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Honolulu Real Estate Market 2025: Record Prices, New Developments, and 2030 Forecasts

August 31, 2025
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Honolulu Real Estate Market 2025: Record Prices, New Developments, and 2030 Forecasts

Key Facts and Figures

  • Home Prices Near Record Highs: The median single-family home price on Oʻahu hit roughly $1.1 million in early 2025, up ~5% year-over-year hicentral.com. Condo median prices held steady around $500,000 hicentral.com after rapid gains during the pandemic. Prices dipped in 2023 (single-family medians fell ~5%) but rebounded in 2024 hicentral.com, reflecting resilient demand.
  • Sales and Inventory Shifts: Home sales volume slowed amid higher interest rates – single-family sales in March 2025 were down ~10% from a year prior hicentral.com – but active listings have surged. Oʻahu’s housing inventory jumped 33% (houses) and 54% (condos) year-over-year by March 2025 hicentral.com hicentral.com, giving buyers more options and cooling the frenzied competition of 2021–2022. Median days on market for homes stretched to ~2 weeks (15 days) vs under 1 week at the peak hicentral.com.
  • Rents at All-Time Highs: Oʻahu’s median rent is about $2,500 per month as of late 2024 agencyhawaii.com, with Honolulu average rents around $2,900 (all sizes) by mid-2025 zillow.com zillow.com. Rents have stabilized with 2–4% annual increases in sought-after neighborhoods like Kakaʻako and Ala Moana agencyhawaii.com. Rental demand remains strong as high home prices and mortgage rates push residents to rent, keeping Oʻahu’s rental vacancy modest (around 5–6%) in 2025.
  • Office Market Recovering: Honolulu’s office vacancy rate has improved to roughly 12–13% in 2025 hawaiipublicradio.org – far healthier than mainland cities like San Francisco (30%+ empty space). Two consecutive quarters of positive absorption were reported into late 2024, bringing vacancy to its lowest in 3+ years (~12.7%) instagram.com. Downtown landlords are backfilling space with new uses, and Honolulu ranks 2nd nationally for planned office-to-residential conversions hawaiipublicradio.org, indicating adaptive reuse efforts to address both empty offices and housing needs.
  • Retail & Industrial Strength: Retail real estate is stable with low vacancies (~5%) brevitas.com, buoyed by rebounding tourism and steady local spending. Waikiki storefronts saw foot traffic in 2024 approach pre-pandemic levels brevitas.com, aiding luxury retailers and restaurants. Suburban retail is expanding in growth areas like West Oʻahu (Kapolei/Ewa), following housing development brevitas.com. Industrial properties remain extremely tight – Oʻahu’s warehouse vacancy hovered near 1% in late 2024 rebusinessonline.com – with strong demand and virtually no excess space.
  • Tourism & Hospitality Rebound: Honolulu’s hotel occupancy has climbed back into the mid-70% range brevitas.com brevitas.com (averaging ~76% statewide in 2024), still a few points below the ~80% pre-2019 peak. Record room rates are driving revenues: average daily rates (ADR) statewide in 2024 were ~30% higher than 2019 (around $360/night) brevitas.com, pushing total hotel revenues to ~$5.5 billion – on par with 2019 after inflation brevitas.com. Waikiki hotels enjoy solid domestic visitor demand, though recovery of Japanese tourism (critical for high-end hotels and luxury condos) remains gradual.
  • New Developments Transforming Skyline: Dozens of new condo towers are underway or recently completed, especially in urban Honolulu. The Kakaʻako/Ala Moana district is booming with luxury high-rises like Victoria Place (finished 2024), The Park Ward Village (completing 2025), Kalae (under construction on former Ward Warehouse site), Launiu (Ward Ave.), Ālia (Kobayashi Group), and Kaliʻu (Our Kakaʻako) hawaiihomelistings.com hawaiihomelistings.com. These projects will add thousands of upscale residences by 2026–2027, reshaping Honolulu’s skyline. In West Oʻahu, master-planned communities (Ho‘opili, Koa Ridge) and a second “city” in Kapolei are delivering new single-family homes, townhomes, and even a UH campus, shifting growth to the island’s leeward side.
  • Policy Shifts to Boost Housing Supply: Hawaiʻi’s government is tackling the housing crunch with new laws and incentives. In 2024, the state enacted SB 3202 allowing up to two Accessory Dwelling Units (ADUs) per lot statewide and HB 2090 enabling conversion of commercial properties into residential use hiappleseed.org – big moves to increase housing stock. Honolulu’s city council passed Bill 3 (2024) offering tax breaks and fee waivers to spur affordable rental development sachihawaii.com. Strict regulations on short-term rentals were also implemented (minimum 90-day rentals in residential areas), pushing many vacation rentals back to long-term market. An “empty homes” tax on vacant investment properties is under debate honolulucitycouncil.org to curb speculative holding and open up more units for locals.
  • Hot and Emerging Neighborhoods: Kakaʻako is Honolulu’s fastest-growing luxury condo market, attracting investors and affluent buyers with its sleek towers, ocean views, and proximity to downtown. Waikiki remains a hot spot for condos (and rental income from tourists, where allowed). High-end areas like Kahala and Diamond Head see continued demand (a record $65.75M sale closed in Kāhala in 2025 hicentral.com), solidifying their “blue-chip” status. Family-friendly suburbs such as Mililani (Central Oʻahu) and Hawaii Kai (East Honolulu) are perennial favorites for their schools and lifestyle. On the west side, Kapolei/Ewa Beach are emerging as growth centers – offering newer homes, retail (Ka Makana Aliʻi mall), and future rail connectivity – with thousands of new homes attracting local families and investors alike.
  • Outlook Through 2030 – Moderate Growth, No Crash: Experts anticipate steady but slower growth in Honolulu real estate over the next 5+ years. Limited supply and Hawaii’s enduring appeal are expected to support home price increases of ~1–3% annually on Oʻahu luxurybigisland.com luxurybigisland.com, barring any major economic shocks. The University of Hawaiʻi Economic Research Organization (UHERO) notes that while high interest rates in 2024–25 have cooled sales volume, property values remain high due to persistent demand luxurybigisland.com. By 2030, Oʻahu’s median home values could approach the mid-$800,000s (up from ~$756,000 in 2025 zillow.com zillow.com) under these moderate growth trends. Importantly, no significant downturn or “crash” is forecast – Hawaii’s unique supply constraints and desirability make a 2008-style collapse unlikely luxurybigisland.com. The main risks to watch are external: a U.S. recession, global geopolitical events, or sharply rising sea levels. Overall, Honolulu’s real estate market is set to remain resilient, with cyclical cooling in the mid-2020s giving way to modest growth as we approach 2030.

Residential Real Estate Trends in 2025

Prices and Demand: Honolulu’s residential market entered 2025 near record price levels. The Honolulu Board of REALTORS® reported the median single-family home price on Oʻahu at $1,160,000 in March 2025, up 5.5% year-over-year hicentral.com hicentral.com. This marks a rebound from 2023, when medians briefly dipped (~5% decline in 2023 to $1.05M) after the frenetic pandemic-era boom hicentral.com. Condominium prices have been steadier – the median condo sold for $500,000 in early 2025, roughly unchanged from a year prior hicentral.com. Average prices for condos did tick up ~6% year-on-year hicentral.com, indicating strength in higher-end sales. Overall, home values remain near all-time highs, supported by low inventory and enduring buyer demand, especially from local move-up buyers and off-island purchasers drawn to Hawaii’s lifestyle.

