A granddaddy of a fixer-upper home on O'ahu is for sale.

The owners of what was once mostly the East Honolulu estate of industrial magnate Henry J. Kaiser are asking $80 million for the 5.5 acres of waterfront Portlock property featuring a 15,000-square-foot house and a 12,000-square-foot boathouse, both in need of "major" repair.

The offering, which also includes a private harbor, begins a new chapter for the bulk of a storied estate that has languished for two decades since enigmatic Japanese billionaire Genshiro Kawamoto bought Kaiser's original 7-acre residence in 1988.

And even though the property needs significant improvement, the listing will test the upper reach of the local real estate market and could set a new price record for a Hawai'i residence.

Overall, O'ahu's single-family housing market has suffered only a moderate 3.3 percent median price decline this year through November, and economic fears have sidelined many prospective buyers. But high-end real estate is typically more insulated from present economic troubles such as job losses, the dramatic stock market downturn and tight lending because buyers of property like the Kaiser estate usually are ultra wealthy.

Still, the Kaiser property sellers, high-tech entrepreneurs Fred and Annie Chan, are asking a lot.

HIGH ASKING PRICE

According to recently published property tax assessments for 2009, the city values the property at $37.5 million, which was reduced from $48.8 million this year.

The Chans, according to property records, paid $14.6 million for the property in two pieces — the first in 1997 near the bottom of the previous real estate market down cycle and the second in 2000 before the latest market boom began.

Fred Chan, a University of Hawai'i graduate, made a fortune in Silicon Valley pioneering sound chips for computers, toys and other products. In 1995, his Fremont, Calif.-based company ESS Technology Inc. raised over $120 million in an initial public stock offering that at the time ranked as one of the largest IPOs in the semiconductor industry.

Shortly afterward, Chan became a major investor in Hawai'i real estate, developed the twin-tower Moana Pacific residential condominium near McKinley High School, and is developing the Moana Vista high-rise nearby.

Last year, Chan resigned as chairman of the board of the company he started in 1984 to focus on philanthropic pursuits. Earlier this year ESS was acquired by a private investment firm.

Chan was not available for comment about the Kaiser property sale. His Hawai'i-born wife also could not be reached.

RENOVATION DROPPED

The property is being listed by Mary Worrall of the local Sotheby's International Realty affiliate Mary Worrall Associates, and Elizabeth Worrall Daily. Mary Worrall said the Chans had an elaborate renovation plan drawn up for the property but decided to instead develop an estate on the Mainland.

Local real estate appraiser Robert Hastings, who lives near the Chan property and has appraised the site in the past, declined to estimate a fair market value for the estate because he hasn't analyzed the property recently, but said the asking price is interesting.

"The price as set makes a very interesting statement that will attract some attention," he said.

Hastings said the property potentially could interest a developer for subdivision at a lower price, but subdivision wouldn't make economic sense at the asking price.

Worrall said the potential for the property is largely in renovating the main house and converting the three-story boathouse, which was built largely to store boats, into a contemporary home.

"The homes are not in good repair, but they have the basis to be something wonderful," she said.

Demolishing the structures would likely require building new structures farther back from the water's edge under present zoning rules.

LARGEST RESIDENCE

Kaiser developed the site below Koko Head in 1959 for $1 million, establishing what was then regarded as the biggest privately owned oceanfront residential property in Honolulu and the largest private residence in America.

On 7 acres of land leased from Bishop Estate, the residential complex features sweeping vistas of the Pacific Ocean, Diamond Head and East Honolulu.

Kaiser, who established Kaiser Permanente and a business empire on the Mainland that included building everything from highways and dams to cars and planes, helped reshape the landscape of Hawai'i in semi-retirement.

The industrialist started what is now Hilton Hawaiian Village Resort & Spa in Waikiki, and created the master-planned community of Hawai'i Kai. His residence — at which he hosted numerous notable guests including Jacqueline Kennedy, Bob Hope and President Johnson and his wife, Lady Bird — remains one of the most storied estates in Hawai'i's modern history.

After Kaiser, who died in 1967, the estate's owners became Monte and Alfred Goldman, renowned party-throwers and millionaire sons of an Oklahoma grocer who invented the shopping cart.

JAPANESE BUYER

In 1988, Kawamoto paid $42.5 million for the estate in a deal believed to then be the highest price paid for a private residence in America.

The real estate tycoon talked about stately renovation plans, but chafed at paying $1 million in annual ground rent to Bishop Estate (now Kamehameha Schools). In 1994 he brashly surrendered the property to the landowner after bristling at an invitation to buy the fee interest in the land for $26 million.

After that, Bishop Estate struggled to sell the property during a depressed housing market. In 1997, a sealed-bid auction was unsuccessful, and led to a conventional effort to sell the 7 acres for $22.5 million. Later, the property was divided into three "mini-estates" to appeal to a bigger pool of potential buyers.

The Chans in 1997 bought a 2-acre parcel with the boathouse, a staff house and greenhouse for $5 million, and three years later picked up a 3.5-acre piece containing the main house and pool for $9.6 million.

The third piece, a nearly 2-acre parcel with Kaiser's old guesthouse, sold in 2000 to the founder of a downtown Las Vegas casino. But the owner, after nearly completing a more than $5 million mansion, died in 2004, and his widow listed the property for sale a year later at $26.5 million.

An investment banker bought the property a year ago for $15.9 million.

The Chans hope to sell their property as one piece, but also are offering to break the property into three pieces — a 1.9-acre main house parcel for $28 million, a 1.6-acre landscaped parcel with tennis courts for $18 million and a 2-acre boathouse parcel that includes the harbor for $34 million.

If sold in one piece for anywhere near $80 million, the sale would set a new record price for a single residence, according to Hastings. "That would be a new high in Hawai'i," he said.

There were several sales last year in the $30 million range, but Kawamoto's Kaiser estate purchase still may be the prior high, according to property records.