Realtors see gold in Golden Week
Japan's own baby boom generation is in the market for second homes
The upcoming Golden Week holiday period in Japan, which runs from April 29 to May 5 and typically brings a quick boost in tourist travel to Hawaii, is also expected this year to bring second-home buyers en masse.
Demand for second homes and residential investment properties by Japan's dankai generation, the age equivalent of the American baby boomers, has ignited an interest in Hawaii's resort products that Realtors expect to ride for at least two more decades.
As the dankai generation, those born primarily between 1946 and 1964, begin to enter middle age and look to retirement, many are gaining wealth by becoming empty nesters, through inheritance. An improving Japanese economy and a still-favorable yen-to-dollar ratio have made this an opportune time to spend the money that they were carefully saving over the years.
"The stars are aligned right now for Japanese investors," said Paul Brewbaker, Bank of Hawaii chief economist.
Fundamental improvement in the Japan economy, which has seen a 41 percent return on the Nikkei 225 stock index over the last 12 months, is rebuilding wealth cycles, Brewbaker said.
"The only market I'm aware of that did better last year was the single-family home market for Makaha/Nanakuli, which went up 50 percent," he said.
While Hawaii's real estate industry doesn't keep statistics on the growth of the Japan market, anecdotally real estate agents, builders and hotel leaders say that they have noticed an increased interest in Hawaii second homes, timeshares and vacation clubs from the eastbound market.
Strengthened demand for Hawaii as a visitor destination and second-home market from Japan also has enticed Ei Publishing Co. Ltd., a major Japanese magazine publishing house, to open its first Hawaii office.
"There is a growing market of people in Japan who are very interested in coming to Hawaii to live or at least for much longer stays," said Kenton Kihara, coordinator for Ei Publishing's Hawaii office.
An increase in Japan's aging population of empty nesters and retirees has contributed to growth in the number of visitors who are able to invest in Hawaii either as a place to visit on longer vacations or to live, he said.
"Asian buyers had been quiet after the bubble economy, but we are definitely starting to see steady growth," said Sachi Braden, who opened Sachi Hawaii Pacific Century Properties, three years ago to cater to the Asian second home market and personally oversaw $90 million in transactions her first year.
Last year, Hawaii saw a strong resurgence in demand from Japanese second home buyers, but the lack of turnkey properties put limits on the market, she said.
The release of additional luxury condominium inventory at Hokua, Moana Pacifica and Koolani has stimulated further interest from the eastbound market, said Braden, who will fly to Japan in April with Centex Homes to sell seniors on Hawaii's second-home market prior to the Golden Week rush.
"There's a lot of interest in Kakaako's luxury market right now," Braden said. "We're expecting to be particularly busy during Golden Week, when we have more visitors from Japan."
While there are a growing number of Japanese buyers who will readily spend the $1 million that it takes to purchase new or modern products in Hawaii's second-home market, rising prices have also created an uptick in the number of Japanese buyers who are purchasing units in a timeshare or vacation club.
More than 50 percent of the timeshares sold at the Hilton Hawaiian Village in Waikiki are purchased by visitors from Japan, said Mark Wang, senior vice president for Hilton Grand Vacation Club.
"We've got offices in Tokyo and Osaka," Wang said.