Here is a bold and broad-sweeping statement:
The fear of a perceived imminent threat is far greater than the threat itself.
This applies to many areas in life, including real estate. Specifically, what I call the FOFD, the ‘Fear Of Future Developments.’ It can cloud our decision process. Before we dive into how and why we should overcome the fear, let’s first check where the fear is coming from.
Over hundreds of thousands of years, our brains evolved to pay close attention to a perceived threat. That’s how our ancestors survived and we wouldn’t be here otherwise.
Except, the nature of the perceived threats has changed. For millennia, a soft rustling sound in the underbrush could have been a tiger about to chomp you up for dinner. Today, we are less likely to suffer from a violent shortening of life. Most modern life threats are non-existential.
However, evolution has hardwired our brain reflexes. Threats we perceive today still trigger the same fear response. And that fear response may be disproportionately too large compared to most of today’s threats.
Fear was a useful survival tool in a world that was far more dangerous than today. Fight, Flight, or the occasional Freeze (inaction in hopes that the predator threat goes away) saved lives and provided a natural selection edge to ensure the survival of our species.
Today, the same fear response tends to be counterproductive. And when fear turns into anger then we might need to reassess what’s important in life.
Concerned Neighbors Fiercely Oppose New Developments
The up-and-coming Kakaako neighborhood is located between Honolulu’s downtown financial district and the popular Ala Moana shopping district.
Rebranded as Honolulu’s exciting new urban hub, Kakaako is where many want to live, work, and play.
But the fear of change is making some current residents nervous. Citing traffic and infrastructure concerns, they complain:
“Not in my backyard. I was here first! How dare they destroy my view, my peace, my serenity. They are overcrowding my street and my city with additional traffic.”
Personal entitlement anger? – We humans don’t do well with change and uncertainty. It becomes a distraction and can add stress to our lives.
See related article: How Will This Story End?
But Is The Fear Warranted?
Does the perceived threat, the FOFD match the actual risk?
When we change the way we look at things, the things we look at change. ~ Wayne Dyer
See related article: The Sellers’ Obligation To Disclose.
Unless you own the entire neighborhood, there is little you can do to prevent future development in your area. These are circumstances and events that are simply out of our control. How we behave is the only measure of control we have. So why stress out?
- Will the fear of future developments in our neighborhood contribute to our well-being? – Most likely not.
- Could fear be holding us back from reaching our full potential? – Possibly yes.
- Could fear inadvertently disqualify options that would otherwise be viable opportunities? – Most likely yes.
Here are three real-life stories that demonstrate the bold statement from the top of the page:
1) The Ilikai Harbor Development
On the marina side of the Ilikai is a State-owned oceanfront empty parking lot for the benefit of the marina users. During the last 60 years, the State of Hawaii discussed plans to develop the lot. The highest and best use might be a luxury condotel with additional parking and a boat ramp to satisfy the existing ‘marina user-benefit’ requirement.
The uncertainty of ‘how big and how tall’ of a building has kept neighbors on edge. Some fear that “the views could be lost and property values might tumble!” – Based on what evidence?
Consider that years ago, the Hilton Hotel built the Hilton Lagoon Tower on the other side of the Ilikai, slicing in half the ocean views from the lagoon side of the Ilikai. The fear and outcry among Ilikai owners were huge at the time.
Property values didn’t tumble. The Hilton Hotel cleaned up the lagoon and all Ilikai unit values flourished. The ocean view, although a bit thinner, is still stunning. Nobody is complaining retroactively: “How dare did they destroy my view, my peace, my serenity, and compromised the value of my property.”
What can we learn from it? Perhaps the outcome is often not as bad as expected.
Could Overblown Fear Act As A Convenient Excuse To Talk Yourself Out Of Buying?
Possibly. – It happens a lot.
Don’t do anything hastily you are not comfortable with. But also don’t hang yourself up on the potential future risk that is unlikely to produce the feared negative impact.
I predict that if and when eventually completed, the Ilikai harbor development will have little to no negative impact on Ilikai property values, rentability, and cash flow.
