The Wall Street Journal

The Hawaiian island has become a major destination for primary and secondary homeowners during the coronavirus pandemic.

By J.S. Marcus

Six months into the Covid pandemic, Cynthia Cook was making dinner for her family in Northern California while her husband, John Cook, planned a getaway to Kauai, the northernmost of Hawaii’s major islands. While searching for short-term rentals online, her husband noticed a listing that also was for sale.

“He came to me and said, ‘We’re going to buy this house,’ ” she recalls.

Ms. Cook, 46, a former commercial real-estate broker, and her husband, 51, a lawyer, had considered looking for a new home in the suburbs north of San Francisco, but were reluctant to test their luck in a seller’s market, where all-cash deals and multiple bidders had become the rule.

“I looked at him,” says Ms. Cook, “And I said, ‘OK, great, when are we leaving?’ ”

The Cooks made an offer of $1.8 million, sight unseen, on a furnished three-bedroom, three-bathroom bungalow located on Kauai’s North Shore, which is known for its verdant mountains and beautiful beaches. The 2,200-square-foot house, with a great room that opens to the outdoors, is on a ¼-acre lot that is a five-minute drive from the ocean. The couple and their two boys, now 4 and 5 years old, moved in time for Thanksgiving.

These days, rainy Kauai has a red-hot real-estate market. With a rustic vibe, balmy temperatures and dramatic scenery, Kauai has settled in as the state’s prime destination for luxury-minded homeowners, attracting the likes of Facebook’s Mark Zuckerberg. Mr. Zuckerberg and his wife, Priscilla Chan, have a property on the northeast of the island comprising about 1,400 contiguous acres, including nearly 600 acres added in March, according to a family spokesman.

Luxury properties tend to start at $3 million on Kauai, which has 72,000 permanent residents. With only 3% of the island’s 550 square miles open to development, housing stock in all price categories is scarce. The pandemic has only added to the demand for primary and secondary homes, particularly by house hunters from California.

In 2003, Canadian entrepreneur Brent Naylor, now 75, and his wife, Gayle Naylor, 74, bought an empty 4/5th-acre lot perched above Hanalei for $1.6 million. They then spent about $18 million to build an 8,200-square-foot, four-bedroom house, with an expansive veranda, known as a lanai in Hawaii, for living and dining. Their lanai has an outdoor kitchen with a gleaming onyx bar. Inside, a 1,200-square-foot master suite has a fireplace and a private terrace.

The couple—who also have homes in Vancouver, British Columbia; Palm Desert, Calif.; and Gainesville, Fla.—have put the property on the market at $22.75 million.

Mr. Naylor, who founded a publishing conglomerate, has been traveling to Hawaii for nearly 50 years. He first fell in love with Kauai’s North Shore without knowing it, he says, when, as a teenager, he saw the 1958 film version of the Rodgers and Hammerstein musical “South Pacific,” which used Kauai as a World War II-era location. During a visit to Hawaii in his 20s, he learned of Kauai’s connection to the film and promptly visited the island, buying his first Kauai property in 1979. He and his wife relocated to the island in the late 1980s. Now that they are selling, their plan is to travel more in their new private jet.

Like many North Shore homeowners, Mr. Naylor regards the rain as a blessing. Rain showers are followed by dozens of waterfalls from jungle-covered mountains, followed by rainbows.

Matthew G. Beall, the Kauai-based CEO and principal broker for the Hawai’i Life real-estate company, says the island’s residential sales above $3 million surged to 38 last year from 23 in 2019. He says the top 2020 sale on the island—and in all of Hawaii—was a 1.7-acre waterfront compound on the North Shore’s Hanalei Bay.

Cradled by mountains, and subject to frequent showers, Hanalei Bay also is known for scenic beaches, lush taro fields, bursts of sunshine and extravagant rainbows. The compound has eight bedrooms and 10 bathrooms spread across three structures. It sold for $36.7 million in April 2020 in an all-cash deal. The agency declined to identify the buyer.

More home buyers are making pandemic-era offers without a viewing, says Neal Norman, director of Hawai’i Life’s luxury platform, who was the agent on the Hanalei sale.

