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New concerns surface on building more hotels

Date Posted: 2009-04-02

Eight new hotels are under construction on Okinawa, and more are being planned and developed despite the economic downturn, leading the Bank of Japan to issue a caution.

The Bank of Japanís Okinawa Branch has just completed research on investments in hotels and condominiums in the Prefecture, and issued a report warning of bankruptcies in real estate companies that is influencing some companies building hotels to back off on their plans. Despite some construction companies having obtained new financing from the banks, with government backing, the Bank of Japan alerting businesses that the deterioration of hotel demand will eat into profits because tourism is in decline.

The investment rush in 2005~2007 led to construction starts on hotels and condominiums by companies from outside Okinawa, but those investors are backing off as the recession spreads worldwide. The migration of Japanese from the mainland to Okinawa has also dropped off, changing the easy financial environment into a more cautious one. Investors have stopped investing money in Okinawa land, and for building hotels and condominiums.

Condominium construction has slowed, and the Bank of Japan says there are already a good number of vacant hotel rooms available. The Bank predicts investors are waiting and watching to see if tourism rebounds and fills the currently available rooms. Okinawa Prefecture, meanwhile, is pressing its campaigns to lure tourists to the islands.

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