Miyakojima’s property boom

Land prices on this tropical island in Okinawa have increased by as much as 50,000% (no, that’s not a typo) over the past four years.

Since the opening of the 3.4-kilometer Irabu-Ohashi Bridge in January 2015, connecting Miyakojima to Shimojishima Airport on Irabu Island, this area has seen an unprecedented surge in tourists. This has led to a rush in the construction of hotels, thereby pushing up demand for land. The airport is also scheduled to be upgraded this year with a low-cost carrier terminal. Jetstar Japan will start adding direct flights from Tokyo and Osaka to Shimojishima this summer. A cruise ship terminal is also planned.  The operator of the airport, Shimojishima Airport Management, is forecasting around 570,000 passengers in 2025, a 420% increase from 2019 estimates. 

Prior to the opening of the bridge, Irabu Island had just one hotel. In December 2018, Mori Trust Hotels & Resorts and Marriott International opened the IRAPH Sui, a Luxury Collection Hotel, Miyako Okinawa, on a waterfront location halfway between the airport and the new bridge. Several other hotels are planned for this stretch of previously idle oceanfront. 

Okinawa-based developer, Nikken Housing, is planning two hotels with a total of 400 rooms for Irabu. One will be a luxury hotel near the Irabu-Ohashi Bridge, while the other will be a city hotel near the airport. The scale of the two hotels may be expanded to cater to the growing tourist numbers. The luxury hotel will have 132 rooms over 3 floors. It sits on a 21,000 sqm block of land. Construction is expected to start in 2020. The city hotel will be 5-storeys and have 200 rooms. Construction is scheduled to start in August 2019. Nikken has also acquired the rights to restart a stalled resort project on the eastern side of Miyakojima. The low-rise, luxury beachfront hotel will have 41 rooms, of which 38 will be villas with their own private pools. Room sizes range from 46 ~ 111 sqm. The resort is scheduled to open later this year. It has an 840 meter stretch of beachfront. 

Miyakojima had 430,000 tourists in 2014. In 2015 this figure had increased to 510,000. By 2017 it had almost doubled to 980,000 tourists. The figures for 2018 are estimated at between 1.1 ~ 1.2 million tourists. The island has been suffering from a severe shortage in hotels, with only 46 hotels or ryokans with 2,432 rooms as of 2017. At best, the current hotel capacity is just 5,868 guests. 

The hotel construction boom has also created a drastic shortage in housing for construction workers, hotel and hospitality staff. Rental housing occupancy rates are almost at 100%, while rents are climbing. The typical rent of a 25 ~ 30 sqm studio apartment on the island is now around 80,000 ~ 100,000 Yen (715 ~ 895 USD) per month, exceeding the 55,000 ~ 60,000 Yen/month rent seen in central Naha City and close to triple what it was four or five years ago. Despite the extraordinarily high demand for rental housing, developers are not able to build fast enough with construction companies booked up for the next one or two years. Construction costs are also high, with the daily wage for concrete pourers almost double the rate of Tokyo. 

One developer from the greater Tokyo area plans to build as many as 130 rental apartment buildings and 70 simple lodgings with a total of 1,500 rooms over the next five years. As much as 70% of the 20 billion Yen project is expected to be funded by various private investors. As pointed out in a Bunshun Online article, one potential concern about this project is that the buildings will be wooden in order to keep costs low. The islands in Okinawa are often struck by typhoons, which means most housing is concrete block construction in order to withstand hurricane-strength winds. Investors from Tokyo, however, may not be aware of the force of the typhoons that hit Okinawa, and not fully understand the risk of investing in wood-framed rental housing. 

Generally speaking, land prices around Irabu and Miyakojima’s town areas have increased by anywhere from 2 ~ 10 times since the bridge was completed. In some parts of Irabu Island, hotel development land that was once trading for 600 Yen per square meter is now selling for as much as 300,000 Yen/sqm. According to a local real estate agent, the buyers are mostly companies from Okinawa and mainland Japan. 

Sources:
The Ryukyu Shimpo, April 22, 2019.
Okinawa Times, April 4, 2019.
Bunshun Online, April 2, 2019.

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