Over the past year, buyers have poured money into luxury real estate in Hawaii, which for many became a tropical haven during the pandemic. There were 64 sales over $10 million statewide during the first nine months of 2021, more than six times the 10 sold during the same period of 2020, according to brokerage Hawaii Life. With multiple sales above $40 million—previously, a rare benchmark—the aggregate value of deals above $10 million this year surpassed $1 billion, up from $150 million in 2020.

To top it all off, in a deal that captured the market frenzy, Amazon founder Jeff Bezos dropped $78 million for a secluded 14-acre compound in Maui, which was previously owned by Douglas Schatz, an energy executive from Colorado. The off-market deal made headlines around the world but never hit public records. Neither Mr. Bezos nor Mr. Schatz responded to requests for comment.

“It’s like nothing anyone has ever seen before,” said Matthew Beall, CEO of Hawaii Life. Historically, Hawaii has seen only one or two home sales above $40 million per decade, he said, but in 2021 there were at least five. “It’s almost like a hot nightclub. It’s not can you get a deal, it’s can you get behind the rope and to the door.”

Hawaii has been a magnet for celebrities and tech billionaires for years, and the trend has picked up in recent months. In addition to Mr. Bezos, Meta’s Mark Zuckerberg and his wife, Priscilla Chan —who bought 700 acres of beachside property on Kauai for more than $100 million in 2014—shelled out another $53 million in March for 600 more acres on the island, records show. In June, EarthLink founder Sky Dayton and his wife, the author Arwen Elys Dayton, paid $41.75 million for neighboring properties on the North Shore of Kauai, according to records. A month later, a San Francisco-based limited liability company paid $43 million to buy the 22-acre estate of the late Microsoft co-founder Paul Allen.

David Richardson of Hawaii Life represented the buyer of a $42 million home on Maui that sold off-market in October. Mr. Richardson, who declined to identify the buyer, said prices have escalated across all price points. “I’ve been doing this for 40-plus years and I’ve never been in a market like this,” he said. “You put a number out and within 24 hours, unless it’s really stupid, you have four or five offers.”

Mr. Beall said workers have flocked to Hawaii since becoming untethered from the office during Covid, drawn by the weather, lifestyle and relatively low rates of infection.

An additional attraction is that Hawaii is on American soil and has multiple daily flights to the West Coast, said Ms. Perry, who said airports have become clogged with private jets. “When life changed and you could work anywhere in the world, and you were concerned for your personal health and safety, people came to Hawaii,” she said. Some people who had vacation homes in Hawaii are trading up, she said, purchasing larger properties with the intention of staying there for months, not weeks, at a time. Some of her clients work mainland hours and then have the afternoons free to hike, snorkel and surf.

Robert Reish, 71, a retired military and airline pilot who invests in real estate, said Hawaii’s weather and slower pace of life prompted him to relocate there from California, buying an $11 million home on the south shore of Oahu. “You’re always outdoors and active, doing things, versus trying to stay warm when it’s 20 below,” he said. To top it off, the people are friendly. “It’s the Aloha State,” he said. “They say hi and mean it.”

Strong demand at the high end of the market has prompted families to consider selling properties they have owned for generations, while buyers consolidate parcels to create large spreads. Many homes are also trading privately without ever being publicly listed for sale. (To get deals done, agents rely on the so-called coconut wireless, or word-of-mouth.) “Discretion sales,” as off-market deals are sometimes called, are particularly common in enclaves with limited numbers of beachfront homes, where demand is so high sellers can name their price.

Mr. Bezos’ property, for example, is at the end of Makena Road in Maui, where there are roughly 20 beachfront homes running up the coast, said Paul Ferrall, an agent at Coldwell Banker Island Properties, who wasn’t involved in the sale. “If you only have 20 beachfront homes and somebody is worth $2 billion—or like Bezos, $200 billion—you’ll pay whatever it takes to get a property, even if it’s not on the market,” he said.

