- Guaranteed stable returns
- Priced from as low as 9.9 million Yen
Land underneath Okinawa’s Naha Airport is for sale and can be bought and sold freely, just like any other asset. The land provides a stable and guaranteed annual income. Airport land is highly sought after and rarely appears for sale.
Naha Airport land rent rose 1.5% in 2010 and the rent increases each year. The lessee is the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). With the Naha Airport, it is very unlikely and unfeasible that the MLIT will ever end its lease.
What are the returns?
The average gross return or yield is 3%. Because of its low-risk and stable returns, this type of investment is preferred over keeping money in Japanese bank that provides negligible interest.
How is the land valued?
The price of the land is not determined by surrounding market prices or government rosenka land evaluations. Instead, it is calculated by its annual rental income multiplied by a scaling factor.
Because the land is designated as being leased by the Government, the land valuation is much lower than normal-use land. This means the annual fixed asset tax is lower.
Also, due to the stable income, banks are more likely to provide a higher valuation when applying for a loan. Leased-land in Okinawa is separated into three different ranks (A to C). Land that is unlikely to have its lease broken and returned to landholders, such as the JASDF Naha Air Base and the Kadena Air Base, are designated as “A” areas.
These ranks determine the valuation by the bank, with “A” areas receiving a higher valuation.
The scaling factor will also vary depending on the rank of the land. “A” areas have a scaling factor of 33, “B” areas have a factor of 25, and “C” areas have a factor of 10.
Naha Airport has a rank of “A”, but the scaling factor will vary between 33 ~ 36, and due to its popularity it may be even higher.
Examples of land for sale:
Example from 2011:
– Size: 70 sqm
– Annual income: 259,000 Yen
– Price (38.5 times income): 9,900,000 Yen
– Gross Yield: 3.11%
Example 1 from 2010:
Land underneath the ANA departures building.
– Size: 234.94 sqm
– Annual income: 947,879 Yen
– Price (36.5 times income): 34,590,000 Yen
– Gross Yield: 2.74%
– Annual fixed asset tax: 45,307 Yen
– Real estate acquisition tax: 95,483 Yen
Example 2 from 2010:
Land in the waiting area for planes near the JAL departure gate.
– Size: 145 sqm
– Annual income: 530,639 Yen
– Price (37 times income): 19,630,000 Yen
– Gross Yield: 2.7%
– Annual fixed asset tax: 30,947 Yen
– Real estate acquisition tax (payable once only upon purchase): 95,483 Yen
How the sales price is calculated:
Land size x leased-land price (per sqm) = Annual Income x Scale factor = Sales Price
145m2 x 3659.58 Yen = 530,639 Yen x 37 = 19,630,000 Yen