Sales Volume and Inventory: Home sales volume has cooled from the frenzy of 2021–2022. Rising mortgage rates (hovering ~6–7% in 2024–25) sidelined some buyers, leading single-family home sales to fall about 10% year-over-year in early 2025 hicentral.com. 2023 was especially slow – total residential transactions dropped over 25% compared to 2022 hicentral.com, as many buyers paused amid interest rate hikes. However, 2024 saw signs of stabilization: single-family sales picked up ~9% for the year hicentral.com, even as condo sales dipped slightly. A key shift is in housing supply – after years of chronically low inventory, listings have started to build up. In March 2025, Oʻahu had 773 active single-family listings and 2,302 condo listings, up 33% and 54% year-over-year respectively hicentral.com. New listings have been hitting the market at a much higher clip (e.g. +30% YoY for houses in March) hicentral.com. This inventory growth gives buyers more breathing room and has ended the frenzied bidding wars of the pandemic. About 73% of new listings remained unsold at month-end (vs just 58% a year prior) hicentral.com hicentral.com, meaning properties aren’t flying off the shelf as quickly. Indeed, median Days on Market for single-family homes crept up to 15 days (from just 8–10 days at the height of the boom), while condos are taking around 40 days to sell (up from ~30 days a year earlier) hicentral.com. Buyer demand, though cooler, is still present – priced-right homes in desirable neighborhoods continue to receive multiple offers, but sellers now must be more realistic in pricing and negotiations hicentral.com. The market in 2025 can be characterized as balanced to mildly favoring buyers, a shift from the strong seller’s market of prior years.

Regional Differences: Within Honolulu (Oʻahu), market trends vary by region and price segment. High-end neighborhoods (Kahala, Diamond Head, Lanikai) saw fewer sales but continued price resiliency – in one notable case, a Kahala oceanfront estate sold for $65.75 million in Q1 2025 hicentral.com, boosting average price metrics. In contrast, some entry- to mid-market areas experienced more noticeable slowdowns. For example, the ‘Ewa Plain (Kapolei/Ewa/Makakilo) – which had a surge of new housing in recent years – saw its inventory jump ~74% (to 144 active listings) in early 2025 hicentral.com as more sellers competed for fewer buyers. Central Oʻahu (Mililani/Wahiawā) also saw listings double hicentral.com. These areas had led price appreciation during the pandemic (with remote workers and military families driving demand), but are now normalizing as supply catches up. Meanwhile, Windward Oʻahu (Kailua, Kāneʻohe) and East Honolulu (Hawaii Kai, Kāhala) remain highly sought-after; limited new supply there has kept those markets tighter, with well-maintained homes still selling quickly. Condo markets vary from urban to resort areas: Downtown and Kakaʻako condos are benefitting from professionals returning to offices and new project hype, whereas older leasehold condos or those in secondary locations might sit longer. Waikiki’s condo market is in flux due to short-term rental regulations – many units that were vacation rentals are now for sale or rent long-term, softening prices for some older Waikiki condo buildings even as luxury buildings hold value. Overall, Honolulu’s residential market in 2025 is calmer and more balanced than the frenzy of 2–3 years ago, but demand remains fundamentally strong, and the long-term scarcity of land ensures that well-located properties continue to command premium prices.

Commercial Property Trends (Office, Retail, Hospitality)

Office Market: Rising Occupancy, Adaptive Reuse

Honolulu’s office sector is weathering the post-pandemic era better than many U.S. cities. As of mid-2025, the island-wide office vacancy rate is about 13.5% hawaiipublicradio.org, down from pandemic highs and well below vacancy levels in tech-centric cities on the mainland (San Francisco’s vacancy is over 30% for comparison). In fact, Oʻahu’s office market posted positive net absorption for multiple quarters through late 2024, bringing vacancy to 12.73% in Q4 2024 – the lowest in over three years colliers.com instagram.com. This improvement is partly due to companies bringing workers back on-site (at least part-time) and some downsized spaces getting leased by smaller local firms or government agencies. Average asking rents for Honolulu office space have inched up slightly in 2025, and landlords are reporting stabilized occupancy in prime buildings. For example, Class A towers in the CBD (Central Business District) and Kakaʻako are maintaining strong occupancy, while older Class B buildings still struggle with higher vacancy and lower rents.

A notable trend is adaptive reuse of aging office properties. Honolulu has the nation’s second-highest rate of planned office-to-residential conversions hawaiipublicradio.org, as stakeholders look to repurpose underutilized commercial buildings into much-needed housing. Several downtown office buildings are being evaluated for conversion into apartments or mixed-use (one example is the potential revamp of the historically under-occupied Finance Factors Center). This aligns with new state legislation (HB 2090, 2024) that allows commercially-zoned properties to be used for residential purposes hiappleseed.org. While not all office buildings are suitable for conversion, the push could gradually chip away at vacancy and add housing units in the urban core. Additionally, a Downtown Business Improvement District and revitalization effort is underway hawaiipublicradio.org, aiming to make the Honolulu financial district more vibrant. City planners and private developers are collaborating on ideas from improving streetscapes to potentially introducing residential lofts in former office spaces. Overall, Honolulu’s office market in 2025 is stable – and arguably healthier than many markets – with vacancy around the low teens and a forward-looking strategy to reinvent surplus office space. The downsides are that tenants still have ample choices, so landlords must offer incentives (tenant improvements, parking concessions) to secure leases, and older buildings without upgrades may continue to lag. But compared to mainland urban cores, Honolulu’s office outlook is cautiously optimistic, bolstered by a diversified economy (including government and military tenants) and relatively few new office developments in the pipeline to compete with existing inventory.

Retail & Industrial: Tight Retail Vacancy, Booming Industrial Demand

Retail real estate in Honolulu has proven resilient through 2024–25, supported by rebounding tourism and stable local consumption. Island-wide retail vacancy sits around 5% – very low by national standards – and essentially held flat in late 2024 brevitas.com. In world-famous Waikiki, foot traffic surged back as visitor counts in 2023–2025 neared pre-pandemic levels, benefiting hotels, restaurants, and retailers catering to tourists brevitas.com. High-street retail spots in Waikiki (Kalākaua Ave.) and Ala Moana Center (the largest open-air mall in the U.S.) are once again commanding top rents as luxury brands and travel retailers see sales recover. Retail spending by tourists hit record highs (visitor expenditures were up ~6.5% in Q1 2025 vs prior year dbedt.hawaii.gov dbedt.hawaii.gov), which translates to healthy demand for store space in tourist hubs. Meanwhile, neighborhood and suburban retail is also doing well – shopping centers in growing communities like Kapolei, Ewa Beach, and Mililani are expanding or fully occupied, thanks to population growth in those areas brevitas.com. Developers have added grocery-anchored centers and mixed-use projects in West Oʻahu to serve the influx of residents. Rents for prime retail locations in Honolulu have been creeping upward, and new construction is limited (due to high costs and land scarcity), which keeps the retail sector largely landlord-favorable in top locations. The challenges for retail lie mostly in second-tier retail corridors and older commercial buildings, some of which face high maintenance costs and competition from e-commerce. But overall, Honolulu’s retail market is on stable footing, and the return of tourism has lifted both resort-area retail and the broader economy.

