Japan Takes Cars to New Heights

Japan Business News

Japan Properties

08 Oct, 2020 –

The future of travel may be coming — and sooner than you think! On Aug. 25, the first flying car was successfully tested by SkyDrive Inc., a Japanese company that develops urban air mobility solutions, at a Toyota Test Field in Japan, according to a press release on SkyDrive’s website.

The public demonstration flight lasted a total of four minutes, as the SD-03 flying car model — which measures two meters high, four meters wide and four meters long, and takes up as much ground as two parked cars — circled the 10,000-square-meter (approximately 2.5-acre) field with a pilot at the wheel.

“We are extremely excited to have achieved Japan’s first-ever manned flight of a flying car in the two years since we founded SkyDrive in 2018 with the goal of commercializing such aircraft,” SkyDrive CEO, Tomohiro Fukuzawa, said in a statement. “We aim to take our social experiment to the next level in 2023 and to that end we will be accelerating our technological development and our business development,” Fukuzawa added. “We want to realize a society where flying cars are an accessible and convenient means of transportation in the skies and people are able to experience a safe, secure, and comfortable new way of life.”

According to SkyDrive, the pearl white aircraft was “designed to be the world’s smallest electric Vertical Take-Off and Landing (eVTOL) model as a new means of transportation for the near future.”Though the pilot was at the controls and technical staff at the field helped monitor flight conditions and aircraft performance, SkyDrive said the aircraft was also operated by a computer-assisted control system that “helped ensure flight stability and safety.”

The model features a total of eight electric motors in four locations to “ensure safety in emergency situations” and “to address compliance standards and allay potential regulatory concerns,” the company explained. It also includes a pair of propellers and two white lights in front, as well as a red light on the bottom of the body — features that are unique to flying cars and designed to act as indicators for which way the vehicle is traveling while floating in the sky.

“In designing an unexplored, new genre of transportation known as the flying car, we chose the keyword ‘progressive’ for inspiration,” explained SkyDrive design director, Takumi Yamamot. “We wanted this vehicle to be futuristic, charismatic and desirable for all future customers, while fully incorporating the high technology of SkyDrive.”

According to the press release, the company plans on continuing test flights under various conditions to make sure they meet safety and technology standards. They are aiming to obtain approval for flights outside of the Toyota Test Field before the end of 2020, and hope to launch the flying car by 2023, though no price has been announced yet. “SkyDrive’s flying car has been designed to be a coupe embodying dreams and exuding charisma, such that it will be welcomed into people’s lives and used naturally,” the company wrote in the press release.

“The company hopes that its aircraft will become people’s partner in the sky rather than merely a commodity and it will continue working to design a safe sky for the future as a partner in the sky,” they added.

(Source – People, Pic – World debut SkyDrive Manned Flight by SD-03 / “Sky Drive Inc.“)

Government Offering Grant for Shifts to Rural Satellite and Shared Offices

30 Sept, 2020 –

The central government plans to begin offering grants to municipalities that promote teleworking as a regional revitalization measure from fiscal 2021. The Cabinet Office and the Cabinet Secretariat are expected to earmark ¥15 billion for the subsidy in their budget requests for the fiscal year from April, informed sources said Friday.

The increase in the number of people working from home and other remote locations amid the coronavirus pandemic has led to a rise of interest in living in rural areas away from densely populated urban centers. The government hopes to support the shift to working from rural areas as a way to correct the concentration of industry and population in Tokyo, the sources said.

The new grant will be available to all municipalities except Tokyo and the prefectures of Saitama, Chiba and Kanagawa, which make up the greater Tokyo metropolis. Under the government’s plan, it will cover 75 percent of expenses borne by municipalities for setting up systems to accept satellite offices of companies and shared office spaces. The agencies will also ask for ¥400 million for a project to match businesses with municipalities looking to accept branch offices.

They are also planning to boost a subsidy program that awards up to ¥1 million to people who lived or worked in central Tokyo’s 23 wards and have moved and found work in regional areas. People who continued their jobs were previously unable to apply for the aid. The government plans to offer the grant to those who move to rural areas for raising their children or taking care of elderly family members, while continuing to work for their employers in Tokyo through remote work.

(Source – “The Japan Times“, Pic – Solarium / “Nippon Tradings“)

Japan Attempts to Establish Global Standards to Co-exist with Robots

22 Sept, 2020

Most of us are familiar with robotics in manufacturing related to industrial safety and performance. These robotics have been, for the most part, tucked away in factory lines and other industrial settings. But now, since the coronavirus, things have been changing. Real-time statistics website, “Worldometer,” states, “894,024 deaths as of September 7, 2020 worldwide.” The coronavirus outbreak put the spotlight on the weaknesses and vulnerabilities in the global human workforce, the risk to frontline workers, and the need for automation to reduce contact between humans to prevent the spread of the virus.

