Wealth from Japan is flowing back into Hawaii's property market

A weak yen has kept many Japanese tourists from visiting Hawaii in recent years. However, capital from Japan is returning to the state, with several major real estate deals closing over the last year. These transactions total hundreds of millions of dollars.

The largest commercial sale of last year involved the land beneath The Royal Hawaiian hotel. Daisho Company paid $510 million for the 10-acre parcel. The hotel itself is owned by a separate Japanese firm, Kyo-ya Hotels and Resorts. This year, Shoei Global became the biggest buyer, paying $67 million for the land under the Bank of Hawaii Waikiki Center. Shoei previously purchased the building in 2013 and now owns the entire property in fee simple.

Other investors have made smaller moves. A Japanese buyer acquired a fourth Waikiki parcel for more than $10 million last spring, bringing him closer to owning a full block. Biosystem Co. purchased an apartment building in Makiki for $9 million from developer MacNaughton. Meanwhile, engineering firm ESC Pacific bought the Podmore building in downtown Honolulu for just under $3 million.

Sal Miwa, president of Miwa and Associates, notes a shift in where Japanese money goes. He says investors want to park funds outside Japan but are often choosing other U.S. markets. They are looking to buy businesses, particularly in manufacturing. Hawaii does not have a large manufacturing sector to meet that demand.