Construction costs in Okinawa Prefecture now exceed the national average. A shortage in labour and a hotel development boom have pushed construction prices in the prefecture up to levels far exceeding those seen during the bubble economy.
In 2016, the average construction cost was 211,000 Yen per square meter (approx. 175 USD / sq ft), up 10.8% from 2015 and 7.1% higher than the nationwide average of 197,000 Yen/sqm.
If construction costs continue to rise, they may make house and apartment construction unaffordable for local residents. The Okinawa Housing Industry Association reported that the average price of a condominium in the prefecture has increased by as much as 30% in recent years. The cost of building a block of rental apartments has also reached a level where it may not be financially viable for landlords.
Building costs vary depending on the type of property and method of construction. The average cost for buildings such as hotels and restaurants was 339,000 Yen/sqm in 2016, up 29.4% from 2015, while the average cost for residential properties was 188,000 Yen/sqm, up 4.6% from 2015.
Construction costs are up across the country due to a shortage in labour and high demand for new buildings, such as hotels, Olympic facilities and reconstruction projects in the Tohoku region. The influx of investment into new hotel projects in Okinawa from both within Japan and overseas has been the leading cause of the local growing construction costs.
With land values and raw materials prices also showing an increasing trend, it is possible that construction costs will continue to increase for the near future.
Construction cost estimates in the prefecture are provided by the Ryugin Research Institute and are based on data published by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT).
The Okinawa Times, May 23, 2017.
The Ryukyu Shimbun, May 24, 2017.