That made Hawaii the third most active market behind California, where Japanese sellers unloaded $3.47 billion worth of properties, and New York, where they sold off $2.7 billion last year.E&Y Kenneth Leventhal Real Estate Group said today that Japanese investors sold off a total of $656 million worth of Hawaii properties in 1995, up more than 4 percent from $630 million in the previous year.
That made Hawaii the third most active market behind California, where Japanese sellers unloaded $3.47 billion worth of properties, and New York, where they sold off $2.7 billion last year.
"I think we are going to see more activity in Hawaii," said Jack Rodman, director of E&Y Kenneth Leventhal's Pacific Rim practice. "There's a lot of investor appetite in Hawaii."
Nationwide, Japanese investors sold $8.87 billion in real estate last year, up 38.5 percent from $6.4 billion in 1994.
In 1993, Japanese owners sold $3.4 billion in U.S. real estate.
Last year's distress sales resulted in an average loss of about 40 cents on the dollar of the
investors' original investment, an improvement from a 44-cent loss in 1994, E&Y said in its annual report.
Over the next five years, Japanese land owners and lenders could sell off as much as $50 billion in U.S. assets, the real estate accounting company predicted.
Rodman estimated that Japanese banks alone are facing $400 billion worth of troubled real estate loans, or more than four times the amount suffered by U.S. lenders during the peak of the saving and loan crisis of the 1980s.
That, he said, is putting extreme pressure on lenders and investors.
Rodman said that most of today's acquisitions are being financed by mainland pension funds.
He cited the example of Colony Capital of Los Angeles, which raised a lot of money from pension funds to buy the 542-room Ritz-Carlton Mauna Lani last year. They also signed a letter of intent to acquire the 194-unit Kapalua Bay Hotel & Villas last month.
In 1993, Colony purchased the former Hyatt Regency Waikoloa on the Big Island.
The property is now known as the Hilton Waikoloa Village.
In addition to mainland funds, isle properties are receiving much scrutiny from Hong Kong, Taiwanese and Korean investors, Rodman said.
Investors in those countries are flush with cash but may feel a need to place their assets in safe haven from external political threats to their countries, Rodman said. "Honolulu has definitely moved up on their radar screen," Rodman said.