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Japan has had to be ahead of the game because of its rapidly aging society with fewer children. The country is already equipped with a ‘national’ standardization JIS Y1001for robot-to-human interactions because of its labour shortages affecting all industries. Taking it one step further, Japan opened a consultation with the International Organization for Standardization (ISO) in a bid to establish ‘international’ standards for human-assisting robots. ISO’s existing TC 299 for “standardization in the field of robotics, excluding toys and military applications” does not consider the best practices for various settings which Japan’s standard does. For this reason, TC 299’s new working group is being headed by Japan to help ensure that the global standards for human-assisting robots is at least as robust as Japan’s national version.

Here’s a recap of the history of ISO/TC 299 as quoted from iso.org reflecting the increasing and broadening standardization activities in the field of robotics. “In 1983, the committee started as subcommittee SC 2 “Robots for manufacturing environment” under the Technical Committee ISO/TC 184 “Industrial Automation.” The initial efforts were primarily related to industrial safety with some activity in vocabulary and performance. As a result, the title was updated as “Robots for Industrial Environments.” The title was again updated to “Robots and Robotic Devices” to include not only industrial robots, but also non-industrial robots, which were defined as service robots in 2006. With increased robotic activity, greater visibility was needed for better coordination. This resulted in the upgrade to ISO/TC 299 with the title of “Robotics” in 2016.

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What will robot-human smart cities of the future look like? With the partnership of Japan Post with Yamato, one of Japan’s door-to-door delivery services, robots and autonomous cars will soon be on the streets of Tokyo. This robot still needs to learn how to use elevators. But, that may not be too long a wait as world leading elevator company, ThyssenKrupp recently unveiled a communication interface to assist with robot delivery services. Also, in restaurants, your hot, steaming bowl of ramen will soon be served by a robot waiter as ramen chain, Kourakuen in Fukushima is initiating. The more familiar 4 foot tall Pepper robots designed by Softbank Robotics are humanoids designed to identify and react to human emotions, laughing at a joke, offering comfort or giving reminders. Patients quarantined at hotels in Tokyo found themselves comforted by Pepper saying, “I hope you recover as quickly as possible.” Or, “Please wear a mask inside.” They are also already used in banks, shops and hotels. The more time the system spends interacting with a person, the more natural the conversation becomes. These robots will be scaled up when better artificial intelligence is developed.

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If Japan’s bid is successful in establishing international standards for human-assisting robots, it will be instrumental in exporting its standard to the rest of the world. It will be ahead of its global competitors in the cultivation of Japan-oriented collaborative robots or ‘cobots’ designed for direct interaction with humans to perform tasks outside of industrial automation applications such as customer service, cleaning, delivery, guide robots, nursing-care robots, assisting robots designed to help the elderly, or even to assist with surgery. With expansion overseas for industries to take advantage of, if we thought life adjustments after the pandemic were “the new world,” we ain’t seen nothing yet.

 

(Source – Priti Donnelly, “Nippon Tradings International”, Pic – Bing.com)

Japan Offers Income Incentive to Newlyweds to Boost Ultra Low Birth Rates

Japan Real Estate

Japan Properties

21 Sept, 2020 –

Couples who get married from next April can receive up to ¥600,000 to cover their rent and other costs as they start a new life, provided they live in a municipality adopting Japan’s newlywed support program, government sources said Sunday. As the nation’s ultralow birth rate is attributed mainly to the tendency that people marry late or stay unmarried, the government will try to boost the number of marriages in the nation by enhancing the program to provide a larger sum and cover more couples, said the sources at the Cabinet Office.

To be eligible, both husband and wife will have to be under age 40 as of the registered date of marriage and have a combined income of less than ¥5.4 million, up from age 35 and ¥4.8 million under the current conditions for aid of up to ¥300,000. Only 281 municipalities, or 15 percent of all cities, towns and villages in Japan, had adopted the program as of July as they must shoulder half the expenses, but in a bid to increase that number, the central government will bear two-thirds of the costs from fiscal 2021, the sources said.

