The selling of distressed commercial real estate is expected to increase in Hawai'i over the next few years, but so far this year buyers and sellers of property from hotels to shopping centers aren't making many deals, according to a new report.

An analysis by local commercial real estate firm Colliers Monroe Friedlander tallied 57 commercial property sales valued at a combined $301 million in the first six months of this year, down by nearly half from 103 sales for $536 million in the same period last year.

It was the third consecutive mid-year decline for commercial property transactions, which include hotels, shopping centers, office buildings, warehouses, farmland and apartment buildings valued at more than $1 million. By comparison, in mid-2006 there were $2.5 billion in such sales, Colliers said.

But today, most investors appear to be waiting for the bottom of the market for opportunities to buy deeply discounted property.

"Until the bottom of the market is recognized, apprehension among the investment community will continue to reign," Colliers said in the report.

Colliers also said that financing sources are scarce, and that the biggest opportunities will be for investors with cash.

Many investors are anticipating a wave of commercial real estate loan defaults over the next few years as significant numbers of owners who used five-year loans to acquire property a few years ago face difficulty refinancing.

Colliers cited a report by Real Capital Analytics that listed $3.8 billion in troubled assets in Hawai'i where loans are in default or owners are financially challenged.

One example is General Growth Properties, which is in bankruptcy and owns Ala Moana Center and Ward Centers on O'ahu, Prince Kuhio Plaza on the Big Island and Whalers Village on Maui. The Chicago-based company has said it will consider selling assets.

In the first half of this year, one of the biggest commercial property sales was the Plantation Golf Course at Maui's Kapalua Resort, which Maui Land & Pineapple Co. sold for $50 million. The deal, which leases the course back to Maui Land, allowed the company to restructure debt and helped prevent a default on credit lines.

Industrial properties constituted the most sales this year through June, with 21 deals for a combined $116 million.

Four hotel deals accounted for $73 million in transactions, and there were 15 retail property sales for a combined $65 million.

Most of the transactions, Colliers said, were under $5 million, involved local buyers and were financed by local banks.

Colliers said it doesn't expect commercial real estate purchases to increase until 2012, given that the sector typically lags improvements in other areas of the economy such as job growth, home sales and manufacturing.

"Until other factors begin to improve ... the commercial real estate sector will wallow in the proverbial mud of a weakened economy," the report said.