Housing policy debates in Hawaii often fixate on density—how many units a parcel can hold, how tall a building can rise, how much floor area a site can support. Those metrics dominate headlines, but for developers underwriting projects in Honolulu, a different variable carries more weight: whether a project can be approved as of right. That distinction is why Bill 18 has drawn attention from the real estate community.
Currently, most market-rate residential development on Oahu proceeds through the 201H process, which functions as a form of spot zoning. Developers must navigate neighborhood boards, public hearings, and an unpredictable consultation period. The outcome cannot be forecast when capital is committed, introducing substantial uncertainty. “It provides a lot of uncertainty to the process,” says Mike Perkins of The Bratton Team at Colliers International Hawaii. That uncertainty is priced conservatively because carrying land through an indeterminate approval period imposes costs with no defined endpoint.
Bill 18, introduced by Council Vice Chair Andria Tupola, would expand the Chapter 32 Affordable Rental Housing program—known as Bill 7 after the 2019 ordinance that established it—into apartment, apartment mixed-use, business, and business mixed-use zoning districts, along with the apartment precinct of Waikiki. The program already offers relaxed zoning standards, property tax relief, and fee waivers in exchange for at least 80% of units being rented for a minimum of 15 years at rates affordable to households at or below 100% of area median income. For 2026, that threshold is $93,400 for a single person and $133,400 for a family of four. Successive drafts have also addressed lot area limits, replaced the blanket 60-foot height cap with the height permitted under underlying zoning, allowed additional units near high-service bus stops within the Primary Urban Center Development Plan area, and repealed maximum square footage rules across unit configurations.
While density provisions help by improving floor area ratios and allowing larger lot assemblies, the decisive factor Perkins identifies is that Chapter 32 projects proceed directly to the building permit process. Developers know at the outset what is permitted and can proceed on that basis. The financial consequence is substantial: certainty compresses timelines, reduces carry costs, and lowers the cost of capital across the project. A shorter, more predictable path to delivery also widens the pool of capital willing to participate, because the risk being underwritten becomes construction and lease-up risk rather than political risk. “That in and of itself would help speed up the process,” Perkins says—and for housing delivery, timing is where the leverage sits. The 2024 update to the Hawaii housing planning study put Honolulu’s requirement at 27,710 new units between 2023 and 2027, a figure that argues for pathways measured in months rather than years.
Two further regulatory developments are shaping how investors read the market. On Maui, Bill 9 is phasing out short-term rental use in apartment-zoned condominiums, while Bill 88—passed in June—created the H-3 and H-4 rezoning pathway. Values in apartment-zoned and hotel-zoned product have moved differently as a result, and the divergence has become a live consideration in underwriting across both counties. Separately, every Hawaii county must permit two accessory dwelling units per lot by the end of the year under a 2024 state law. Perkins assesses that this operates largely on the single-family side, supporting housing stock and purchasing capacity without materially affecting commercial-scale multifamily development.
Asked whether the regulatory picture now weighs more heavily in underwriting Hawaii income property than interest rates, Perkins’s answer is unambiguous: it does. Entitled land carries a version of the same question. Buyers acquiring an entitled position may still need to reaffirm those entitlements, and where the original approval is some years old, that reaffirmation introduces a variable. Time is the cost, and buyers discount for it. This is precisely why legislation like Bill 18 matters beyond the affordable segment it addresses directly. Anything that converts a discretionary process into a defined one removes a discount that currently applies across the market.
For developers and investors, the practical implication is that the regulatory pathway attached to a site belongs alongside its physical characteristics in any valuation. Two parcels with identical zoning and dimensions are not equivalent if one qualifies for a by-right pathway and the other requires discretionary approval. The difference shows up in carry cost, financing terms, and the breadth of the buyer pool. That understanding is also where established local knowledge earns its value. Current Hawaii inventory and monthly market statistics describe what is available and how it is pricing. Knowing which approval pathway attaches to a given position is what turns that into an investment decision—and as Hawaii’s approval framework becomes more defined, the sites positioned to use it stand to benefit first.