On the North Shore of Kauai, there are about 50 beachfront homes on Weke Road overlooking Hanalei Bay, which has 2 miles of sandy beach surrounded by mountains. The town of Hanalei is known for art galleries and farmers markets. “People love that there’s not a chain store on the North Shore,” said Neal Norman of Hawaii Life.

In March, Mr. Norman represented “The Bachelor” creator Mike Fleiss in the sale of his Kauai home for nearly $30 million. Mr. Norman pointed to the home’s appreciation over the years: It sold for $13.375 million in 2011 and $16.2 million in 2016.

Mr. Fleiss didn’t respond to requests for comment.

Local agents said some of Hawaii’s most expensive homes are in or around resort communities. “The market is bigger than most people would ever imagine,” said Mike Meldman, founder and chairman of Discovery Land Co., who has been developing luxury real estate in Hawaii since the early 2000s. He said $80 million and $100 million homes have been built over the years.

Discovery’s projects include Kūkio, an oceanfront resort community on the Big Island, and Mākena Golf & Beach Club on Maui. In April, Discovery launched sales at a new community on Kauai called North Shore Preserve. The company is currently selling vacant lots in Hawaii for $5 million to $20 million. “Young tech people are coming out to Kauai because of the surf,” Mr. Meldman said.

At Kūkio, a home on roughly an acre of land with ocean views sold for $34 million this year before it was officially on the market. The seller was Sally Lucas, widow of Don Lucas, who owned a chain of car dealerships, records show.

Their son Scott Lucas, 61, said his parents paid $10 million for the land in 2001 and put another $25 million into construction. “It was a vision they had together,” he said. After his father died in 2017, he said his mother began thinking about selling. Mrs. Lucas, who lives in Pebble Beach, Calif., is 85. “When you’re on the Big Island, you’re a long way from a hospital,” said Scott Lucas, who described that part of the Big Island as fairly rural, “hence the beauty.” Plus, he said, “obviously this was a good time to sell.”

The buyer was William McMorrow, CEO of real-estate investment company Kennedy Wilson, which is developing Kohanaiki, a club community on the Big Island, records show. Mr. McMorrow didn’t respond to requests for comment.

Historically, buyers from Japan, Canada and California have flocked to Hawaii, but over the past year there has been an influx of buyers from around the United States, who are taking advantage of the ability to work from anywhere, agents said. Many are coming from the finance and tech world, and see prime Hawaii real estate as a hedge against the stock market. Still, with many domestic buyers scooping up property, local real-estate agents said there has been a noticeable void of foreign purchasers.

In May, a 28-acre property in Kauai tied to Russian billionaire Dmitry Rybolovlev and his daughter Ekaterina Rybolovleva sold for $27.525 million, records show. Listing agent Roni Marley of Compass said the family sold because they couldn’t enter the country due to Covid restrictions.

For some longtime owners, rising property taxes have become an impetus to sell.

That was the case for Geoffrey Avery, whose family has owned beachfront property on Weke Road in Kauai for over a century. In 1974, Mr. Avery built a roughly 1,500-square-foot beach cottage on one of the family’s parcels overlooking Hanalei Bay. In December, after Mr. Avery’s property taxes went from around $18,200 in 2011 to more than $140,000 in 2021, the 75-year-old retired pilot sold the house, on about an acre, to a neighbor for $26.6 million.

Mr. Avery, who used the house as a vacation rental, said he never had trouble keeping it occupied, but tax increases increasingly left him with little profit. “It’s become a billionaire’s playground over there and I don’t necessarily dislike that, but I’m not in that category,” he said. “It’s a losing game.”

In recent weeks, local real-estate agents said deal flow has slowed due to limited inventory. “People are knocking on sellers’ doors and saying, ‘What would you consider?’” said Ms. Marley.

Agent Annie Kwock sold a nearly $25 million property on Oahu in July. She said she has other clients who have been offered $40 million for their home, which isn’t on the market. Still, she said, “they’re not selling.”

Source: THE WALL STREET JOURNAL, December 22, 2021