Hawaii Explores New Affordable Housing Model with 99-Year Leasehold Condos

Hawaii is testing an innovative approach to address its housing crisis by developing a high-rise condominium project with 99-year leasehold units, designed to provide more affordable homeownership options for local residents. The proposed $200 million tower in Honolulu would offer 360 units, with prices ranging from $456,400 for a one-bedroom to $862,600 for a four-bedroom unit.

Led by the Hawaii Community Development Authority (HCDA), this state-backed initiative follows a model similar to Singapore’s government-run housing program. The goal is to make homeownership more attainable without long-term costs to taxpayers, as revenue from unit sales is expected to cover development expenses. At the end of the lease term, ownership of the property would revert to the state.

While HCDA has secured $1.5 million for preliminary planning, the agency is now seeking an additional $30 million in state funding to move forward. The project's feasibility depends on sufficient buyer interest and the ability to secure financing. Ko Laila LLC, the selected developer, is currently evaluating costs and potential sites, including Kakaako and areas along the Skyline rail route.

To qualify, buyers must meet income restrictions, with eligibility capped at 140% of Honolulu’s median income (around $156,000 for couples and $195,000 for a family of four). The state hopes to make units even more accessible for households earning the median income, roughly $111,000 for a couple and $139,000 for a family of four.

A 2021 study suggested strong demand for leasehold condos, particularly for two-bedroom units priced at $400,000—far below the cost of comparable fee-simple units. However, financing remains a challenge, as private lenders may be reluctant to invest without additional state support.

If enough buyer interest is confirmed and funding secured, this pilot project could serve as a blueprint for future affordable housing developments in Hawaii. However, if demand or financing falls short, the initiative may not proceed beyond its planning phase.

What are your thoughts?

Source: Star Advertiser 2/5/25