Several high-rise residential buildings in Okinawa have seen an increase in re-sale prices over the past few years.
One of the recent residential developments, called RYU:X TOWER, sold out prior to completion. The twin tower condominium contains 676 apartments over 30 floors. The first tower was completed in 2013, and apartments have already been selling on the re-sale market for 10 ~ 25% higher than their price when new. Apartments can currently be found on the resale market for between 670,000 ~ 1,125,000 Yen/sqm. The second tower was completed in May 2015 and has already sold out. The most expensive apartment was priced at around 130 million Yen (1.07 million USD). This has been the largest condominium development in Okinawa to date.
Urtore Mihama is a 19-storey resort condominium in Chatan, and just south of the Kadena Air Base. The 421-unit complex was completed in 2010 at a time when Japan’s economy and property market was in a slump. Sales were off to a bad start at first, but saw an unexpected turnaround after the 2011 Tohoku Disaster led to an influx of families looking to move as far away from the Fukushima nuclear plant as possible. All apartments were eventually sold.
Current demand for apartments in Okinawa is coming from several sources including private investors who have benefitted from improving economic conditions and high stock prices, as well as wealthy individuals looking for a holiday home that can be used in both the summer and winter months.
Following in the footsteps of entertainer Shinsuke Shimada, who retired to Okinawa in 2011, retirees have also been making their way to the Okinawa main island. While the smaller islands lack facilities and services, making life difficult, the main island offers medical facilities and other conveniences. This group of buyers typically have budgets in the 10 million Yen (83,000 USD) range and are seeking older apartments. The growing demand has helped to push up the prices of older buildings. An apartment in a 25-year old building that might have sold for 8 million Yen in 2010 may now sell for as much as 12 ~ 13 million Yen, representing an increase of as much as 62%.
Okinawa also has the smallest difference between the price of brand new and 10-year old apartments in the country. Research by Tokyo Kantei found that the average sale price of a brand new 70 sqm apartment in 2014 was 26.51 million Yen, while the average price of a 10-year old apartment was 24.32 million Yen.
The average annual income for Okinawans is among the lowest in Japan, and the current real estate price growth is not sustainable if local residents are the only source of demand. Demand from outside the prefecture is essential in order for prices to remain at current levels. Foreign buyers are not a visible presence yet in the Okinawa property market, but may present a potential new source of demand.
Source: IT Media Business, October 21, 2015.
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