Hawaii is undeniably a tropical paradise with gorgeous beaches and endless sunshine. But some areas in Hawaii offer more than just a coastal getaway. Kakaako, a neighborhood in Honolulu, is one such place.
You may have heard people refer to Kakaako as an “up-and-coming” neighborhood, but the truth is it has already arrived. Formerly an industrial area, Kakaako has undergone a major transformation over the years and now boasts trendy restaurants, luxury condos, and cultural hotspots, plus some of the coolest street art and murals scattered throughout the neighborhood.
And the best part: all of this is just minutes away from the beach!
If the idea of owning a Kakaako property excites you, you might be closer to making it a reality than you think. This guide will give you all the details you need to find “the one” out of all the beautiful Kakaako homes for sale.
Table of Contents
KAKAAKO: URBAN CHIC AND ISLAND LIVING COMBINED
Kakaʻako, located on the southern coast of Honolulu between Ala Moana and Waikīkī to the east, and Downtown Honolulu to the west, is found on the island of Oʻahu.
Known for its oceanfront attractions like Kakaʻako Waterfront Park, Kewalo Harbor, and Ala Moana Beach Park, Kakaako’s constellation of neighborhoods – including Nuʻuanu, Pauoa, and Makiki – result in a vibrancy that’s hard to match. Here, fine dining restaurants and street vendors coexist, as well as high-end boutiques and local shops with eclectic wares for you to explore.
At the same time, Kakaako’s island roots run deep. There’s always a buzz of activity around town, yet the state’s trademark serenity is never far away. You will have no problem stepping back at one of the many cafes, restaurants, or parks for a quick breather. It’s not uncommon to see locals practicing yoga in the park, indulging in shaved ice from one of the many food trucks, or simply taking in the ocean views that even locals can’t get enough of.
What makes Kakaako a desirable spot for your new home
There are many reasons to buy or invest in a Kakaako home:
- Property values are consistently increasing, ensuring a good return in the future
- The neighborhood offers convenience with everything you need within walking distance – grocery stores, shopping centers, parks, and beaches
- The diverse community means you can be your true self and find your tribe!
- The commute to Honolulu is breezy, which means you can always take a job in the city or go for a night out without worrying about traffic or parking
- The arts and culture scene is on the upswing, with a wealth of galleries, museums, and events that can turn anyone into an art aficionado
THE KAKAAKO REAL ESTATE MARKET
If this all sounds good to you, here’s a closer look at the Kakaako real estate market.
Overview of current market trends
The market for Kakaako homes is competitive.
The April, 2024 median sales price ranged from $770,000 to $880,000, higher than the median for the larger Oahu market, which hovered around the $500,000 mark. These reflect an upswing after a dip in 2023, though the time it takes for Kakaako properties to sell rose from around 70 days in 2023 to just under 90 days this year. This could mean more wiggle room for buyers and better opportunities to find the perfect home.
The area’s rapid growth and relatively low square mileage means that the bulk of what’s available in Kakaako are luxury condos, with all the amenities you can expect. Of these, high-end units make up about 40% of resales this year.
Currently, over half of the listings are in that same price range too. Lower-end properties aren’t entirely absent – but you’ll need a great agent on your side to snag one.
Local buyers are snapping up around 2/3 of the market, with mainlanders and foreigners taking up the rest. More and more Japanese buyers, in particular, are flocking to Kakaako over the last few years. While a substantial part of this group is doing so as an investment, an increasing number are buying condos to actually live in – not surprising, given the strong Japanese influence in the area.
Real estate investments promise to be profitable. On average, the rent is fast approaching $3,600 a month, the highest it’s ever been. Combined with the ever-rising influx of new residents – in addition to the tourists, the backbone of Hawaii’s economy – investing in Kakaako right now seems like a prudent move.
PURCHASING A HOME IN KAKAAKO
Is Kakaako feeling more and more like your next home or investment? Don’t get caught up in excitement just yet: there’s a few more things you have to get squared away.
