Sales of homes at Hawai'i resorts — from Princeville on Kaua'i to Mauna Lani on the Big Island — climbed 17 percent to $2.7 billion last year and the average price set a new record at $960,480.

The spending on residential resort real estate was $400 million more than 2003, according to sales data compiled by market researcher Ricky Cassiday for Hawaii HomeLoans.

The number of sales — including new and previously owned condominiums, single-family homes and house lots — dropped 5 percent to 2,116 last year, compared with 2,232 a year earlier. But the increase in price more than made up for the decline in unit sales. The $960,480 average price was 25 percent higher than the previous year's $767,927 and broke the 2001 record of $918,614.

Cassiday said the slowdown in purchases and jump in prices stemmed from developers concentrating on the uppermost end of the luxury market with less dense communities that maximize open space and views.

There were 489 sales of newly developed residential real estate at resorts last year, down 33 percent from 729 a year earlier. That compared with a 7 percent rise of previously owned resort home property sales to 1,629 last year over 1,522 a year earlier.

"The builder component of the market has an opportunity to step up to the plate and produce. This has not happened," Cassiday said in the report.

Instead, builders developed fewer parcels to sell and concentrated on price, which averaged almost $1.4 million per lot, condo and single-family home last year. In 2003, the average was almost $900,000. The overall average for resort properties is brought down by sales of previously owned homes.

Cassiday projects that the number of new resort homes or lots will double by 2006 and possibly triple by 2008 with more land in the hands of developers, and because institutional lenders like pension funds and investment banks are aggressively seeking to finance such projects.

"There's just not a lot of investment opportunities like this," Cassiday said. "Real money is starting to pour in."

Among projects in the works is the 126-unit Kulalani condo development scheduled to start construction and sales in the next month at Mauna Lani by local homebuilder Stanford Carr Development.

California-based equity and debt investment firm Pacific Coast Capital Partners LLC made a $32 million loan to finance the project.

"The residential resort market in Hawai'i has retained significant momentum," said Brian Heafey, managing director of Pacific Coast Capital.

Heafey cited strong demand for past resort home projects by Carr, including Waikoloa Colony Villas and Fairways at Mauna Lani on the Big Island, as indicators of opportunity to invest in Kulalani.

Another reason the resort home market continues to grow is available land. Cassiday said several Japanese investors that acquired or developed Hawai'i resorts in previous decades but developed few homes in recent years have sold their holdings to more active developers.

Among transactions were Carr's acquisition of undeveloped Mauna Lani property from Tokyu Inc., which also sold land to local developer Curtis DeWesse and a joint venture of Brookfield Homes and Alexander & Baldwin Inc. that are all developing homes.

Much development is also occurring at Wailea Resort on Maui where A&B in late 2003 bought 270 acres of undeveloped land from Japan-based Shinwa Golf Group and has been busy developing the property or selling pieces to other residential developers.

A&B estimated that the deal will result in 1,500 to 1,800 single-family and multifamily homes at Wailea over eight to 10 years.

And at Princeville, a group led by local developer Jeff Stone is planning to add homes as one of several improvements to the Kaua'i resort purchased early this year from three Japanese companies.

Cassiday predicts that the expected rise in production of second homes at Hawai'i resorts will dampen prices.

Last year there was a 60 percent increase in residential property sales between $1.25 million and $1.5 million at resorts, according to Cassiday. There also was a 60 percent reduction in the number of resort home properties sold for under $500,000.

The priciest resort home project last year was Kuki'o on the Big Island where the average price for condos and lots was $3 million.

By island, Hawai'i posted the highest average sales price at $1.2 million, followed by Maui at $1.1 million. On Kaua'i the average was $641,411. The O'ahu average was $482,472.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.