On the industrial side, Oʻahu continues to have one of the nation’s tightest industrial real estate markets. With limited industrial zoned land (mostly around Honolulu Harbor, Airport, and Campbell Industrial Park), vacancy rates have been under 2% for years. Even as of late 2024, the industrial vacancy was around 0.9% colliers.com, barely rising from record lows despite a few new warehouses coming online. Demand for warehouse, distribution, and logistics space remains intense, driven by everything from construction companies to e-commerce distributors needing local facilities. Rents for industrial units have climbed steadily, and tenants often have to renew leases early or face no available alternatives. New industrial developments are extremely scarce – one notable project is a planned expansion near Kapolei for logistics uses, but community opposition and permitting hurdles make new supply slow to materialize. For investors, industrial properties in Hawaii are a prized asset class, offering low vacancy and stable cash flow. The key issue here is that any business needing space (from storage to manufacturing) has few options, which can constrain economic diversification. However, from a market perspective, industrial real estate is arguably Honolulu’s strongest sector – essentially full occupancy, rising rents, and low risk of oversupply.

Hospitality & Hotel Property: Tourism Reignites

Hawaii’s hospitality industry – which underpins a significant portion of its real estate – saw a robust recovery through 2024. By the end of 2024, statewide hotel occupancy averaged ~73% for the year brevitas.com, up dramatically from the pandemic lows (which fell under 20% in 2020) but still a bit shy of the ~80% achieved in 2019. Oʻahu (Honolulu/Waikiki) hotels have performed well, with occupancy in the mid-70s% range brevitas.com as of late 2024 and into 2025, thanks to surging U.S. mainland visitor numbers and the return of group/business travel (conventions at the Hawaiʻi Convention Center are back). Importantly, room rates have skyrocketed – Hawaii hoteliers took advantage of pent-up demand to raise prices. The average daily rate (ADR) in Hawaii is now roughly 30% higher than pre-pandemic (statewide ADR ~$340–$370 in 2024 vs ~$280 in 2019) brevitas.com. This has translated into near-record revenues: Hawaii’s hotels earned about $5.5 billion in 2024 (approaching 2019’s revenue on an inflation-adjusted basis) brevitas.com. In Waikiki, many hotels are effectively full on weekends and high season, and the revenue per available room (RevPAR) for luxury properties is among the highest in the nation.

Hotel real estate transactions have picked up as well – investors are confident in Hawaii’s long-term tourism prospects. Notably, several high-profile hotel redevelopments and sales occurred or are in the works. For instance, the iconic Aliʻi Tower at Hilton Hawaiian Village is slated for upgrades, and Japan-based investors, traditionally big players in Waikiki, have slowly resumed acquisitions as travel resumes. New hotel development is limited by land and regulation, but one marquee project is the Mandarin Oriental Honolulu, a combined ultra-luxury hotel and condo tower under construction near Ala Moana (scheduled for the late 2020s) brevitas.com. Additionally, some older hotels are being rebranded or renovated rather than new builds. Outside Honolulu, resort areas on Maui, Kauaʻi, and the Big Island also saw divergent performance – e.g., Maui’s West Side hotels struggled after the 2023 Lahaina wildfire tragedy (occupancy there dipped below 60% as tourism paused) brevitas.com, whereas other islands absorbed some of that demand.

Another trend affecting Honolulu hospitality real estate is the regulatory crackdown on short-term rentals. In 2022–2023, Honolulu County implemented strict rules (Ordinance 22-7, Bill 41) that outlaw rentals under 90 days in most residential areas (outside resort zones). This significantly reduced the supply of legal vacation rentals, pushing tourists back toward hotels and a smaller number of legal resort condos. Vacation rental occupancy fell to ~47% in 2024 amid the new rules and increased competition among Airbnbs agencyhawaii.com. Some condo owners in Waikiki and Ko Olina who formerly did short-term rentals have converted to long-term leasing or sold their units. For hotels, this has been a boon – less alternative supply means higher hotel demand. For the housing market, it’s mixed: it may free up some inventory for local renters, but also removed an income source for some owners. The City’s intent was to restore neighborhood housing and reduce the tourism impact on local communities, and by mid-2025 the consensus is that tourism is largely back in the hotels.

Hospitality outlook: Tourism is expected to continue growing into 2025 and beyond, albeit at a moderated pace. The Hawaiʻi Tourism Authority projects a full return to pre-COVID visitor numbers by ~2025–2026, with certain markets (U.S. West, Canada) already exceeding 2019 counts, while Japan and other Asia-Pacific markets lag slightly dbedt.hawaii.gov dbedt.hawaii.gov. This implies hotel occupancy in Honolulu could push back toward the upper 70% range in coming years, especially once Japanese travel normalizes (critical for Waikiki’s luxury segment). From a real estate perspective, Hawaii’s hospitality assets remain highly coveted and generally resistant to downturns – even during COVID, while values took a hit, there were few distressed sales. Now, investors see upside as tourism stabilizes. One caveat: new state initiatives to manage tourism’s impact (like a proposed “green fee” tourist tax or limits on daily visitor counts) could cap growth a bit but also ensure sustainability. All considered, the commercial real estate market in Honolulu is broadly stable to expanding in 2025: offices finding new footing, retail and industrial very strong, and hospitality roaring back, reinforcing Honolulu’s status as a world-class destination and a solid long-term investment market.

Rental Market Overview

Honolulu’s rental housing market remains tight and expensive in 2025. After years of increases, rents have plateaued at historically high levels, with only modest growth in select areas. The median rent for Oʻahu (all property types) is approximately $2,522 per month as of late 2024 agencyhawaii.com. According to Zillow, the average rent in Honolulu (city) is about $2,900 per month in mid-2025 zillow.com. For context, a typical one-bedroom apartment in Honolulu now rents for around $2,200–$2,400, while two-bedroom units average $3,000+ in desirable neighborhoods livinginhawaii.com. These rent levels make Honolulu one of the most expensive rental markets in the U.S., on par with coastal California cities. Rent growth has eased from the 2021 surge; in 2024–25 landlords are generally imposing smaller increases (2–5% a year, if any). In fact, some areas are seeing flat or slight declines in rent – for instance, property managers in Waikiki report that an oversupply of units for rent (partly due to former Airbnbs converting to long-term) has kept rents in check agencyhawaii.com. On the other hand, high-demand residential neighborhoods near new jobs and transit – Kakaʻako, Ala Moana, Kapolei – are still seeing rent bumps as new luxury rentals come online and attract tenants willing to pay a premium agencyhawaii.com.

Rental vacancy in Honolulu is relatively low – latest figures put it around 4–6% (varies by submarket) which indicates a landlord-friendly market but not as extreme as during the peak housing crunch a few years ago (when vacancy dipped under 3%). The increase in inventory for sale has also translated to a bit more inventory for rent, as some owners choose to rent out units rather than sell in a cooling sales market. Moreover, pandemic-era population shifts (out-migration of some residents) have stabilized; Hawaii’s population even ticked up slightly in 2024 brevitas.com, which feeds housing demand. More residents are renting longer because buying a home is out of reach for many – Honolulu’s homeownership rate (about 55%) is lower than the U.S. average, reflecting the expensive ownership costs. Therefore, there’s a steady pool of renters, from local families to military personnel (who receive housing allowances) to mainland remote workers trying out an “office in paradise.” This keeps occupancy of well-located rentals high.

