The freeze-up in real estate lending last year hit buyers of Hawai'i commercial property hard, according to a new report that said purchases of hotels, shopping centers, office buildings and other commercial real estate plunged from $3 billion in 2007 to $788 million in 2008.

A dearth of high-value hotel transactions largely contributed to the dramatic fall, though the decline was spread over the market that also includes warehouses, apartment buildings, golf courses, farmland and undeveloped land zoned for commercial use.

The report, by local commercial real estate firm Colliers Monroe Friedlander, said uncertain property values, the dismal economy and higher lending requirements likely will result in another decline in Hawai'i commercial property purchases this year to an estimated $525 million.

"Investors are waiting on the sidelines until a clear direction is established," the report said.

The number of transactions last year was 166, down 37 percent from 264 a year earlier. The dollar volume, which fell 74 percent, hasn't been lower since at least 1999 when Colliers began tracking commercial deals valued at more than $1 million.

The largest transaction last year was the Royal Garden at Waikiki hotel, bought for $43 million by Wyndham Vacation Ownership for time-share use.

Colliers said the deal was one of only three hotels sold last year, which collectively fetched $65 million. A year earlier, there was $1.5 billion of hotels sold, including Makena Resort with the Maui Prince Hotel for $575 million.

Industrial property, which was generally in better shape than other sectors of Hawai'i's commercial real estate market last year, consisted of the most transactions last year, with 50 sales for a combined $187 million.

Retail property was the next-busiest segment, with 44 sales for $162 million, including land in Kapolei bought by Costco for $12.5 million.

Among individual big deals were the Waikele Golf Course, bought for $23 million, and 2,140 acres of farmland bought by seed corn producer Pioneer Hi-Bred International for about $20 million.

Had more money been available, there likely would have been more purchases, Colliers said. The firm said 60 percent of commercial property financing in 2006 and 2007 came from commercial mortgage-backed securities, essentially loans made for commercial real estate purchases that were bundled and sold to institutional investors, investment banks and others.

Colliers said the commercial mortgage-backed securities market had disappeared by the end of last year.

"When the majority of available capital vanishes, transaction volume ... dries up," the report said. "Leverage is the lifeblood of real estate."

Most commercial properties sold last year, Colliers said, were financed by local banks and bought by local investors or property users.