Hawaii has long been a popular tourist destination, but it is also emerging as an attractive place for investment. There are several key reasons why investors may want to consider investing in Hawaii. The tropical climate, natural beauty, and laid-back lifestyle draw millions of tourists every year. This fuels Hawaii’s robust tourism industry and creates opportunities in hospitality, real estate, and entertainment. Hawaii’s strategic location in the Pacific also makes it a hub for military defense and international business. The state offers tax incentives for development in technology, renewable energy, film & media, agriculture, and other sectors that diversify the economy beyond tourism. Hawaii’s real estate market is strong, with property values boosted by high demand. The state’s island geography limits supply, while a growing population and rising incomes increase demand. However, investing in Hawaii also comes with challenges like high costs of living and transportation. Overall, Hawaii offers investors a unique blend of lifestyle appeal and economic prospects across various industries.
Tourism fuels economic growth
Hawaii’s natural splendor and tropical climate have made it a prime destination for leisure travelers, honeymooners, and incentive trips. Tourism is a pillar of the local economy, generating over 200,000 jobs. Major hospitality brands operate luxury resorts and hotels to serve this market. A vibrant tourism ecosystem has also sprouted up around activities like luaus, boat tours, helicopter rides, and visits to historic sites. The industry faces some volatility from economic cycles, but long-term prospects remain strong as global travel keeps expanding. There are opportunities for investment in new resorts and attractions.
Real estate demand is surging
Hawaii’s real estate market is red-hot, with property sales and median prices reaching all-time highs in 2021. Home values have nearly doubled over the past decade. This growth reflects extremely limited housing supply coupled with strong demand drivers. Land availability is highly constrained due to the state’s remote island geography. In-migration from U.S. mainland has picked up, lured by Hawaii’s unparalleled quality of life. A hot job market in tech, healthcare, hospitality and other sectors also boosts housing demand.
Alternative industries are growing
While tourism has historically dominated Hawaii’s economy, state leaders have made a concerted effort to diversify into new industries. Technology, creative media, renewable energy, agriculture and defense contractors have been targeted for growth. Tax incentives such as Act 221 encourage investment in these spaces. For example, Hawaii’s abundance of sun and wind make it well-suited for solar, wind, and other clean energy projects. Its central Pacific location also enables transoceanic connectivity for defense and telecommunications.
Downsides exist too
However, investing in Hawaii also comes with challenges. The state has a very high cost of living, largely driven by imported goods and housing shortages. Inter-island transportation is constrained by limited aviation and ferry capacity. Labor costs are high relative to productivity. Physical distance from the U.S. mainland impedes access to materials, equipment, and specialized expertise. Investors must weigh these factors carefully when evaluating opportunities in Hawaii.
In summary, Hawaii offers investors an attractive combination of lifestyle appeal and economic growth catalysts, especially in tourism, real estate, and emerging industries. However, Hawaii’s remote island geography also brings higher costs and transportation hurdles that must be considered.