A significant dynamic in the rental market is the impact of short-term rental regulations. With thousands of vacation rentals effectively barred from operating short-term, many owners pivoted those condos and houses into 6- or 12-month leases. This added a one-time boost in long-term rental supply in 2023–2024. Property managers note that while initially this pushed vacancies up slightly in resort-heavy neighborhoods (e.g. Waikiki, North Shore), the market has largely absorbed the units by 2025 given the overall housing shortage. The Agency Rentals property management firm advises owners of former Airbnbs to convert to long-term leases to tap stable demand, especially in family-friendly neighborhoods where local renters are eager for units agencyhawaii.com. For example, some investors with condos in Ko Olina or Turtle Bay (traditional vacation spots) have leased them to military or corporate tenants instead.

On the affordability front, Honolulu renters face challenges: the median renter household income (~$64K) can barely keep up with these rents point2homes.com. Many households pay well above 30% of income on rent (Hawaii consistently ranks among the worst for rental affordability). To address this, the City and State have been working on affordable rental projects – leveraging programs like the Rental Housing Revolving Fund and inclusionary zoning. Several new affordable housing developments (income-restricted rentals) are underway in Honolulu, such as The Reserve at Hilomoana in Kapolei and Halewaiʻolu Senior Residences in Chinatown. Furthermore, the state extended an eviction mediation program and considered (though didn’t pass) bills to require longer notice for rent increases hiappleseed.org hiappleseed.org. These measures aim to give renters more stability. Another recent policy change is the City’s Bill 3 (2024) which incentivizes developers to build rental apartments by offering faster permitting and property tax breaks sachihawaii.com – this could yield a few thousand new rentals over coming years if developers take it up.

Looking ahead, the rental market is expected to stay strong. High interest rates make it difficult for many would-be first-time buyers to purchase, so they’ll remain in the rental pool. At the same time, any economic downturn could soften demand slightly (e.g., if tourism dips, some service jobs could be lost, reducing renter demand). But given Hawaii’s tight housing supply, even flat population growth creates pent-up rental demand. By 2030, unless a lot of housing is built, rents are likely to rise further. In the near term, landlords are advised to remain competitive and amenity-focused – the vacancy uptick to ~5% means renters have a bit more choice, so updated appliances, included utilities, or slightly lower asking rent can help fill units faster reddit.com livinginhawaii.com. The bottom line: renting in Honolulu will continue to be a costly proposition, and the rental market will stay a critical and closely watched part of the overall real estate picture.

New and Upcoming Developments

Urban Honolulu – Kakaʻako and Ala Moana: Nowhere is development more dramatic than in Kakaʻako, the urban district between Downtown Honolulu and Waikiki. Guided by the Howard Hughes Corporation’s Ward Village master plan and several other developers, Kakaʻako’s skyline is being refashioned with sleek high-rises. Recent and upcoming projects include: Victoria Place (a luxury condo tower completed in 2024), The Park Ward Village (a park-facing condo tower finishing in 2025) hawaiihomelistings.com hawaiihomelistings.com, Kalae (another luxury tower on Ala Moana Blvd under construction) hawaiihomelistings.com, Launiu (planned across from Ward, breaking ground soon) hawaiihomelistings.com, ʻĀlia (a high-end mixed-use tower by Kobayashi Group that broke ground in 2024) hawaiihomelistings.com, and Kaliʻu (a new condo at 728 Ala Moana Blvd with wide ocean views) hawaiihomelistings.com. Also in the pipeline are Ilima and Melia, twin towers to rise above Ward Center mall hawaiihomelistings.com. Collectively, these projects will add several thousand new condo units, many of them luxury or “reserve” (workforce) units, by the late 2020s. Ward Village alone has consistently sold units at $1,200 – $2,000+ per square foot, reflecting strong demand for upscale urban living in Honolulu. The area is also benefitting from infrastructure improvements – notably, a new pedestrian bridge over Ala Moana Boulevard opened in 2025 hawaiihomelistings.com, better connecting the Ward Village condos to Ala Moana Beach Park (a big draw for residents). This wave of development is transforming Kakaʻako into a true live-work-play neighborhood, with new retail, restaurants, and even a planned rail station nearby (Civic Center station in the future Honolulu rail line).

Adjacent to Kakaʻako, the Ala Moana neighborhood is also seeing growth. A highlight is the planned Mandarin Oriental Honolulu, which is a 36-story tower combining a 125-room five-star hotel with 99 ultra-luxury residences (branded as The Residences at Mandarin Oriental). Construction started in 2023 and is expected to complete around 2026–2027 brevitas.com. The units – some priced over $20 million – target high-net-worth buyers and will set a new bar for luxury in Honolulu. Nearby, the iconic Ala Moana Shopping Center is adding a new entertainment complex and possibly a high-rise on its property. A proposed twin-tower project called The Plaza at Ala Moana (on Kona Street) is in the works, and across from the mall, a developer is planning Sky Ala Moana 2, following the success of the first Sky Ala Moana tower. These developments capitalize on the forthcoming Ala Moana rail station, which will be the terminus of Honolulu’s rail transit line by 2031. The promise of rail is encouraging Transit-Oriented Development (TOD) – expect mid-rise and high-rise projects to cluster around stations from Kalihi to Ala Moana in coming years.

Elsewhere on Oʻahu: Outside the urban core, significant development is taking place in West and Central Oʻahu to address housing demand. In Kapolei (the “Second City”), several projects are delivering new housing. The Ho‘opili master-planned community in Ewa is building thousands of homes in phases (single-family, townhomes, and condos) along the new rail line. By 2025, Ho‘opili has added new schools, parks, and commercial centers to support its growing population. Koa Ridge in Central Oʻahu (Waipio area) is another large master plan, eventually bringing ~3,500 homes along with a village center and medical complex. These suburban developments typically include a mix of market-rate and some affordably priced units (though “affordable” is relative in Hawaii). Demand for new homes in these areas has been robust, with lottery systems often used for sales releases.

In terms of resorts and hotels, beyond the Mandarin Oriental, one of the most anticipated is the potential Atlantis Resort at Ko Olina (west Oʻahu). This project has been long discussed – a mega-resort with aquariums and water parks – but as of 2025 it has not broken ground and its status is uncertain. More concrete is the time-share and hotel expansions by existing players: Disney’s Aulani at Ko Olina is adding amenities, and Hilton Hawaiian Village in Waikiki has announced plans for a new tower on its campus. Also, near Waikiki, the Hawaiian Village’s Halekulani Corporation opened the Halepuna Hotel in 2019 (a boutique sister to Halekulani); while not new in 2025, it’s part of the refreshed inventory of hospitality options. Some older condo-hotels in Waikiki (like Ala Moana Hotel Condo, Ilikai) are undergoing renovations to remain competitive. Another interesting development angle is the conversion of certain properties to housing – for example, several smaller Waikiki hotels or apartment buildings have been proposed for conversion into affordable housing for local residents, leveraging government funds (to both increase housing and reduce lower-tier tourist units).