Rental revenue and unit values will remain strong and even increase on both ocean view sides of the Ilikai. That is despite the risk of a new tower potentially thinning the view.
I own four Ilikai ocean view rental units. Two on the lagoon side plus two more on the marina side. I’m a believer in the Ilikai’s long-term future. I’m also committed to buying more Ilikai rental units for passive cash-flow. Either side, the marina side, or the lagoon side will do. It makes no difference in the long run. – Life is simple. Over-analyzing is counterproductive.
Consider that any future development on the marina parking lot is likely going to be upscale and expensive. It will lift all Ilikai condo values.
But don’t take my word for it. It happened before.
The FOFD is only temporary until the economic benefits overrule the push-back.
New developments can synergetically increase the quality and value of the entire neighborhood, improving commerce and prosperity for local businesses and property owners.
See related article: History Of Waikiki Hotels
Think back to when the Ilikai was built. At 26-stories tall, it was an architectural monstrosity at the time. It caused a public uproar and immense FOFD. As a result, the city implemented a temporary construction moratorium on new tall buildings in Waikiki.
That didn’t last long. The allure of additional tax revenue and the economic benefit was compelling. Subsequently, Waikiki experienced an unprecedented building boom during the 1970s that created most of today’s skyline. Today, the Ilikai perfectly blends in with all the other skyscrapers. Waikiki property values have been increasing ever since and the rest is history.
Here are two more buildings where the FOFD was overblown in retrospect.
2) The Ritz-Carlton Blocking Four Paddle’s Ocean View
The Four Paddle condo in Waikiki used to enjoy a wide-open ocean view beyond the Fort DeRussy Beach Park. That was until the Ritz-Carlton Waikiki was built. It was expected to decimate the view and values of the ocean-facing units in the Four Paddle condo building. The FOFD ran rampant and many condo owners furiously complained.
Some panicked and sold their condos in anticipation that their property value might drop.
In retrospect, the time when the Ritz-Carlton development was first announced was the moment of greatest fear. It was also the worst time to sell.
Anybody that sold back then likely regrets the timing of their decision.
While the ocean view from the Four Paddle has diminished, the property values and rentability have not. The remaining ocean views are still mesmerizing. The Ritz-Carlton development cleaned up and rejuvinated the neighborhood. It lifted all condo values at the Four Paddle.
3) Convention Center views
The Villa On Eaton Square and 1717 Ala Wai are two condo buildings that for the longest time enjoyed an unobstructed mountain view beyond the Ala Wai Canal. Everything was about to change when a large vacant lot along the Ala Wai Canal was selected for the construction of the Hawaii Convention Center. The announcement unnerved the neighboring condo owners.
But who would have thought it would be a blessing in disguise? The new Convention Center turned into a world-class architectural masterpiece with exemplary lush tropical landscaping. Plenty of new large trees were installed.
Today’s views are gorgeous and represent a substantial improvement over the old barren parking lot that the condo owners had been looking at.
Unless you live front-row, you will never have a guaranteed unobstructed view.
Your choices are…
- be content that future new developments eventually will change your views. Or,
- buy a front-row oceanfront property with forever ocean views.
Except, there is one more wrinkle. Consider what is happening in Monaco, the French Riviera city-state that has become a Billionaire’s playground. Smaller than New York’s Central Park, Monaco is one of the densest countries in the world with property values averaging $4,560 per sqft.
Here land gets reclaimed in front of what used to be oceanfront property. Pioneered and championed by the Dutch, this is fascinating stuff. It comes down to the feasibility and the ‘highest and best use’ of the land.
So then what should we do about our FOFD?
How about replacing the FOFD with FOTBP. Which stands for Focus On The Bigger Picture. Remember that every opportunity comes with certain risks associated.
What you do is entirely up to you, but don’t let the FOFD freeze you in your tracks. Enjoy life and get used to uncertainty. Plan prudently and take full responsibility for the consequences of your choices. Focus on working on the issues within your control, and don’t fret the rest.
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