The program is part of government efforts to address the low birth rate. Married couples tend to have two children, although the average number of children a woman will bear in her lifetime was only 1.36 last year. A record-low 865,000 babies were born in 2019. An economic incentive is deemed effective to encourage people to marry since 29.1 percent of single men age 25 to 34 and 17.8 percent of single women cited a lack of funds as a reason they stayed unmarried in a 2015 survey by the National Institute of Population and Social Security Research.
(Source – The Japan Times, Pic – Japan Wedding / “Yu Studio“)

Landlords Offer More Flexibility in Tenant-Favourable Office Market

Japan Real Estate

Japan Properties

15 Sept, 2020 –

The coronavirus pandemic has made working from home commonplace, and left many companies looking to reduce office space. The problem is, relocating in Japan can be crushingly expensive, even if you’re downsizing. But some innovators are offering a solution.

When a company in Japan relocates, they have traditionally paid to have their old office remodeled and restored to its original, unfurnished state. Carpets are replaced, walls are removed, lighting fixtures are torn down, and the painters turn the wall a spotless white. In central Tokyo, the average cost for this work is nearly $100,000. Landlords typically prefer to rent their rooms as empty shells because it means they won’t be responsible for repairs. Even the interior walls belong to the tenant. But this standard may be starting to change as the coronavirus pandemic reshapes the office rental market and puts pressure on the owners.

For eight years, Tokyo landlords had all the bargaining power as demand for land rose. But that trend reversed in March and analysts say the uptick in availability will only continue to grow in the coming months. This means that Tokyo-based Hitokara Media has been busier than ever. The company mediates between tenants and owners, and tries to minimize the costs of a relocation. Chief sales director Kohata Daichi says they’re getting more and more enquiries from companies looking to quit their leases and move into smaller digs. This would have been difficult in the past, when owners refused to renegotiate agreements. But with the current market favorable to tenants, Kohata says many are willing to discuss new terms as long as Hitokara Media can find a replacement.

Renovation fees aren’t the only hurdle for a relocation. Tenants usually have to give six months’ or even a full year’s notice and pay rent for that period. But a new company called Venture Property is trying to solve that issue. The firm takes over the office space, furnishings and all, from tenants who want to move out quickly. It then leases them “as-is” to other companies, with an agreement that the new tenants can also leave at short notice and without paying for any restoration work. CEO Udagawa Yoshihiro says many companies rent office space without thinking they will one day have to move out, and they are often astonished at how long and expensive the process is. He says his company offers other businesses an exit strategy.

For companies going through tough financial times, services such as those offered by Hitokara Media and Venture Property can be a lifeline, and even the landlords see the benefit, as they too worry about the future and how to fill their office space.

 

(Source – NHK World, Pic – Japan Co-Working Space / “Rama Mamuaya“)

Affordable Country Homes a Labour of Love

Japan Investment Properties

Japanese Real Estate

26 Aug, 2020 –

(CNN) — Kimberly and Paul Fradale were living in Tokyo, working at international schools, when they took the leap many an American expat dreams of: buying a large country house for a song and restoring it to its former glory. Both had been raised in the countryside: Kimberly, who is Japanese-American on her mother’s side, grew up in rural Alaska, and Paul’s childhood was spent in rural New York. In a country known for sky-high real estate prices, buying a large country home (or “kominka”) in Japan is still affordable.

“You can buy a home with a modest lot for as little as $20,000 USD, depending on location. Some towns even maintain lists of free or nearly free houses, in hopes of bringing in new families, ” Paul explains. There are no restrictions on foreigners buying land or property in the country, and no citizenship or resident visa is required. That said, without a work visa or permanent resident status, obtaining a loan can be difficult. Foreign buyers typically opt to pay cash for this reason. “With so many houses available for so little, however, cash should not be an issue, ” Paul says.

The Fradales, who live and work in Japan year-round, waited until they achieved Permanent Residence status before they purchased their home. They didn’t want to have to leave the country every three months to renew a tourist visa, in the event of an unforeseen job loss. They also spent a lot more money than they could have — roughly 250 thousand US dollars — but their 130-year-old home came with about three-quarters of an acre of land, a fully mature garden with a giant Japanese cherry tree, and ancillary buildings such as a “kura,” a type of earthen-walled storehouse.

Why old country houses are abandoned

The Fradales say most young Japanese people have little interest in an old house, particularly one far from the city, lacking modern conveniences. In Japan, they say, houses are considered disposable. But they reject that mindset.”Old, grand farmhouses like ours were built to endure, to shelter generations of families, and it shows,” Paul says. “Houses in Japan do not gain value over time; just the opposite is true. The value of our property is solely in the amount of land. The main house is valued at a few thousand dollars, despite it being made of materials that literally cannot be bought anymore,” Paul explains.

