Value of the Land and Project’s Rarity
Investment in developable land in Hawaii also holds an immense potential due to the regulations of the Hawaiian Government. The land use division of the State of Hawaii allows only 5% of the islands’ lands to be open for development. The limited space makes it very difficult to acquire and entitle land, while increasing the value of approved sites for residential and commercial construction.
The 4,000 square mile Island of Hawaii is severely constrained by water supply which comes from rainfall on the local mountain ranges. Water supply is extremely limited and permits for access to the public water system is difficult and costly. However, the Sponsor has paid $1,185,000 up front for water meters and access to the public water system for the subdivision. Residential single-family development is further constrained by the availability of fee simple land with water.
50% of the island is uninhabitable, 25% is owned in native public land trusts and 25% is fee simple of which most of the buildable land with water supply has been absorbed. Puainako Heights is the only large scale residential project with water available in the Hilo submarket. In addition; any development projects are rigorously fought by local and stateside environmental groups which makes subdivision approval very lengthy and costly.