Offshore buyers are on the hunt for hot spring resorts and traditional ryokans in Shizuoka’s Izu Peninsula, according to a recent article in Diamond Online. The article quotes an onsen and hotel broker that received over 200 inquiries in May alone from buyers looking to acquire accommodation facilities across the country, with 70% of those looking for luxury hot spring ryokans around Izu, Hakone, and Mt. Fuji.
Many of the inquiries are from overseas investors. The most popular asset class has been traditional wooden ryokans with Japanese gardens. Rather than the larger commercial-style hotels that cater to tourists, these buyers are searching for ryokans that can be converted to private use for friends and family.
The scenic coastline is famous for its onsens, ocean views, and mountainous forests, and has been popular with both domestic and foreign tourists. Izu and nearby Hakone and somewhat convenient to access from Tokyo, within about a 2-hour train trip or drive, depending on traffic. In these locations, the typical price for a hot spring ryokan can range from 300 ~ 400 million Yen (US$2.7 ~ 3.6 million). If the seller needs to sell quickly and the buyer is ready and able to sign and close immediately, there are some cases where discounts of 10 ~ 20% have been possible.
These traditional ryokans may be listed for sale by their retiring owners/operators. As the next generation does not want to carry on operations, they have no other option but to sell. A small number of rooms, aging buildings, and high operating costs make them difficult to operate at a profit, especially when staffing is required. But, they may appeal to wealthy buyers looking for weekend retreats since they are often larger than the standard holiday homes.
However, the entry bans prohibiting foreign tourists and overseas buyers from coming to Japan to inspect properties means the offshore inquiries rarely lead to actual sales. The ryokan broker in the article is expecting there to be a rush in sales as soon borders re-open, as foreign investors who have been sidelined will finally be able to make their move. Demand could also start to spread to other famous onsen districts across Japan in the coming years.
Source: Diamond Online, August 7, 2021.
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