Pre-purchase considerations
Always start with the hard numbers. Take a closer look at your finances and see if you have enough saved up for the down payment, closing costs, and contingencies such as unexpected repairs or upgrades, on top of the cash flow you need to live comfortably.
Work with a mortgage lender or broker to get a professional overview of your budget and to get pre-approved for a loan. This will give you a clear idea of what you can afford and the type of loan that suits you best.
Reach out to homeowners or condo associations to learn about their rules and fees. A surprise here could end up being a deal-breaker.
Find out about property taxes in the area and their variations, as they can significantly impact your overall costs. Consult with the local assessment office for accurate information on tax rates. Be aware of any potential future increases in property taxes that may affect your financial planning.
Finding the right home
With condos making up the vast majority of Kakaako homes for sale, finding the right property involves different considerations from buying a traditional single-family home.
These are some of the most important factors to consider:
- Type of Ownership: Leasehold vs. Fee Simple:
As with other parts of Hawaii, ensure you understand whether the property is leasehold or fee simple. With a leasehold property, you do not own the land. Instead, you lease it for a specified period. For this type of property, be aware of lease terms, expiration dates, and lease rent increases.
Fee simple ownership is preferable as this makes you the owner of both the condo and the land it sits on.
- Building Amenities and Services
One of the best things about condos in Kakaako are the extensive amenities such as fitness centers, swimming pools, BBQ areas, and co-working spaces. Assess the quality and maintenance of these amenities and whether they meet your lifestyle needs.
- Homeowners Association (HOA) Fees and Rules
With the wealth of amenities, HOA fees for condos in Kakaako can also be significant. Review what the fees cover and the financial health of the HOA. Investigate if there are any planned or recent special assessments for major repairs or improvements, which could significantly impact your costs.
Additionally, review the potential condo’s covenants, conditions, and restrictions (CC&R) to ensure they align with your lifestyle. For instance, if you have a pet or plan to own one, confirm that the building allows pets. Some condos may also impose rental restrictions which could affect a rental investment.
- Location and Neighborhood
Kakaako is known for its urban, walkable environment with proximity to shopping, dining, entertainment, and the beach. Consider the specific location within Kakaako, as some areas might be closer to parks, waterfronts, or busy commercial zones. Look into the distance from your place of work or the kids’ schools.
In addition, be aware of potential natural hazards, such as flooding, hurricanes, and tsunamis, and their impact on insurance costs and safety. Investigate the availability and cost of insurance, including coverage for natural disasters.
- Construction Quality and Building Age
Newer buildings may offer modern features and energy efficiency but can come at a premium price. Older buildings might have lower purchase prices but could require more maintenance and updates.
- Views and Orientation
Condos with ocean views or mountain views can command higher prices and have better resale value. Consider the orientation of the unit for natural light, ventilation, and potential noise from nearby construction or traffic.
- Future Developments:
Kakaako is undergoing significant development, so check for planned projects that could impact views, noise levels, and property values. Understand local zoning laws and any special regulations that might affect your property.
- Community and Lifestyle
Kakaako has a vibrant community with a mix of locals and newcomers, and numerous cultural and social events. Get to know more about your future neighbors and see if the community atmosphere aligns with your lifestyle preferences. If you’re moving with your family, for example, you might want to live in a community with other families around and which includes kid-friendly amenities. If you’re a single professional, you might prefer a property close to restaurants, bars, and similar establishments.
REGULATORY AND LEGAL CONSIDERATIONS
There are several legal and regulatory factors to consider in buying a property in Kakaako. It’s crucial to understand these factors before going ahead with your purchase to ensure a hassle free ownership that meets your long term goals.