In particular, young families are not interested in living in a”‘kominka” (literally “old house”) because while they are spacious, they offer little in terms of privacy: all doors are either paper shoji or fusuma (a cloth-covered sliding door). “If anyone snores, for example, the whole house can hear it. If we had children, a kominka would not be an option,” says Kimberly. They can also be cold. “Even with the addition of a wood stove, we still have several winter mornings and evenings where we can see our breath in the house,” says Kimberly.

House hunting

The Fradales scoured real estate listings for years, with Paul even checking aerial views in Google maps every time they found a decent prospect. Then he’d look for the key features he wanted most.

Paul’s wish list:

-A river within cycling distance but not so close that flooding would be a risk

-A temple nearby so they could hear the bells

 -A local produce shop/farmers’ market

 -Hills or mountains nearby

 -Akura (storehouse) on property

 -A mature garden

 -Enough land so that neighbors would be a fair distance away

 -A town big enough to have a hospital, grocery stores, and a home improvement store

 -A town not so big that traffic would be an issue

 -A relatively flat town so cycling around it would be easy

 By comparison, Kimberly’s wish list — running water, electricity and plumbing — was extremely modest.

Finding their dream kominka

“We stayed away from the coast. As much as I love and miss the ocean, the 2011 quake/tsunami put paid to that notion,” Paul says. So instead they checked city and town hazard maps to see where there was a risk of mudslides, floods, and tornadoes. After looking at more than 30 homes in person, they finally came across the one they would buy.

The buying process

For Paul, their future home was love at first sight. “When we set foot on the property I fell in love with it. I could easily imagine what it would look like eventually. Kimberly was much less impressed. Her words to me as we went to meet the agent were, ‘Remember, poker face! Don’t look interested!'” But as soon as he entered the house, Paul spotted a ‘Kaidan Tansu,’ a chest of drawers that also function as stairs, a hidden trap door in the ceiling, and sliding doors made of a single solid slab of elm. That’s when, he says, he “squealed like a little girl.”

“We were told the seller had an offer from a developer to buy the property, raze the house, and build a dozen small houses on it, but he was hoping someone would want to keep the old house,” Paul says. One small shock for the Fradales: in Japan, the buyer, rather than the seller, typically bears all the closing costs. The owner, in turn, delivers an empty house, cleaned of its contents. “Usually, an owner is required to thoroughly clear the house, but I could see there were many interesting antiques mixed in among the endless amount of stuff, and so we got a price cut to account for that,” Paul says.

 A treasure trove (and a box of roaches)

Since the house came with all its contents, cleaning it up turned into a treasure hunt. “For us it meant that the first year of ownership was little more than sorting through a hundred years of history, as told through one family’s possessions, ” Paul says. One box had nothing but candy wrappers, all neatly flattened and stacked. “One box made a suspicious noise so I took it outside to open it. It was full of nothing except hundreds of cockroaches, that spilled out like something out of an Indiana Jones movie,” Paul says.

The next box, however, contained rare old photos and postcards from WWII. Another box was filled with old jewelry, including a string of pearls. There was even an old chest of drawers with vintage kimono in them.

Of most interest to the Fradales were the historical photos, documents, and antiques, which they offered to return to the owner on more than one occasion. “I have shared some of the newspapers and other war time artifacts with my history students. These items have helped make the events more personal and tangible,” says Kimberly. “There are extended family members in the next town we’re contacting them to see if they would like some of the photos; we’ve curated historical photos and documents we will keep,” the Fradales explain.

They have also considered donating the artifacts to a historical society or even turning part of their home into a miniature museum featuring a history of Japan in the early 20th century, as told through one family and their home.

War memories

“We found an old clock made in Nazi Germany, complete with a swastika stamped on it; we gave that to a clock maker in a neighboring town,” Paul says. There were also old Chinese coins, letters home, and a miniature Japanese flag to be carried by a soldier into battle for good luck, with encouraging messages on it. They also found WWII-era newspapers featuring stories of General Tojo laughing at the numbers of dead Allied forces.

“Some of the documents are not flattering (for example, the newspapers) to Japan, so we’re aware that not everyone would be happy to see them displayed anywhere. We believe history should never be whitewashed but neither should it be rubbed in anyone’s face,” Paul says.

 Holiday traditions

“Every traditional Japanese house has a ‘butsudan’ ” explains Kimberly. A ‘butsudan’ is an in-house Buddhist shrine for family members who have died. The Fradales’ shrine came with the names, letters, and photos of those in the previous owner’s family, going back several generations. The Fradales were told they should just get rid of it, but Kimberly couldn’t do it: “I still can’t evict them. Every major holiday I open up the doors and they hang out with us. Hopefully they approve of the attention we’ve given to the place.”

