Japanese Make Themselves Felt in Hawaiian Real Estate : 1986 Saw $1 Billion in Properties Bought

Japanese tourists are ubiquitous in Hawaii, sunning themselves on the sands of Waikiki Beach and having their pictures taken by popular landmarks.

Now, the Japanese are making themselves known in another way: as growing buyers of Hawaii real estate.

Last year, the Japanese bought $1 billion worth of property in the islands. That is about two-thirds as much as the $1.57 billion they invested in the state in the 30 years through 1986, according to the state Department of Planning and Economic Development.

During 1986, headline after headline appeared in local newspapers as prime properties ranging from the Hyatt Regency Waikiki to the Maui Marriott were sold to Japanese buyers.

Asked about the Japanese investment wave, Gov. John Waihee said it was welcome if it produced economic gains for the state.

“It’s not the source of the investment,” Waihee said. “It’s the type of investment.”

Waihee said he welcomed investment that created or protected jobs, as opposed to speculative investments or takeovers intended to dismantle existing companies.

By most accounts, the Japanese are believed to be entering the Hawaii market for the long term.

“The Japanese are paying high premiums in dollar terms for these hotels,” said David Ramsour. “The cash flow won’t support the price they pay unless they hold it for a number of years.”

Perhaps the biggest Japanese spender in 1986 was Azabu U.S.A. The company paid $245 million for the Hyatt Regency Waikiki, $150 million for the Maui Marriott, and an undisclosed sum for the Ala Moana Americana.

The company now owns 3,243 hotel rooms, or 5% of the 66,308 rooms in Hawaii.

During a lavish cocktail party and reception late last year, Kitaro Watanabe, president of Azabu U.S.A., tried to reassure local business and community leaders of his company’s commitment to Hawaii.

“I will not sell these hotels,” Watanabe said through an interpreter.

Other big spenders in 1986 were Otaka Inc., which invested $238 million, and Seibu Hawaii Inc., which spent $64.5 million.

Virtually all the Japanese Hawaiian investments last year were in real estate, primarily hotels, although office buildings, golf courses, restaurants and homes also were bought.

Japanese investment accounted for 71% of foreign investment in the state in 1986, followed by Hong Kong (9%), Great Britain (7%) and Canada (6%), according to figures compiled by First Hawaiian Bank.

Total foreign investment in Hawaii now stands at $2.5 billion, out of a estimated $16 billion state economy, First Hawaiian said.

While the long-term impact on the state’s economy of the incoming Japanese investment cannot be accurately gauged yet, the investment wave already has changed perceptions of labor relations.

On Feb. 10, about 350 retired hotel employees marched on the Japanese consulate, protesting a plan to reduce their health benefits.

The proposal was made during contract talks between a local hotel workers union and management of 13 Waikiki hotels, eight of which are now owned by Japanese.

During the demonstration, union representatives handed a petition to consulate officials calling on Japanese hotel owners to refrain from attempts to cut workers’ benefits.

“The retirees decided that the Japanese government should be made aware of what these companies are trying to do,” said Roddy Rodriguez, an official of the Hotel Employees and Restaurant Employees, Local Five.

“If they cut off benefits, then local people are going to hate investors from Japan,” said retired chef Seiko Yamashiro, 74, who was among the marchers.

Yukihisa Koga, a spokesman for the consulate, said it was not the consulate’s role to play a role in contract disputes.

Late last year, Tetsuyo Endo, Japan’s consul general to Hawaii, urged Japanese companies to be good corporate citizens in Hawaii, donating money to local charities and participating in community causes.

In a recent editorial, the Honolulu Star-Bulletin offered this advice: “Japanese investors who don’t, for example, support United Way-type drives and community causes at home should do it in America. Here such community help is expected from big corporations.”

Hawaii has always been a favorite of Japanese travelers going overseas, and has remained a longtime top destination for Japanese honeymooners.

Most of those factors are expected to continue, and the long-term outlook for the state’s tourist industry is believed to be bright.

The state also has a large Japanese-American population, many of whom speak Japanese. It also is closer to Japan than to the U.S. mainland.