On the public infrastructure side, the big story is Honolulu’s $10+ billion rail transit project (now branded “Skyline”). The first segment of the rail opened in mid-2023 from East Kapolei to Aloha Stadium. The next segments, reaching the airport and into urban Honolulu, are under construction through the late 2020s. This rail line is spurring development around station areas: the City has up-zoned several TOD districts encouraging high-density housing and mixed-use projects near stations such as Kalihi, Iwilei, and Pearlridge. For example, a high-rise project called Kūʻono Marketplace near the Pearlridge station will bring residences and retail. The state is also planning to redevelop the Aloha Stadium site (Halawa) into a mixed-use sports and entertainment district with housing – a project expected to kick off by 2026, including potentially 3,000 new housing units in that area. These are all part of a broader strategy to channel growth into rail-accessible hubs, alleviate traffic, and add housing without sprawl.

In summary, Honolulu’s development pipeline is very active, with a clear bifurcation: luxury urban condos in the core and much-needed family housing on the west side. Community concerns about overdevelopment and strain on infrastructure persist, so each project faces intense scrutiny (for instance, Kakaʻako residents have raised issues about view planes and congestion). But the general trajectory is that Honolulu is building up rather than out, trying to accommodate population and housing needs within a limited land area. By the end of this decade, the cityscape will have visibly changed – new gleaming towers in Kakaʻako and along Ala Moana, new suburban villages in West Oʻahu, and hopefully a rail system connecting them all. Real estate investors and homeowners should watch these development trends closely, as they signal where future growth and value appreciation may concentrate.

Investment Opportunities and Risks

Hawaii’s real estate has long been seen as a safe-haven investment, and 2025 continues to offer opportunities – albeit with some new risks to consider.

Domestic vs. International Buyers: Traditionally, Oʻahu draws significant interest from international buyers (Japanese, Canadian, Korean, Chinese) and mainland U.S. investors, in addition to local buyers. During the pandemic, international buyer activity dropped sharply due to travel restrictions. In 2024–2025, we are seeing a gradual return of foreign buyers, especially as Japan’s tourism resumes. Still, the strong U.S. dollar and Japan’s economic conditions mean the Japanese buyer wave is smaller than in the 1980s boom. Most of the investor activity now comes from the U.S. mainland – e.g., tech wealth from California or institutional funds looking for stable assets. Offshore investment remains crucial, especially in the condo sector: UHERO notes that on neighbor islands a majority of high-end condo buyers are out-of-state uhero.hawaii.edu. On Oʻahu, the share is lower but still substantial (many Waikiki condos and Ko Olina properties are non-local owned). For investors, Honolulu offers an attractive asset: high demand, limited supply, and an international destination appeal.

Yield and Cash Flow Considerations: One risk for investors is low cap rates – Hawaii properties tend to have lower rental yields compared to mainland investments, due to the high purchase prices. A Honolulu residential investment might only yield 3–4% annual rent return on purchase price at today’s rents, which, with rising interest rates, can mean negative cash flow if leveraged. However, many luxury and foreign buyers are cash buyers (especially at the high end) luxurybigisland.com luxurybigisland.com, so they are less sensitive to interest rates and focus on long-term appreciation and asset diversification. Indeed, in the luxury market, cash is king – a trend that will likely continue luxurybigisland.com. For those looking at rental properties, single-family homes in good neighborhoods see constant tenant demand (often from military officers or corporate relocations), and well-managed vacation rentals in resort zones can still be lucrative (Waikiki legal short-term units average high occupancy). There’s also an emerging interest in alternative rentals like renting to remote workers for 3-6 month “workations,” which some investors are exploring.

Development and Value-Add Opportunities: Developers and value-add investors see opportunity in aging building stock. Honolulu has many 1960s–1980s condos and apartments that could be renovated or redeveloped. For example, some walk-up apartments in urban Honolulu could be rebuilt into mid-rises if zoning allows, taking advantage of Bill 7 (a Honolulu incentive for small affordable rental projects). Additionally, with the state now allowing 2 ADUs on single lots hiappleseed.org, an investor could take a single-family property on Oʻahu and add rental cottages to increase income (provided the lot size and infrastructure support it). There’s also interest in distressed hotel-to-apartment conversions – smaller older hotels that may no longer compete well could be converted to workforce housing (with government support). An instance of this is the conversion of a former Waikiki hotel into Hale Kalele (affordable housing for families). Such creative repositionings could yield good returns while addressing housing needs.

Risks – Economic and Environmental: On the risk side, macroeconomic factors pose the biggest threat. A potential U.S. recession in late 2025 or 2026 could slow demand – fewer wealthy expats buying second homes, cautious local buyers, and possibly fewer tourists (hitting the hospitality sector). This could put downward pressure on both prices and rents, especially in the higher price tiers or discretionary second-home market. However, Hawaii historically often outperforms during national recessions in terms of housing values, thanks to the steady inflow of people who want to live in or own a piece of paradise. Another risk is interest rates: if rates remain high or go higher, affordability for locals stays very strained – that could reduce sales volume further and eventually cap price growth. We saw in 2022–2023 how a jump to ~7% mortgages cooled the market quickly.

Regulatory risk is another factor. Hawaii’s policymakers are increasingly trying measures to tame the real estate market for locals’ benefit – examples include the discussed empty homes tax (which could impose a surcharge on properties vacant more than half the year) honolulucitycouncil.org, or even potentially rent control (not currently on the table, but tenant groups have raised it conceptually). While Hawaii has traditionally been pro-property rights, the housing crisis is prompting bold ideas. Any such measures could impact investment returns or strategies (e.g., an empty homes tax might nudge some owners to sell or rent out units, affecting supply). Investors should keep abreast of policy changes at both the county and state level.

Climate and Insurance: A growing concern is climate change and natural disaster risk, which is very relevant in island real estate. In 2023 the Lahaina wildfire on Maui was a wake-up call on wildfire and climate risks even in Hawaii. Sea level rise is a slow-moving issue that could affect low-lying neighborhoods like Waikiki, Mapunapuna, and Ewa Beach in coming decades. Already, King Tide flooding occasionally affects some Honolulu streets. This could lead to increased insurance costs and adaptation expenses. In fact, insurance premiums in Hawaii have been rising ~15% annually for coastal properties agencyhawaii.com agencyhawaii.com. Some insurers are tightening coverage for hurricane/wind or requiring higher deductibles. Investors, especially those buying near the ocean, must factor in these costs and potentially retrofit properties for resilience (roof reinforcements, elevating structures, etc.). The good news is Hawaii is proactive – for instance, new buildings have strong hurricane standards, and there’s talk of seawalls and pumps in areas like Waikiki. But long term, climate risk is something that could impact property values in the most vulnerable locations and should be part of any risk assessment.

Outlook for Investors: Despite high entry prices, Hawaii real estate remains a desirable long-term investment. It offers portfolio diversification and typically steady appreciation; as the saying goes, “they aren’t making any more land in Hawaii.” Many investors see it as a generational hold or a future retirement plan (buy now, rent out, retire later in the home). With forecasts calling for moderate growth rather than a crash, even those who buy in 2025 at peak prices have a decent prospect of values being higher by 2030. The rental market provides a backstop – if a unit can’t sell for the price you want, chances are you can rent it and cover costs given Hawaii’s housing demand. One key for new investors is to choose segments wisely. Ultra-luxury condos can be volatile (depend on foreign buyers) and have high carrying costs (fees/taxes), whereas mid-range housing (think a condo under $600k or a house under $1M in a good school district) has a deep local buyer pool and rental pool, hence perhaps lower risk. Commercial investments like small retail centers or industrial warehouses are also attractive if one can find them, since those sectors have tight supply. Overall, Hawaii offers strong long-term fundamentals – an attractive lifestyle, limited land, and millions who want to live/visit – but investors should be mindful of shorter-term headwinds like interest rates, regulatory shifts, and ensuring their strategy aligns with Hawaii’s unique market dynamics.

