Hawaiian Bill Targets Japanese Investors

Honolulu Mayor Frank F. Fasi is known as a maverick politician who is not afraid to stoke the fires of controversy. And this week he has lived up to his reputation.

In an effort to stem a wild home-buying spree by Japanese investors in the city’s luxury neighborhoods in recent months, Fasi sent a bill to the state Legislature seeking to prevent foreign investors from buying residential property throughout Hawaii.

Although the draconian proposal is not given much chance of passage anytime soon, Fasi’s move reflects a rising concern among Hawaiians who are both alarmed and fascinated by the spectacle of wealthy Japanese investors paying huge sums for luxury homes in Honolulu.

“Fasi is a good bellwether of political opinion,” said Robert Robinson, president of the Hawaiian Chamber of Commerce, in a telephone interview. The Japanese consul general’s office in Honolulu would make no comment.

Windfalls for Some

Though Japanese investment in hotels and commercial real estate is old hat in Hawaii, the acquisition of single-family homes in residential neighborhoods is a phenomenon that emerged last year and resulted from the falling value of the U.S. dollar against the Japanese yen.

Fasi’s proposed ban also would extend to farm land in response to well-publicized cases in which Japanese landowners have moved to evict Hawaiian farmers in order to build golf courses.

“It has been a real ugly situation in some cases,” said Paul Brubaker, an economist for the Bank of Hawaii. Fasi’s bill does not include resort, commercial or industrial properties.

Some Honolulu homeowners have reaped huge windfalls from the higher prices, but their neighbors who do not sell are not so lucky. They are stuck with sharply higher property-tax bills that have resulted from property reassessments reflecting the rising values in the neighborhood.

Prices Double

Fasi said it is these people he is trying to protect. “We have a lot of retired people who are trying to live on fixed incomes,” the mayor said in a telephone interview. “Their assessments have gone up and they can’t afford the (tax) increase.”

The buying frenzy in Honolulu is reminiscent of the 1970s on Los Angeles’ Westside when property values, propelled in part by money from Iran, soared beyond all previous expectations.

Honolulu is now awash with reports of wealthy Japanese businessmen cruising the city’s streets in limousines, buying any luxury home with a for-sale sign in front of it. Some of the Japanese are land speculators, while others simply want a vacation home, local real estate experts say.

Homes in luxury neighborhoods near Diamond Head, not far from the commercial strip at Waikiki, are selling for $800,000, twice what they were a year ago.

“Real estate agents are literally going door-to-door soliciting business for Japanese buyers,” Brubaker, the Bank of Hawaii economist, said.

One two-story, ocean-front home on 1.5 acres of land in the city’s Kahala neighborhood was recently sold to a Japanese company for $21 million. “Prices are going through the roof,” Honolulu realtor John Poss said.

Housing developments that used to take months--if not years--to sell are now being snapped up in days by wealthy Japanese investors who often pay in cash, Honolulu developer Jim Ohlman said.

“Honolulu is getting to be like a suburb of Tokyo,” Ohlman said. “You can fly in and out from there just as easily as you can from Los Angeles.”

Fasi, saying that his action has ample legal precedent, pointed to similar laws in Nebraska, Wisconsin and Mississippi that have placed various limitations on the amount of land that citizens of foreign countries can buy.

Politically Motivated

Mississippi is the most restrictive, barring non-resident aliens from buying land. Wisconsin limits the amount of property foreigners may own, while Nebraska places restrictions on foreign ownership of family farms.

An aide to one Hawaiian Democratic state legislator, asking not to be further identified, indicated that Fasi’s move was a politically motivated step designed to boost his chances for reelection later this year.

Fasi is Republican, while the Hawaii Legislature is controlled by the Democrats--one reason that the proposal does not have much chance of passage, the aide added.