 Neighborly trades

The Fradales’ neighbors in the countryside, most of whom are retirees in their 70s, have welcomed the newcomers. “They have seen us come up every weekend and during all our holidays, working from dawn to dusk to clean up the house and yard. Like folks everywhere, the Japanese like rooting for an underdog, and seeing the two of us tackle this place … has made us the ‘welcome-if-mad’ newcomers to the neighborhood,” says Paul.

 Neighbors have donated stones and plants, including a 100-year-old fern and a bonsai tree, to help them spruce up their garden. In turn, the Fradales give away the bamboo they tear up from the yard each year. Since bamboo is something of a seasonal delicacy in Japan, neighbors welcome the treat.

“This year, for example, we had over 50 come up, and we dig them up and take them around to all the neighbors. Invariably, later in the week various neighbors will drop off beer, coffee, cabbages or other produce, or homemade rice dishes in thanks for the shoots,” he says. “We are so fortunate to have landed in a place where the neighbors are kind and open. In exchange we offer hours of endless entertainment,” Kimberly says.

 Honoring traditional crafts

Since people worldwide are struggling to find a way to lower their impact on the environment, the Fradales believe restoring countryside homes, along with embracing traditional folk arts and crafts, represents a way Japan — and indeed the world — could move forward.

“Japan was once known in the West as a source of cheap goods that worked well. Japan has now seen first South Korea, then China, rise and then equal that claim,” says Paul.

“The values that went into building this house are the same that still go into handmade paper umbrellas, hammered copper tea pots, lacquered chopsticks, or quality tatami mats. Each item is made with care and is meant to last more than one generation if maintained; they are made with deep respect for the materials from which they come, and made with deep consideration for those who will use them,” Paul says.

 Beauty amid the lockdown

The Fradales’ country retreat has been a welcome respite during the coronavirus. “As the Covid crisis has us all self-isolating, this house and the property have been a source of endless comfort in the form of hope…[right now] the frogs are about to start their evening songs and the azalea are giving way to the hydrangea. There is optimism in seeing nature grow,” Kimberly says.

 Paul agrees, and says buying their country home was the right decision. “All around the world there are historic homes in need of love. I highly recommend leaving your home country, really getting involved in a new culture, and taking on a challenge like this. Make no mistake, it can be backbreaking labor, but it is very rewarding,” he says.

(Source – CNN, Pic – Japan Investment Property / “Nippon Tradings“)

What are Investors Looking for?

2020, Aug 25 –

(The following is an excerpt from our “Japan Real Estate Podcast”, in which we interview NTI’s sales & marketing manager Priti Donnelly. The original episode can be streamed/downloaded for iphone/ipad/Mac listeners, or here for all other devices)

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Japan Real Estate

Japan Properties

ZM – Priti, thank you so much for joining us today, it’s great having you on the show.

PD – Thank you, Ziv, it’s great to be here!

ZM – So, what we normally like to do here on the podcast, before we actually dive into the practical part of the conversation, could you maybe tell us a bit about yourself? Your work experience before, and during your job here at NTI, stuff that interests you, maybe what actually drew you to this particular position?

PD – Sure! Like most of us, I’ve worn many hats, I have a background in commercial and residential mortgages in Canada and the US, I have a degree in English literature, I’ve studied advertising and marketing, as well as negotiation – and I say all that, because when I saw this position, I was just drawn to it, because this gave me an opportunity to tie all my skills together. That’s what I felt. I’ve even worked with the government which, as you know, means understanding contracts, and paperwork – I know that quite well too – so, I just loved how this position tied everything together.

But, there was only one thing – I have never been to Japan. That was the challenge. And I knew very little about the Japanese property market.

ZM – That’s right, you actually had no real exposure to Japan at all, or even any knowledge about the country before taking on this job, did you?

PD – So true! Not much at all. In fact, the idea of investing in a foreign country, to me, seemed risky, and not something I’ve opened my mind too. And I think many foreign investors probably feel the same way. What opened my mind actually was one of your videos on the NTI website – and it was at that point, when I watched it, that I realized – you know what, NTI is not a real estate agency. It’s actually a proxy service and a buyers’ agency. And that was something completely different. It was like, a niche. Not your typical real estate agency, and in that way, I felt, it was like a natural extension of anyone who wants to invest in Japanese real estate – there was the opening.