Zoning and Government Policy Updates

Government policy plays a crucial role in Honolulu’s real estate market, especially now as leaders grapple with high housing costs and development pressures. Here are some key recent zoning and policy updates affecting real estate:

  • Accessory Dwelling Units (ADUs) Expansion: In 2024, the state legislature passed SB 3202 (Act 39), a groundbreaking law that allows up to two ADUs on a single residential lot statewide hiappleseed.org hiappleseed.org. Prior to this, Honolulu allowed one ADU (granny flat) on certain lots; now owners could potentially add two additional small dwellings if infrastructure permits. This effectively upzones many single-family neighborhoods to accommodate more housing. However, Honolulu’s City Council raised concerns about infrastructure strain and tried to push back (local officials don’t like the state overruling county zoning). The law retains county approval authority case-by-case, so implementation is ongoing. If embraced, this could gradually increase rental supply and multi-generational housing options island-wide.
  • Commercial-to-Residential Conversions: Alongside ADUs, HB 2090 (Act 37, 2024) was passed to allow properties zoned for commercial use to be used for residential purposes hiappleseed.org. This is aimed squarely at empty office buildings and strip malls – making it easier for an owner to turn, say, a vacant commercial building into apartments or condos. Honolulu will likely identify candidate sites (perhaps parts of Downtown, Iwilei, Kaimuki, etc.) where this can help add housing. Zoning codes will need adjustments to handle parking, unit size, etc., but this policy signals a creative approach to add housing and enliven underused areas.
  • Affordable Housing Incentives (Honolulu Bill 3): At the county level, Honolulu’s Mayor Rick Blangiardi signed Bill 3 (2024) which strengthens incentives for developing affordable rental housing sachihawaii.com. It expands property tax exemptions and waives certain fees for qualified projects (those that set aside units for low-income renters). The bill also streamlines permit processing for these projects (targeting 90-day turnarounds). The goal is to encourage private developers to build more workforce housing. Given high construction costs in Hawaii, these incentives are seen as necessary to make projects pencil out. As a result, a few new low-income and “gap income” rental projects have been announced for urban Honolulu and West Oʻahu, often through public-private partnerships.
  • “Empty Homes” Tax Proposal: In 2024, Honolulu Councilmembers introduced Bill 46 to establish an Empty Homes Tax – a fee on residential properties that are vacant for more than half the year honolulucitycouncil.org. This is modeled after Vancouver’s tax, aiming to nudge investors who leave units empty to rent them out, or else pay a tax that funds housing programs. The idea is controversial among property owners, but advocates say Honolulu’s ~34,000 vacant housing units (some are vacation homes or investments) is a resource to tap for local housing. As of 2025, this measure is still under debate; if eventually passed, it could lightly increase long-term rental supply and generate revenue for affordable housing. It’s a sign that Hawaii is considering stronger measures to address housing vacancies and speculation.
  • Short-Term Rental Regulations: A major policy change was Ordinance 22-7 (Bill 41) passed in 2022, which took full effect in 2023. This ordinance prohibits short-term rentals (stays under 90 days) in most of Oʻahu’s residential areas, except designated resort zones (like parts of Waikiki, Ko Olina, Turtle Bay). It also increased enforcement and fines for illegal vacation rentals. This had an immediate impact: thousands of Airbnb/VRBO units shut down or converted to long-term rentals. The ordinance was challenged in court but largely upheld (with a tweak that allowed 30-day rentals while litigation was pending, now likely moving to 90 days soon). The policy intent is to return housing to locals and reduce visitor impact on neighborhoods. For real estate, it means properties outside resort areas have lost short-term rental income potential, which could soften values of condos or homes that were marketed as vacation rentals. Conversely, properties inside resort zones (like condotels in Waikiki) became more valuable as they hold a near-monopoly on legal vacation rentals. The city continues active enforcement, and this policy appears set to stay, reshaping the investment calculus for many residential properties.
  • Zoning and Upzoning Initiatives: The City and County of Honolulu is updating its Oʻahu General Plan and neighborhood TOD plans. Areas around the new rail stations have seen zoning changes to higher density. For example, around Kalihi and Iwilei stations, the city is encouraging mid-rise apartments and mixed-use. In neighborhoods like Ala Moana, a special Ala Moana TOD Plan allows high rises in exchange for community benefits. Kakaʻako, which is under Hawaii Community Development Authority (HCDA) jurisdiction, continues to approve new towers per its master plan. Meanwhile, some community pushback occurs in areas like Windward Oʻahu or the North Shore where residents resist any zoning changes that could increase development. In East Honolulu, for instance, there was a proposal to allow some apartments in certain commercial zones (to create housing), but it faced resistance. The pattern is: urban core and West Oʻahu are slated for growth, while rural and established suburban areas stay protected by zoning. As housing needs grow, expect more debates on how to tweak zoning – including possibly raising height limits or reducing parking requirements – especially with the climate of housing shortage urgency.
  • Infrastructure and Climate Policies: In 2025, the state and city are also integrating climate resiliency into development rules. For instance, new shoreline setback rules (Act 16, 2020) require buildings to be further from the coast to account for sea level rise. Honolulu is planning infrastructure upgrades like sewer improvements and a stormwater utility fee – these can affect development timelines and costs. There’s also the state’s push for sustainable tourism: a “Green Fee” bill was introduced to charge visitors for environmental conservation, and though it’s not directly a real estate policy, the recognition of tourism impacts might influence future resort development approvals or require more mitigations from developers.

In summary, Honolulu’s policy landscape is actively evolving to address housing affordability and sustainability. The trend is towards encouraging more housing (through upzoning and incentives) while managing the impacts of tourism and absentee ownership. For stakeholders in real estate, staying informed on these policy changes is crucial – they can significantly alter property values and permitted uses. Thus far, the measures like ADU expansion and TOD upzoning signal a pro-development stance to increase supply, whereas things like the short-term rental ban and potential vacancy tax signal a stance to prioritize local housing usage. The balance of these will shape Honolulu’s real estate market in the years ahead.

