Heat a small saucepan over medium-low heat.
Add the shredded coconut and toast for 3 to 5 minutes, stirring frequently, until lightly golden and fragrant. Watch carefully to prevent burning.
Carefully pour in the water. Reduce the heat to low and simmer for 2 to 3 minutes.
Stir in the brown sugar and honey. Continue cooking until the sugar has completely dissolved.
Remove from the heat and let the syrup steep for 30 minutes. For a stronger coconut flavor, steep for up to 4 hours.
Strain through a fine-mesh sieve into a clean glass jar or bottle. Discard the toasted coconut.