JAPAN

Interest in buying vacation homes starts to heat up

By Jun Iwawaki
Kyodo News

Jun 28, 2007

Demand for vacation homes is showing signs of recovery, good news for an industry in the dumps since the collapse of the asset-inflated bubble in the early 1990s.</PARAGRAPH> <PHOTO> <TABLE WIDTH='250' ALIGN='RIGHT' BORDER='0'> <TR> <TD><IMG ALT='Vacation homes are becoming more attractive as the economy continues to improve' BORDER='0' SRC='../images/photos2007/nn20070628f2a.jpg' WIDTH='250' HEIGHT='186'/></TD> </TR> <TR> <TD><FONT SIZE='1'><B>Vacation homes, like this one in the mountain resort of Karuizawa, Nagano Prefecture, are becoming more attractive as the economy continues to purr along. </B> KYODO PHOTO</FONT></TD> </TR> <TABLE> </PHOTO> <PARAGRAPH>With the economy on the upswing, young, well-to-do workers at major foreign financial institutions, information technology companies and firms in other high-flying sectors are now on the lookout for second homes, industry watchers say.</PARAGRAPH> <PARAGRAPH>Retiring baby boomers are also considering purchasing an additional house, they say.</PARAGRAPH> <PARAGRAPH>According to real estate dealers, properties in some areas of Japan are reasonable and thus within the reach of people without fat wallets.</PARAGRAPH> <PARAGRAPH>A 61-year-old man busy gardening at his villa in the popular mountain resort area of Karuizawa, Nagano Prefecture, said he has been coming here every week after retiring two years ago from a Tokyo company.</PARAGRAPH> <PARAGRAPH>'I finally have the time to tend to my garden,' he said, visibly relishing the charms of his sylvan surroundings.</PARAGRAPH> <PARAGRAPH>According to the town of Karuizawa, permit applications to build vacation houses plummeted to fewer than 300 a year in the mid-1990s from a peak of 679 in fiscal 1988 toward the end of the bubble. The figure has since been rising for the last six years and bounced back to 494 in 2005.</PARAGRAPH> <PARAGRAPH>Figures from the Land, Infrastructure and Transport Ministry confirm the trend, showing that land prices in Karuizawa have been heading higher since fiscal 2006.</PARAGRAPH> <PARAGRAPH>'The prices of parcels of flat land near the town center began to rise in 2002, but some plots in the outlying areas still remain cheap,' said Daisuke Kitazawa, a marketing official for the Karuizawa area with Mitsui-no-Mori Co. The firm is the resort development arm of major real estate firm Mitsui Fudosan Co.</PARAGRAPH> <PARAGRAPH>Interviews with local property dealers also reveal a patchy picture where land prices are concerned.</PARAGRAPH> <PARAGRAPH>While a 700-sq.-meter residential plot costs a mere 1 million yen in one area, a 2,700-sq.-meter tract in another location fetches a staggering 240 million yen.</PARAGRAPH> <PARAGRAPH>Kitazawa also points to the disparity in properties his company deals in. Prices in other well-known Nagano Prefecture resorts such as the Yatsugatake mountain range and the highlands of Tateshina have changed little, he said. </PARAGRAPH> <PARAGRAPH>'The recent strength of the economy has yet to touch these areas in contrast to –

Karuizawa," Kitazawa said.

A real estate magazine published by Recruit Co. conducted a survey last summer to rank resort areas by popularity. Izu, Shizuoka Prefecture, finished on top, while Karuizawa and Kusatsu, a Gunma Prefecture town known for its hot springs, tied for second, followed by Hokkaido.

Izu is popular for its temperate climate, beaches and hot springs. It is also easily accessible from Nagoya and Osaka.

Nationwide, the price for a standard plot of residential land in resort areas starts at around 500,000 yen, industry observers say. Previously owned one-family houses can be had for as little as 3 million yen, a mere song compared with the cost of housing in major cities. For a new home, the minimum price is about 10 million yen.

Experts say prospective buyers of vacation houses should make sure the climate is right for them throughout the year.

Another point to look at is whether the area offers a well-developed infrastructure.

Fixed-asset taxes and other regular expenses for would-be residents should be examined before taking the plunge and purchasing a second home, the experts say.