And there’s no question, we all know that we live in volatile times – the real estate markets around the world couldn’t be more speculative. Yet here, in Japan, here’s a market that focuses on steady cash flow and rental income. And it’s so affordable! Finally, real estate investing doesn’t have to be just for the rich, and doesn’t have to be as speculative as most of us understand it to be.

So this proxy service gives foreign investors that access.

ZM – And, I guess this frame of mind, that’s actually where many of these potential clients who contact you for the very first are in, isn’t it? I mean, there are just so many things that most people who haven’t been exposed to Japan, like yourself, or to Japan’s property market, or any Asian property market, probably wouldn’t know about, or might even have the wrong impression about certain things.

Can you maybe give us a few examples of these common misconceptions that you run across regularly?

PD – Sure, yeah, I do run across misconceptions. I think one of the most common ones is the effect of earthquakes on Japanese homes – plenty of misconceptions there. The fact is, properties built from 1981 and later would fall under the latest earthquake resistant construction methods (for reinforced concrete structures) under the building standards act. I always emphasize, however, that if you buy something built PRIOR to 1981, it wouldn’t blow away or crumble. If an older building has been well maintained, with a strong reserve funds pool utilized for renovations projects and repairs, it’s not necessarily a high-risk project.

So that’s one of the things. Another is that people also think that owning a property overseas would be a headache, and costly, and they’re going to have to do a lot of travel, and bear a lot of travel expenses. Again, not true. And that’s because of this proxy service, and that’s what I love about it – because we make things simple for foreign investors. So first of all, there’s no need to travel for the purchase. And since your wife and business partner, Chikako, is native Japanese, as is most of the staff over there in Japan, we can and do represent clients at meetings. Even though the seller is aware that the buyer is foreign, we send the documents for signing in English to the buyer, and the conduct all the meetings on their behalf, with the sellers and their representatives, in Japanese.  So it’s a turnkey experience for the investor, and there’s no travel required.

And in terms of managing the property, which is what many people ask me about – NTI communicates with the property manager, renovation and repair professionals, building management, tax authorities, insurance companies – as well as paying bills and receiving rental income. So anything and everything that’s associated with properties, we do. We also provide financial management, collecting and holding on to rent payments, remitting funds overseas on request – and should the time come to sell, we assist with that as well. All this, and you never need to travel – truly fantastic!

There’s another misconception as well that I want to talk about, which is the worry that tenants would be a hassle to manage. People think “oh, no, what if I’m far away, and something goes wrong, something happens, they’re having a party, and my property is destroyed”, etc.

What I have learned is that Japanese people are trouble and hassle free, honest, and by nature, do not want to tarnish their reputations, so for this reason, they’d never intentionally damage property. Rarely would there be any tenant headaches. Generally, the only repairs are from wear and tear.

ZM – That’s so true…And aside from that, what actually draws people to have an interest in this market – and when they ARE drawn to it, what are they worried about? And by that I mean not misconceptions, but stuff that they’re wondering about, will that work or not work, what do they expect?

PD – Well, everyone I meet, whether they’re new to investing or seasoned, and understand Japanese real estate or not – they’re all looking for the same thing. The best possible deal with the lowest possible risk. And in this cash flow market, low risk means steady occupancy and cash flow. They want to see the steady rental income. Yields range from 6% to 12% net pre-tax, depending on the location – try getting that anywhere else – I mean, that’s high.

So, say ,6% metropolitan VS 12% in the countryside. And property features such as the size of the property would make a difference, how close it is to public transportation, schools, hospitals, things like that. Once a person expresses interest in Japanese properties, I like to get a good understanding of their criteria, and then I send the relevant listings. Just those properties that they would be most interested in.

This is a huge market, the second largest real estate market in the world. So what I do is filter it down to the best suited properties, so that they can get the offer in as quickly as possible. Because, in this market, what people don’t realize, is that properties close within days. They don’t sit around for months like they will in the US, Canada and other parts of the world.

ZM – Right. And this is stuff we’ve talked about here in the podcast in the past, and we’re probably going to keep coming back to again and again…could you maybe tell us a bit about who your typical client, or potential client, is? Profile? The kind of people that regularly contact you – are they always from the same countries, similar socio-economic profiles, ages? Any common denominators at all?

PD – I’ve talked to people all over the world. I think it’s mainly people who are interested in real estate and understand it. So you’re looking at Australia, Canada, US, UK, Singapore, which are all on top of our list for popularity – but really all over. This market definitely appeals to the financially savvy investor, who is looking to develop a portfolio and who is very much at ease with international markets.