In 2020, Mr. Norman says, he handled some 30 residential sales, averaging about $10 million, and six were sold sight unseen. By comparison, he says, in his previous 30 years as an agent, he sold only one listing without a viewing.

Dominated by an inactive volcano, near one of the state’s rainiest spots, Kauai has a craggy perimeter where just about everyone lives. At the shoreline, the island has a steady climate of about 80 degrees, says Kauai geologist Chuck Blay. Though rainfall near the center at Mount Waialeale, more than 5,000 feet above sea level, currently averages about 360 inches a year, it is closer to 80 inches a year near Hanalei, says Kevin Kodama, of the National Weather Service’s Honolulu Forecast Office. On the drier south side of the island, a second major enclave of luxury homes is being developed near Poipu Beach.

Despite the rain, Kauai’s North Shore has turned into Hawaii’s most expensive area, says the Big Island’s Rebecca Keliihoomalu, vice president of Corcoran Pacific Properties. In 2020, says Ms. Keliihoomalu, there were six residential sales on Kauai above $10 million, compared with two in the Wailea-Makena area of southwest Maui, and three above Honolulu, near Oahu’s Kailua Bay, where Barack and Michelle Obama took presidential vacations.

Waterline North Shore properties get top dollar, but oceanfront spots come with risks, says Kauai landscaper Brandon Miranda, a third-generation islander, whose home-care and landscaping business looks after high-end estates for second-home owners.

“Everyone wants to be on the beach,” he says. “But this is a tropical environment and all that moisture causes problems,” affecting everything from electrical outlets to AC units. And then there is the flooding.

“Every year we have two or three floods,” he adds.

This spring, Kauai and other islands were hit by torrential rains and isolated flooding. A resulting mud slide has impeded access to Hanalei. Mr. Miranda says local Hanalei owners can expect problems for months to come.

What Mr. Miranda calls super-high-maintenance homes sit on what Hawai’i Life’s Mr. Beall calls “one of the most incredibly beautiful places on the planet.”

Earlier in 2021, a Hanalei oceanfront five-bedroom house on a 1.11-acre waterfront lot went into contract with an asking price of $24.75 million.

Mr. Beall says recent floods and lingering road damage haven’t dented demand. “We’re busier than we’ve ever been,” he says.

Mr. Miranda counsels new arrivals on their plantings, convincing them that, for example, a yard filled with coconut palms and a private mango grove will lead to maintenance nightmares. He advises his clients—who may spend up to $500,000 on landscaping plans, followed by $5,000 a month on maintenance—to stick to citrus, which produce manageable amounts of fruit all year.

He believes the ideal Kauai lots are on ridges just above—not on—Hanalei Bay, affording residents ocean and mountain views.

Back at the Cook home, not far from the Naylors, the family has adjusted their long-term plans. Initially, says Ms. Cook, they decided to see out the pandemic on Kauai, then use the new property for vacations.

Now, she says, they are there to stay. Her husband has gotten a signoff to work remotely, and she has returned to an earlier career composing music.

The island, which had monthly Covid cases hovering in low single digits for much of the pandemic, is making its way out and re-fostering a sense of community in the process. “My kids always remember their masks but never remember their shoes,” says Ms. Cook.

Kauai’s North Shore is known for its natural attractions, like Tunnels Beach, and a thriving culinary scene, featuring the organic products of Hanalei Bread Co., not far from Hanalei Pier.

PHOTOS: KRISTIN HOSHINO FOR THE WALL STREET JOURNAL

HOMES FOR SALE

$33 million | North Shore, Kalihiwai

6 bedrooms, 5.5 bathrooms

This 10,320-square-foot pod compound offer views from nearly every room overlooking Kalihiwai Bay. The 2003 home has a wine cellar, spa and media room. The master suite is in its own pod.

$16.5 million | North Shore, Hanalei

Main house: 3 bedrooms, 3 bathrooms

The 2,992-square-foot oceanfront compound dates to the 1920s. It has a two-bedroom guesthouse. There are views of mountains, waterfalls and beaches.