Top-Performing & Emerging Neighborhoods

Honolulu’s real estate landscape is a tapestry of diverse neighborhoods, each with its own trends. Here are some of the top-performing and up-and-coming areas as of 2025:

  • Kakaʻako/Ward & Ala Moana (Metro Honolulu): As mentioned, Kakaʻako is booming with new luxury condos, making it the most dynamic neighborhood in terms of development. It has quickly become a premier address for high-end buyers who want urban convenience – akin to Honolulu’s version of Manhattan or downtown Miami living. Condos in new buildings like Waiea, Anaha (completed a few years ago), and the upcoming Kalae regularly sell for several million dollars. The area’s transformation (new grocery stores, parks, art installations) has made it very desirable. As a result, Kakaʻako has seen strong price appreciation over the past decade and continues to outperform many other neighborhoods in both price growth and volume of sales. Adjacent Ala Moana, with slightly older condos and the shopping center, is also seeing renewed interest, especially with the rail line eventually ending there. Investment outlook: Positive, though largely limited to condo market; it’s a haven for wealthier buyers and investors, with some units used as pieds-à-terre or long-term rentals targeting affluent tenants.
  • Waikiki: Waikiki is Honolulu’s tourist heart and a unique condo market. It has a mix of condotels, residential condos, and high-end hotel residences (like the Ritz-Carlton Waikiki). Waikiki real estate performed well in the pre-pandemic era due to vacation rental income potential. With the new rules, Waikiki is one of the few places short-term rentals are still legal, so certain buildings (those zoned resort) remain investment hotspots. Property performance here varies: luxury condos like Trump Tower Waikiki or Ritz-Carlton have held values strongly (with international buyers coveting them), whereas some older walk-up apartments have stagnated. Waikiki’s appeal endures – it’s walking distance to famous beaches, dining, and entertainment. As tourism bounces back, rental yields for legal vacation condos here are rising again. Thus, Waikiki remains an “oldie but goodie” for investors, though prospective buyers need to be savvy about which buildings allow what uses.
  • Kahala & Diamond Head (East Honolulu): This is Honolulu’s classic luxury residential enclave – known for its beachfront estates and quiet streets. Kahala in particular is like Oʻahu’s Beverly Hills. It saw a surge of ultra-luxury sales in the past few years (with several transactions over $10M, and the record $65M sale in 2025 hicentral.com truly underscoring its elite status). Kahala’s market is very supply-constrained; only a handful of homes trade each year. Prices are at record highs (median often $2–4M for non-beachfront homes, beachfront easily $10M+). Diamond Head and Black Point areas similarly are top-tier. These neighborhoods perform steadily – they rarely go “down” in value significantly, even in downturns, because of their cachet and scarcity. For investors, these are typically long-term holds or legacy purchases (rental yields are low since one can’t rent a $5M Kahala house for proportionally high rent, but appreciation and prestige drive value). We classify them as top-performing in terms of holding value and commanding premium prices, though not “emerging” since they’re well-established.
  • Hawaiʻi Kai (East Honolulu): A suburban coastal community, Hawaii Kai consistently ranks as one of the most desirable family areas. Good schools, marina-front homes, and shopping amenities make it popular among local professionals and military brass. It’s “performing” in the sense that supply is limited (it’s a finite planned area) and demand is steady, so prices inch up consistently. Median single-family homes here are around $1.3–1.5M now, and townhomes in the $700K–$1M range. Investors like Hawaii Kai for long-term tenants (it’s a bit far from town, so less attractive for tourists, more so for residents). No big new development is slated (as Hawaii Kai is essentially built-out), which bodes well for existing property values.
  • Mililani (Central Oʻahu): Mililani, including Mililani Mauka, is a master-planned community known for its family-friendly vibe, strong schools, and relative affordability (compared to Honolulu proper). It has been a top-selling neighborhood by volume for years – many military families buy or rent here due to its proximity to bases. The market in Mililani is robust; even in 2023’s slowdown, Mililani homes sold well if priced correctly. The area is a bit further from the city, but offers a cooler climate (upland) and suburban comfort. It’s not exactly “emerging” (it’s been popular since the 1980s), but it is consistently one of Oʻahu’s best in terms of demand. With new employment centers like Konēwai (Honolulu Authority rail operations center) not far, and eventual rail not too far off (Honolulu rail’s second phase goes to near Mililani’s edge at Leeward Community College/Pearl Highlands with park-and-ride), connectivity will improve. Expect Mililani to continue as a top performer in the mid-range market, appealing to both local and mainland buyers seeking a “real neighborhood” feel.
  • Ewa Plain & Kapolei (West Oʻahu): This region is Oʻahu’s growth frontier. In the past decade, tens of thousands of people have moved here for new housing. Kapolei, in particular, is marketed as Oʻahu’s “Second City” with its own downtown, government offices, shopping centers, and the rail line. For a while, investors shied away due to the long commute to town, but with more jobs and the partial rail opening, interest has picked up. Home prices in Kapolei/Ewa are lower than Honolulu (median house ~$900K in 2025 vs $1.1M island-wide), making it attractive for first-time buyers and investors looking for newer construction. Neighborhoods like Ocean Pointe, Hoakalei, and Kapolei-Mehana have lots of new builds and have been top sellers. The area’s one caution: as seen in inventory data, Ewa had a surge of listings in 2024–25 hicentral.com, suggesting a bit of a glut as many similar homes hit market simultaneously. But long-term, as Oʻahu’s population grows (or even just redistributes), West Oʻahu is where most new supply will be – so it’s “emerging” in the sense of becoming ever more significant. For investors, single-family rentals here can do well with families (especially military with base nearby at Schofield and Hickam via H-1/H-2). Also, Kapolei’s growing retail and possibly a future university campus (UH West Oʻahu is expanding) mean it’s turning into a self-sufficient city which should drive demand.
  • Kalihi–Palama & Iwilei (Urban Honolulu): These are older neighborhoods just west of downtown that historically have been working-class and industrial areas. They are emerging in that the City has big plans for them under transit-oriented development (the rail line runs through here with multiple stations). There’s talk of mixed-use projects, affordable housing, and even relocating Oʻahu Community Correctional Center (the prison) to free up land for development in Kalihi. Some developers are assembling parcels in these areas betting on an upswing. Current property values there are relatively lower, so there’s potential for appreciation if redevelopment happens. It’s a longer-term play, with infrastructure upgrades needed, but by 2030 we could see Kalihi transform significantly (much like Kakaʻako did in the 2010s).
  • North Shore & Windward “Lifestyle” Areas: Oʻahu’s North Shore (Haleʻiwa, Pupukea) and Windward coast (Kailua, Kāneʻohe) remain highly desirable for their lifestyle – surf towns and tranquil communities. Kailua in particular saw huge price jumps in the pandemic (remote workers paradise). Those markets have cooled slightly (fewer bidding wars now), but they’re still among Oʻahu’s priciest outside Honolulu. Kailua’s median house price is routinely over $1.3M, and inventory remains tight because no new development can really happen (community resistance is strong). These areas are “top-performing” in terms of long-term desirability – properties hold value and often only go up. They’re not “emerging” (they’ve long been prime) but are worth noting as they often outpace general market trends (Kailua’s price growth outpaced Honolulu’s average in many recent years).

In conclusion, Honolulu’s real estate winners include both the new urban hotspots (Kakaʻako) and the established luxury and family locales (Kahala, Mililani, etc.). For someone looking to invest or move, the choices range from ultra-modern condos to suburban homes, each with different risk/reward profiles. It’s also evident that transit and development plans are elevating certain neighborhoods (rail-connected areas, West Oʻahu communities) as the next places to watch. Keeping an eye on infrastructure (like rail, new highways) and where government or developers are focusing efforts can clue one into the “emerging” neighborhoods of tomorrow.

