Japan’s resort areas are seeing a dramatic polarization of their property markets. Some areas, such as Karuizawa and Okinawa are seeing prices rise, while other areas are seeing year-on-year falls. Why is this happening?
The main buyers of resort apartments are baby-boomers and retirees. These buyers are seeking a comfortable climate in an area with suitable amenities. As such, Okinawa with its warm climate all year-round, and Karuizawa with its cool summers and convenience to Tokyo are hot spots for the baby-boomer generation.
According to Tokyo Kantei, the average asking price of a 70sqm second-hand apartment in Karuizawa between January and February 2013 was 22,450,000 Yen – 3.6% higher than in 2012. Prices are now 16.1% higher than they were when they hit a recent bottom in 2009.
In Okinawa’s Nakagami District, the average asking price of a 70sqm second-hand apartment was 28,660,000 Yen in 2013 – up 9% from the year before.
Meanwhile, apartments in resort towns that have lost their lustre are seeing their values erode year after year. In Yuzawa, Niigata Prefecture, the average apartment price between Jan-Feb 2013 was 3,460,000 Yen – down 4% from 2012 and half of the value they were 10 years ago. It is even possible to find apartments listed for sale for as little as 30,000 Yen (300 USD).
Resort apartments in Yamanakako near Mt Fuji have an average price of 6,060,000 Yen, which is 27% lower than their previous peak in 2006.
Unlike Karuizawa and Okinawa, these areas have trouble attracting retirees. In Yuzawa, many of the resorts were built at the peak of the bubble economy when the town was in the midst of a ski-boom. As a result, the apartments and facilities were built to cater primarily to ski tourists. For retirees and the older generation whose skiing days are behind them, there is little else to encourage them to settle in the town.
Yamanakako is well-known as a scenic area. While prices are relatively cheap, apartment management fees are particularly high and be as much as 100,000 Yen a month on some apartments.
Resort Memberships as an alternative to buying
Demand for resort-living is declining. In the past it was a status symbol to own a holiday home in a resort area, but fewer consumers are subscribing to this belief anymore.
There is now a shift towards buying resort memberships rather than a holiday home. These memberships provide the member with a set number of days each year that can be used to stay at a resort. There are no building management fees or maintenance issues to worry about.
According to Yokohama-based resort member brokerage ‘e-kaiinken’, the average price of resort membership in March 2013 was 1,580,000 Yen (16,000 USD), up 7.4% from February.
Areas such as Yamanakako and Lake Hamana, which are both seeing property prices falling, are seeing a noticeable increase in the price of resort membership fees.
The Nikkei Shimbun, April 13, 2013.