Apartment real estate market stays hot

Hawaii’s apartment real estate market generated almost $500 million in total sales in 2014.

Several institutional acquisitions including Waena Apartments, Kalaeloa Rental Homes and Hibiscus Hill accounted for more than half of the total sales volume for the year, according to a new report.

There were a total of 73 transactions with 1,777 units sold last year, according to the quarterly market report by Apartment Advisors, a Hawaii real estate brokerage and property management firm.

Inventory levels remained stable throughout the year with an average of 35 to 45 active listings on the market at any given time. Properties were on the market an average of 74 days.

Prices for multifamily properties have seen a dramatic increase over the past few years — 2014 marked the fifth consecutive year of growth in price per unit and the first year with double-digit growth since 2010, the report said.

The volume of apartment sales in 2014 was up in every quarter compared to 2013. During the fourth quarter of 2014, more than 75 percent of all transactions had sales prices above $1.5 million, compared to 53 percent a year earlier.

The market continues to be driven on a local level by non-institutional investors that have demonstrated confidence despite escalating prices, said Jared Ikeda, president and principal broker of Apartment Advisors.

He noted that favorable financing terms and low interest rates continue to play a key role in the ongoing demand for apartment assets along with signs of a strengthening rental market as landlords begin to raise asking rents.

“The apartment market has entered into a new era of pricing expectation,” he said in a statement.

“The aggressive growth has been partly attributed to a new demographic of investors entering into the market and driving up prices.”