I did a profit/loss analysis of Waiea, Park Lane, and Anaha, three prominent luxury condos in Kakaako.
For Waiea, I analyzed the data as of Nov. 8, 2019 and of the 132 transactions I found, the average price change from when they bought it from Howard Hughes to when they sold on the MLS was -$28,617, which was an average of -0.59%. This shows that the luxury market pre-construction strategy in this building was not effective, and most people lost money. There are some instances where they made money, but this happened less often than those where they lost money. Below is a histogram, which shows the distribution of gains vs. losses.
I analyzed 95 transactions at Anaha, and found that the average gain from initial purchase to MLS sale was $169,246 and the average percentage gain was 16.03%. There were not all gains, however, since some of them had losses as well. The majority of the ones that posted a gain was under $2M. Therefore, this supports the thesis that the highest demand is in the mid-luxury range, since most people can afford these, compared to the higher end luxury.
Overall, the pre-construction investment strategy can prove to be very lucrative, but it is not without risk, as shown by Waiea. This strategy has a very high barrier to entry, since the developers usually require 20% down at the time of contract, and this liquidity is trapped in the building until it opens.