These are some of the most important considerations to keep in mind:
- Public Reports and Disclosure Statements
Developers of new condo projects are required to provide a public report that discloses important information about the project. Review these documents carefully to understand the financial health, management, and any issues related to the property. - Title Insurance
Secure title insurance to protect against any potential legal claims or disputes over property ownership. This ensures that the title is clear and free from encumbrances. - Building Codes and Permits
Ensure that any renovations or modifications to the property comply with local building codes and have the necessary permits. This is especially important in older buildings or those undergoing significant updates. - Hurricane and Natural Disaster Preparedness
Hawaii’s climate requires consideration of natural disaster preparedness, particularly hurricanes. Check for compliance with building standards designed to withstand such events and ensure appropriate insurance coverage. - Hawaii Real Property Tax Act (HARPTA)
If you are purchasing from a non-resident seller, the Hawaii Real Property Tax Act requires withholding 7.25% of the sales price to ensure the seller pays state taxes on any capital gains. - Inspection Considerations
Conduct thorough inspections of the condo and review all pertinent documents, including the building’s financial statements, meeting minutes, and any special assessments. - Financing Options
Explore financing options and requirements, as condos might have different loan conditions compared to single-family homes. Some buildings may not qualify for specific types of loans, so check with lenders about the eligibility of the building.
If you’re planning to invest in a rental property in Kakaako, certain legal conditions and restrictions also apply. These are three key regulatory considerations to keep in mind:
-
Short-Term Rental Regulations
Honolulu County, which includes Kakaako, has specific regulations regarding short-term rentals. Short-term rentals are typically defined as stays of fewer than 30 days. -
Nonconforming Use Certificates (NUC)
Properties that have been legally operating as short-term rentals before the new regulations may qualify for an NUC, allowing them to continue operating under certain conditions. Owners must renew these certificates annually and comply with specific requirements, such as maintaining proper insurance and paying transient accommodations taxes. -
Zoning Laws
Verify that the property’s zoning designation allows for rental use. Some zoning laws may have restrictions on the type and duration of rentals permitted. Understanding the zoning regulations helps prevent legal issues and ensures the property can be legally rented.
As of recent regulations, most short-term rentals are restricted to designated resort zones. Outside these areas, short-term rentals are generally prohibited unless the property is eligible for a Nonconforming Use Certificate (NUC).
In addition to these, there are also tax regulations, landlord-tenant laws, insurance, and other requirements to consider. Work with your real estate agent and your lawyer to ensure your compliance with these requirements.
CLOSING THE DEAL
Buying a home tends to evoke strong emotions. That might be useful when you’re feeling out which house in Kakaako you want to purchase, but when it comes to the final stretch, it’s all about keeping a clear head.
You’ll be tangling with a mountain of paperwork and other technicalities. Having an experienced Realtor and a real estate attorney in your corner, both with a good grasp of the local legal landscape, will help you wade through the often complex process of buying a home in
But even with help, you’ll still need to keep a few things in mind:
- Keep your documents organized in one place. You never know when you might need them.
- Be as open and transparent with your real estate agent and lawyer as possible. Don’t hesitate to ask questions or voice any concerns you may have.
- Take your time when reviewing documents before signing them.
- Let the professionals do the heavy lifting, especially when it comes to negotiations. Those can get contentious quickly. Let your buying team know where you stand and let them handle the rest.
FIND THE PERFECT HOME IN KAKAAKO, HAWAII
The luxury real estate market in Hawaii can be tricky to navigate. If you’ve spent months or even years eyeing one of the many gorgeous Kakaako homes for sale from afar, taking the next step has to be done with expert guidance. Taniguchi & Associates can take care of that for you.
As a Top 10 Realtor in Hawaii for the past three years and consistently recognized among the state’s top real estate teams, Taniguchi & Associates’ unrivaled understanding of the local market gives you all the advantages you need to find the Kakaako property that does more than just speak to you – it speaks for you.
As part of a global network that spans 54 countries, working with Taniguchi & Associates means having all the expertise, resources, and most importantly, peace of mind that comes with partnering with an established and respected real estate firm.
The firm’s local and global connections give you a native’s understanding of the local market without losing sight of global trends and opportunities – ensuring that your investment is not only the right one now, but a strong one for years to come.
Call Taniguchi & Associates at 808.596.2888 or send an email here to start exploring your real estate options in Kakaako today!