REAL ESTATE: Hawaiian Building Fever

In Hawaii last week tourists were telling the story of a woman visitor awakened by noises outside her hotel window. When she complained to the manager that "I didn't come to Hawaii to get a room next to a pile driver," he replied: "Madam, nowadays all the rooms in Honolulu are next to pile drivers."

From the ranch lands of outlying islands, where orchids grow wild, to the cool, pastel-colored balconies of new buildings on famed Waikiki Beach, a frenetic building boom of houses, shopping centers and hotels is under way in Hawaii. The Honolulu bureau that records new construction is eight months behind in its tallies. In February alone, new construction of dwelling units reached $15 million, a 250% increase over a year ago. Fortunes have been made in days by big and small investors alike. Examples:

¶ Two former Denver businessmen, Glenn I. Payton and David O'Keefe, bought 12,000 acres of ranch land on the big, outlying Island of Hawaii for $55,000 cash and a $200,000 mortgage. After putting in $270,000 worth of roads, they subdivided the land into 4,000 "Tropic Estates," sold them for $2,500,000.

¶ David Watumull, member of a prominent Honolulu family, staged a Land-O-Rama in New York complete with hula-skirt-clad maidens to promote his 5,600-lot Paradise Park near an active volcano eleven miles outside Hilo, Hawaii. Thus far, he has sold 4,200 lots, grossed $3,750,000.

¶ One Honolulu secretary plunked down $100 each for five co-op apartment options, quickly turned a $2,000 profit by selling them to other investors.

Subdividing the Air. Hottest properties are cooperative apartments, which can easily be turned into hotel space to meet the tourist invasion. One of the most successful builders of co-op apartment hotels is Kepokai (Hawaiian for pounding sea) Choy Aluli, 36, a lawyer who turned to real estate after he flunked his bar exams and was twice defeated for public office. Aluli saw the hotel boom coming in 1954. But when he tried to build a hotel, he quickly learned that high land cost and tight mortgage money made it difficult for a small developer to operate. He turned to building coops, and started a new trend. Explains Aluli: "I figured land was so scarce, why not subdivide the air?" His first 46-unit co-op apartment sold out seven hours after he advertised it, and he had enough investors left to finance a second 32-apartment coop. He went on to build the 200-room Oahuan Tower, the 60-room null and the 650-room Kalia off Waikiki Beach. His most ambitious project, the Tradewinds, is scheduled to become a $15 million, ten-building hotel complex with 1 ,000 apartments.

After Aluli and other co-op developers build their apartment hotels, they hire trained management teams to operate them, provide maid service and other amenities to the owners of individual apartments, who are then free either to live in them or to rent them to tourists. A typical two-room Aluli co-op hotel apartment costs $15,100, with $4,500 down and a $75 monthly mortgage payment for 25 years at 7% interest. An investor can earn 10% on his initial investment if his apartment is rented only 15 days a month.