Expert Forecasts and Projections Through 2030

What lies ahead for Honolulu’s real estate market? Forecasts through the rest of the 2020s suggest a period of modest growth, underpinned by Hawaii’s perennial supply-demand imbalance. Here are some key projections and expert expectations:

  • Home Price Trajectory: After the dizzying climb of the early 2020s (and a brief correction in 2023), Honolulu home prices are forecast to grow at a moderate pace through 2030. Several housing analysts predict Oʻahu’s median home prices will rise on the order of 1% to 3% per year in the latter half of the decade luxurybigisland.com luxurybigisland.com. This would put the median single-family price in Honolulu County somewhere around $1.3M–$1.4M by 2030 (from ~$1.1M in 2025), and condo medians perhaps around $550–$600K (from $515K in 2024 hicentral.com). These are of course estimates – actual outcomes will depend on interest rates and economic forces – but the consensus is slow growth rather than another boom. One reason: interest rates are not expected to return to the ultra-low levels that fueled the 2021 spike, so buyer power will be tempered. However, limited inventory and high construction costs act as a floor under prices. Even if demand softens, Hawaii’s housing shortage prevents any glut. In fact, the Hawaii Department of Business, Economic Development & Tourism (DBEDT) projects that Honolulu County needs roughly 13,500 to 24,000 new housing units by 2035 (depending on population trends) to meet demand files.hawaii.gov files.hawaii.gov. This equates to about 1,300–2,400 units per year needed – a construction pace we historically struggle to meet. This shortfall suggests that housing will remain scarce, propping up values.
  • Rents and Yield Outlook: Rental rates in Honolulu are likely to keep climbing gradually, especially if home buying remains out of reach for many. By 2030, a one-bedroom that rents for $2,300 now might rent for $2,700–$2,800 (assuming ~2% annual increases). While not a huge jump, it compounds the affordability issue. The Honolulu Board of Realtors and UHERO expect vacancy rates to stay low, and any new supply (from ADUs or new rentals) will be absorbed by pent-up demand. So from an investor’s perspective, rental properties should continue to provide stable income, and possibly slightly better cap rates if one buys at today’s prices and locks in a rate (should interest rates stabilize or drop in a few years, refinancing could improve cash flow). Another factor: by 2030 the large millennial cohort will be deeper into family-raising years, which could increase household formation (good for housing demand) – albeit offset by some local millennials leaving Hawaii due to costs. On net, rent growth will track inflation if not a bit higher, and Honolulu will likely remain among the top 5 most expensive U.S. rental markets.
  • Commercial Sector Forecasts: Office space demand is expected to remain stable or slightly declining as hybrid work persists. Colliers forecasts Honolulu office vacancy may hover in the low-to-mid teens in the coming years – much better than mainland cities, but not tightening dramatically either. We may see an equilibrium with some older buildings taken offline for conversion and companies optimizing their footprint. Retail real estate should stay strong as long as tourism and local consumer spending remain healthy. Hawaii’s retail rents could rise modestly and vacancy stay low (~5% or under) through 2030, barring a major recession. Retail development will be mostly focused on neighborhood centers in growth areas (West Oʻahu, maybe new retail in TOD projects). Industrial is almost maxed out – even by 2030, unless a new industrial park is developed (which would require political will to rezone land), vacancy will remain ultra-low. So industrial rents will likely be significantly higher by 2030 (inflation plus scarcity could easily push them 20-30% above today’s levels). For hotels, the forecast is bullish: by 2030 Hawaii tourism is expected to fully recover and even grow beyond 2019 records. The state’s official forecast expects visitor arrivals to increase a few percent each year, surpassing 10 million annually later in the decade. That will keep hotel occupancy high and possibly warrant new hotel projects (or expansion of existing ones). Hotel values should appreciate accordingly, especially as institutional investors increasingly view leisure destinations like Hawaii as stable bets.
  • Investor Sentiment: A survey of local real estate experts and the Pacific Asia Center for Entrepreneurship indicates general optimism that Hawaii real estate will outperform inflation but not see bubble-like growth in the next 5 years. Hawaii’s economy is on a modest growth trajectory (~1.5–2% GDP growth) brevitas.com, which supports real estate but doesn’t indicate overheating. No crash is anticipated – notably, the factors that often precede crashes (oversupply, speculative leverage, etc.) are largely absent in Hawaii right now. Lending standards remain solid, and construction is constrained. Additionally, many owners have low mortgage rates locked in, so they aren’t forced sellers. One could see a scenario of a plateau if interest rates stay high: sales slow and prices flatten for a few years (as arguably happened 2018–2019). But significant price declines seem unlikely unless a severe external shock hits (e.g., geopolitical crisis that halts travel, or a huge interest rate spike beyond anything expected).
  • Historical Perspective: Historically, Hawaii’s real estate moves in cycles roughly parallel to the U.S. but with milder swings (aside from the 1990s Japan-bubble burst which led to a decade-long slump in Hawaii). For instance, after the 2008 global financial crisis, Honolulu prices dipped only around 10–15% and recovered by 2013, whereas many U.S. markets fell 30%+. In the 1990s, Hawaii did have a prolonged downturn (~1991–2000 values stagnated) due to an exodus of Japanese investment. Could something similar happen by 2030? Japan’s influence today is smaller, and mainland U.S. demand is more crucial. Unless we see a major long-term decline in desirability (which could only happen if, say, climate change severely impacts the islands or if remote work drastically reduces the desire for second-home ownership here), Honolulu real estate should avoid drastic swings. If anything, climate and sustainability might start factoring into value by 2030: properties in safe zones (elevated from flood zones) might command a premium over those in vulnerable coastal areas as awareness increases. But these effects will likely be gradual.
  • Population & Housing Demand: Hawaii’s population projections are relatively flat – the state has been around 1.42–1.45 million people for the past 5 years. DBEDT’s forecast suggests slow growth going forward (perhaps reaching ~1.5 million by 2030 statewide, mainly on Oʻahu) brevitas.com. Even with flat population, Hawaii has a housing unit deficit because household sizes are shrinking and many local young adults live with parents due to lack of housing. Thus, even stable population creates new housing demand (through household formation). The housing demand study for 2025-2035 indicates Honolulu needs on average 1,874 new units per year (midpoint of scenarios) files.hawaii.gov files.hawaii.gov, which is above what we’ve been building. If policies succeed in increasing construction (say we start building 1,500 units/year versus ~1,000 currently), that could slowly ease price pressure. But if not, the squeeze continues. The likely scenario is somewhere in between – some increase in housing production thanks to new laws, but not a flood. Therefore, by 2030 we expect Honolulu will still be a high-priced, supply-constrained market, just hopefully with a bit more inventory and options than today.

Bottom line: Through 2030, experts project continued stability and gradual growth for Honolulu real estate. It’s a market characterized by resilience – buffered by limited land and global appeal. While we may not see double-digit annual gains like early 2022, owners can reasonably expect their properties to appreciate modestly over time, and investors can expect consistent demand for rental and commercial spaces. For policymakers, the challenge will be to ensure this growth is managed in a way that benefits residents (more affordable housing) while maintaining the market’s strength. If current trends hold, by 2030 Honolulu will remain one of the nation’s most desirable (and expensive) places to live, with its real estate carrying premium values that reflect its unique island economy and lifestyle. As one local economist put it, Hawaii’s real estate isn’t a rollercoaster – it’s more like a steady climb up Diamond Head: sometimes steep, sometimes flat, but always with a strong foundation beneath it. luxurybigisland.com luxurybigisland.com

Sources:

Roman Bednarski

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