them began. More than 110 units had been sold to local residents.

Sales for 14 three-bedroom, three-story homes at The Townhomes at The Collection in Kakaako also began around the same time. They are located on the former CompUSA site bounded by Ala Moana Boulevard and Auahi, South and Keawe streets in Kakaako and are part of a mixed-use development by Alexander & Baldwin Inc. affiliate A&B Properties Inc. Starting price: $1.7 million.

Jack Tyrrell, who owns his eponymous Jack Tyrrell & Co. real estate company and specializes in luxury condo sales, says there has been no shortage of demand for units in Ward Village’s three mixed-used residential complexes: Waiea, Anaha and Aeo.

In May, The Howard Hughes Corp. said that its two other towers under construction, the 171-unit Waiea and the 311-unit Anaha, were more than 75 percent sold.

“I would say the demand is many more times than the number of units that are available for the number of people who have appointments to select units,” Tyrell said. “They oversubscribed, so I think it’s going to be very successful.”

It’s not just Mainland or international residents who are seizing the opportunity to live within the first phase of The Howard Hughes Corp.’s redevelopment across its 60-acre master-planned community.

“There’s a lot of locals,” Tyrrell said. “I saw a lot of people who I knew there. Some are families who are helping to buy the first home for their son or daughter, or even for their grandchildren who are young adults who are just starting off.”

Tanna Dang, who operates her Eden in Love womens wear boutique in Ward Warehouse, said she and her husband purchased a condominium nearby in the 341-unit Waihonua at Kewalo project in Kakaako “because we want to live, work and play in this area.”

“I see this community as being so vibrant,” Dang said. “For us, I’m not worried — I know the changes are going to happen, I know the redevelopment is coming, and I think it’ll be good for the whole community. I think change is really good.”

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