But at the same time, and this is another thing I really like – it also appeals to the new investor. Someone who’s always felt “Oh, I can’t invest in real estate, I just can’t afford it”. Japan’s property market gives them the opportunity because of the affordable prices in Japan. So for as little as 25-30,000 dollars, they’d be able to invest and take advantage of the high yield of properties.

ZM – And that’s 25-30 including all purchase costs, right?

PD – Yes. Including all purchase costs. Pretty unbelievable, right?

ZM – Yeah! So new investors who just maybe couldn’t afford, or were a bit weary of investing a lot of money in other places AND more seasoned investors, who just want to hedge their portfolio and get more exposure to different markets in other countries. Would that be about right?

PD – Yeah, that’s about right. And I think that the fear is mainly, people are worried about stepping out of their back yard, that is, if they’re from the United States, they just want to invest in the US, because everything else is scary or risky, and having a proxy service like we do gives everybody that opportunity to invest in Japan, because it’s literally like having their own arm in another country. So again, whether you’re savvy or new to the market, we’re here to do that and for anybody that is simply interested that isn’t able to travel, or just doesn’t speak the language.

ZM – I guess when you’re doing due diligence in your own back yard, as opposed to a remote location, the main difference is that, when you’re doing it back home, you mainly need to do your due diligence on the property, drive by, look at the inside, the outside, maybe a building inspection – whereas, when you’re investing remotely, and you can’t do all of that, due diligence really turns into researching the right kind of company and team that’s going to represent you on the ground – and then THEY do the actual due diligence for you, don’t they?

PD – Exactly.

ZM – Could you maybe give us an example of one potential client, someone who actually turned into an active client, so no names or personal details of course, but maybe just a general profile of the person or persons, what they ended up buying, the process, and how their investments are doing these days?

PD – Sure. Let me first explain how most clients familiarize themselves with the properties and become active clients. Most clients start by asking to receive our featured property listings and the monthly Japanese business and property news digests. And with this information, they’re able to compare prices, locations, yield, income and features, etc. Then, when they have a better idea of what they want, they contact me regarding a particular property that they might have seen on our featured list that may be available, or they’ll just send me their particular criteria, such as the budget they have in mind, the locations they’re interested, or any other criteria. Now, in this market, offers are made on properties within days, as I mentioned earlier, of hitting the market – so you have to be quick.

And so, going forward to the type of clients we have, I want to give you one example. So this client is from Canada – I won’t give you his name – but like most foreigners, he couldn’t speak Japanese to conduct the real estate transaction on his own. Now, his budget to start was about 30,000 US dollars – this was his first property and he didn’t want to take too much of a risk, which is perfectly understandable. So we recommended properties in metropolitan areas, close to transit, where occupancy is high, built in or after 1981 – and he was willing to accept the lower yields for lower risk, of about 6% net pre-tax, VS what he could have otherwise get, say 8-11% – and it was a very smooth purchase. And that’s what he was doing, he was testing the waters, to see how it goes. And it was very smooth and he felt very comfortable, so he stuck with it, and went on to start and build his portfolio – he increased his budget to 65,000 US dollars, and this time he was willing to take on a bit more of a risk, which meant more suburban properties, where you may not be so sure of how quickly a property will be rented out if it indeed does become vacant. So far we’ve had no occupancy challenges, and he’s a very happy client, and continuing to grow his portfolio.

ZM – And when we say suburbs, this could be less central suburbs of big metropolitan centers, or it could be maybe a smaller of middle sized town – but I think you always only recommend locations – unless someone has a specific request – that have a stable or increasing population, places that are not one-horse towns with a single industry – so even if it’s suburban, or smaller townships, it’s always at least stable and reliable. So maybe capital growth won’t occur as fast or as often, but it’s usually going to have at least the typical rental cash flow that we’re looking for, wouldn’t it?

PD – Right. We’re not doing anything that’s super high risk. So we are staying within areas where you’ll get 8-11% yield, which is still very high – but without that extreme risk of being far from public transportation, or properties that might be on the 4th or 5th floor without an elevator – things that would really deter people from wanting to rent. We don’t typically get involved with these types of properties. We do stay within, generally, areas and features that are marketable.

ZM – Ok, good stuff. And, maybe before we wrap up – where do you see interest from potential investors focusing these days? What types of investments are drawing more attention, what types of challenges are they looking at when they enter the market these days? Are things changing, improving, or getting worse as far as challenges go?

