Overall, it looks like another solid year for new construction at Kiawah. The island's natural splendor, an award winning development plan and improvements in the resort amenities all favor a continued attraction by buyers looking to retire or construct a second home.

As in previous years, the lack of commercial and retail services immediately adjacent to Kiawah will continue to suppress the demand for new full time residents with the majority of homes being built as second homes..

However, the possible development of some portion of the Andell tract in 1997 could change that should a commercial development begin and additional services like a grocery store and other retail and professional services begin to become available.

We expect the overall cost per square foot to stay about the same and possibly rise slightly for 1997. This is largely due to the number of large homes being built in the $500,000 and above market at Kiawah Island. This could change however, since Kiawah has the highest cost per square foot to build in, we expect additional contractors to enter the market who could force the price down through competition and technical innovations.

Based on conversations with owners recently completing a new home, we feel there is also room for other builders who build on a reputation of quality after completion. We have heard from several new occupants of frustrations with builders due to punch list items uncompleted after nearly a year of occupancy.

Kiawah may lose some new lot owners with a desire to build as a value play to neighboring Seabrook where the average price per square foot is about 20% less to build. (See SEAIM 4Q96 for details.)

With new construction slowing in other beach areas like the Isle of Palms, both Kiawah and Seabrook may see added competitive forces from builders interested in getting a foothold in the market. New construction in that market has tapered off in recent years, largely due to the decreasing number of lot sales. (See IOPIM 4Q96 for details.)