Lanai – The Most Expensive Private Island Real Estate Transaction in History

Lanai – The Most Expensive Private Island Real Estate Transaction in History

The most expensive private real estate transaction on record in the United States for 2012 is valued at between $500 – $600 million. That is the estimated price that the billionaire CEO of Oracle, Larry Ellison reportedly paid to buy up to 98% of the sixth-largest Hawaiian Island of Lanai in 2012, likely the most expensive single island transaction in history.

Hawaiian Islands from Space Satellite Image

Lanai was first discovered by Europeans on February 25, 1779, when Captain Charles Clerke sighted the island from aboard James Cook’s HMS Resolution. By 1870 most of the island was acquired by Walter Murray Gibson for ranching. In the early 1900’s traditional fishing and ranching was displaced by pineapple farming on the island.

1878 US Government Land Office Map of Lanai, Hawaii

In 1922, James Dole, the President of Hawaiian Pineapple Company (Dole Food Company) purchased the entire island of Lanai and developed a substantial portion of it into the world’s largest pineapple plantation.

Historical Pineapple Fields in Lanai, Hawaii for the Dole Food Company

In 1955, Lanai became part of the County of Maui when Hawaii earned statehood by joining the union to become the 50th State in the United States of America on August 21, 1959.

1950 Historical Image of Manele Bay in Lanai, Hawaii

In 1985, the ownership of Lanai passed onto David H. Murdock as a result of his takeover of Castle & Cooke, then owner of the Dole Food Company.

David H. Murdock - Billionaire CEO of Castle & Cooke

Midway through 2012, Hawaii’s current governor, Neil Abercrombie, confirmed that Larry Ellison, CEO of Oracle Corp., made a deal to purchase a huge parcel of land on Lanai through Lanai Island Holdings, LLC., a company formed by Ellison for the purchase. As part of regulatory approval the purchasing entity agreed to invest a minimum of $10 million in the islands water and wastewater utilities respective operations within 5 years.

Beach View of Luxury Four Seasons Resort - Lanai, Hawaii

Ellison acquired Lanai by agreeing to purchase Castle & Cooke’s 98% share of the island from Murdock in June 2012, gaining ownership of a 141 square mile parcel of land on the private island that at one point produced three quarters of the world’s pineapple crop with more than 16,000 acres of pineapples under cultivation. Lanai was even coined “Pineapple Island” because of its long history of extensive pineapple plantations.

Aerial View of Lanai, Hawaii

Murdoch, the billionaire owner of Castle & Cooke decided to retain possession of his private residence on the island in Manele Bay, Lanai and also kept two local businesses as well as several luxury apartment units at The Pines at Koele and at the Manele Terrace that he owned on the island. Murdoch also retained the right to develop a wind power project on the island with windmills built on the island’s north end in an area that locals aptly named, the Garden of the Gods, but he now only has access to 7,000 acres of land, according to the sales agreement with Ellison.

Luxury Koele Resort - Real Estate in Lanai, Hawaii

Lanai is home to two major luxury resort hotels managed by Four Seasons that were also included in the sale. The Four Seasons Resort Lanai and the Lodge at Koele, both include major world-class golf courses.

The Four Seasons Resort in Lanai, Hawaii

The Challenge at Manele course, designed by Jack Nicklaus, borders the ocean while The Experience at Koele course, designed by Greg Norman, is located in the mountains of Lanai.

The Challenge at Manele Golf Course in Lanai, Hawaii

Shortly after finalizing the purchase of Lanai, Larry Ellison presented his vision for the future of the island transforming it into a sustainable high-tech eco enterprise. Introduction of solar power and solar thermal will allow replacement of traditional vehicles with electric cars and transform sea water into fresh water for an organic farm-export based economy.

Larry Ellison, CEO of Oracle Corp, Buys Lanai Island in Hawaii

During an October 2, 2012 interview with CNBC, Ellison addressed his plans for the first time.

“What we are going to do is turn Lanai into a model for sustainable enterprise,” said Ellison.

“I own the water utility, I own the electric utility.”

“The electric utility is all going to be solar photovoltaic and solar thermal where it can convert sea water into fresh water.”

“Electric cars will be brought in and farming will be transformed.”

“We have drip irrigation where we are going to have organic farms all over the island. Hopefully we are going to export produce – really the best, organic produce to Japan and elsewhere.”

“We are going to support the local people and help them start these businesses.”

“So it is going to be a little, if you will, laboratory for sustainability in businesses of small scale.”

Beach View of Lanai Island in Hawaii

Lanai, which is the smallest inhabited island in Hawaii that is publicly accessible, is roughly six times the size of Manhattan and had a population of 3,135 according to 2010 census figures.

Manele Bay Beach - Lanai, Hawaii

The pineapples are all gone now and tourism has become the dominant industry on the Island. Ellison’s purchase is bound to have a prominent and positive economic impact on Lanai for years to come as his new visionary development plans are implemented.

Contact


  Co-Founder at The Pinnacle List
  Vancouver, BC, Canada

  +1 (778) 836-3302
  kris@thepinnaclelist.com
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5 Comments

  1. Q Baker - January 4, 2013

    Will be interesting to see how Lanai is transformed by this purchase in a few years.

  2. Scott Lifshine - January 5, 2013

    That is one expensive island.

  3. Harvey Fisher - February 2, 2013

    Yes, some purchase islands for reasons of privacy — Charles Lindbergh is a prime example — but we can safely say that with Ellison, there are other forces at work. The remaining 2 percent of Lanai is owned by other residents, and his portion includes two large resorts. Certainly, others have purchased more exotic islands. In 2005, Gibson paid $15 million for the roughly 9-square-mile Mago Island, part of the Fuji island chain. But in at least one respect, Ellison may have them all beat. According to reports, Ellison paid between $500 million and $600 million for the Lanai property. Chris Krolow — CEO of Private Islands Inc., a real estate company that sells, yes, private islands — says his most expensive sale topped out at about 150 million euro, or roughly $188 million. But he does say that in private island market, many sale prices are not disclosed.“Lanai doesn’t really fit into the category of islands that are traded on a regular basis,” says Krolow. “This kind of purchase is extremely rare, and it’s probably the most expensive island sold.”

  4. James South - February 9, 2013

    Lanai is no stranger to private ownership: it was originally acquired piecemeal through the 1870s by Walter Gibson, to be used first as a Mormon colony and then as ranching land, and subsequently purchased by the Dole Food Company (at that point still the Hawaiian Pineapple Company) and converted to pineapple farming – hence its nickname of “Pineapple Island”. When the self-made billionaire David Murdock acquired Castle & Cook in 1985, he also acquired Dole, and by extension the island.

  5. CJ Jordan - February 22, 2013

    I never even knew this island existed in Hawaii honestly. Now I have to go here! Gee thanks 😛

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