PD – Well, smaller apartments were always the asset class of choice, I would say. So small apartments, 25, 30, 35,000 investments – but there’s a growing interest in apartment buildings. Earning income from several properties instead of just one unit. And in this regard you’re looking at about 175,000 US dollars to a million, but the yield is excellent – you’re looking at about 5-11% net pre-tax, and the stability is there. The other thing also is that in Japan, the trend these days is the shared economy. So, because of that, people are purchasing older properties, demolishing them, and then re-building in a couple of different ways. So shared houses, and also shared offices. This is the latest trend.

Also, in Japan, as most people know, there’s an issue with the ageing population, so there are just not enough retirement homes – and that’s another blooming market. There need to be more of those, and that’s coming up pretty quickly. You’re not going to find any shortage of demand from Japan’s elderly, that’s for sure.

The other thing I wanted to mention is that we do have clients – most of our clients ARE cash investors – but they DO ask us about mortgages loans – unfortunately, financing is still a work in progress. It’s still a challenge for foreigners trying to get loans in Japan. So, at this time, I might have to say there’s still work to be done. But when we do see more of that, I’m sure that’s going to be a big hit. But right now, unfortunately, that’s not really available for non-resident foreigners

ZM – Yeah, that’s a bit of a pain, and we’ve spoken about this a few times here in the past. So just a reminder, folks – if you’ve got any funds saved, and you’re wondering what to invest them in, and you’re NOT interested in hands-on property ownership for any reason – Priti and the rest of us here at NTI, we’ve got loads of reliable investors, most of whom already HAVE purchased properties in Japan, in cash, and they’d be more than happy to expand their portfolios if they’ve got a bit of financing available for this purpose. So you stand to make really comfortable interest returns on any of these loans, which of course would be secured against any actual high yielding property assets – so, please don’t hesitate to contact us if you want to be a part of this program.

Edit – this interview was recorded in late 2018 – fortunately, at this time, there are actually a few lenders who CAN assist non-resident foreigners, although terms for their loans vary and can be quite stringent in most cases – listen to a podcast episode detailing current loans availability here (iOS users can tune in here).

Priti, I also wanted to add, when you were talking about buildings there – the reason that people often go for buildings, which tend to generate slightly lower return in comparison with the cheaper and older individual units, is for two main reasons – one is that you own the entire land parcel, so if the property gains in value, obviously anything that’s got more land attached to it stands to gain a lot more – and the other thing is that you’ve got a lot more flexibility – so if and when the time comes to tear the building down, or if you’d like to somehow increase the return from it, you can rent it out for short term stays, you can tear it down and turn it into a parking lot, you can build a small residential or commercial block in place of an older house, and all of those factors can have a really big impact on your return.

Those are all things that you CAN’T do with individual units, particularly ones that are in a co-owned building – on the other hand, the individual units obviously have less of a uncertainty factor to them – you pay your monthly building fees, and those cover all of structural issues, renovations and repairs that need to be done (in most cases).

So, fantastic info there, Priti, thank you so much for your time – it was great having you with us today.

PD – Thanks, Ziv, it was a pleasure. And I just want to give a huge shout-out to all the people that I’ve been speaking with, who are hopefully listening to this podcast – I’ve been in touch with many of you, and it’s been a pleasure working with you all.

Are you interested in Japan’s real-estate property market? Maybe you have been watching developments in this arena for some time, but aren’t sure how to make your first move? Perhaps you’re concerned about language and cultural barriers? We here at Nippon Tradings International are always happy to talk shop, and will gladly answer all questions, free of any charge or commitment. We can also provide you with

(Source – Ziv Nakajima-Magen, Nippon Tradings International”, Pic – NipponTradingsInternational)

 

 

Japan’s Beachy Shirahama Poised to Become Next Silicon Valley

11  Aug, 2020  –

Japan Properties

SHIRAHAMA, Wakayama — A leading resort town in western Japan is attracting more attention as an alternative to working in urban areas as the pandemic has led to the nationwide spread of telecommuting. In recent years, information technology companies have been moving to Shirahama, Wakayama Prefecture, and locals expect that the town will become an IT-centric area like Silicon Valley in the United States.

At present, the municipal government operates two such office buildings for the companies it has invited. Ten companies, mainly those related to IT and ranging from major corporations to start-ups, have facilities such as satellite offices in those buildings. Because both buildings are already at maximum capacity, the town is scheduled to open a new seven-room office building this autumn through the aid of private capital.

Shirahama is located in the southern part of the Kii Peninsula and is a major resort town that sees about 3.5 million visitors a year. Rich in tourism resources, the area attracts people with the 620-meter-long Shirarahama beach, the 1,400-year-old open-air hot spring Saki no Yu and Adventure World, an aquarium-zoo-amusement park currently raising a family of pandas. Adventure World is a highly regarded tourist destination for domestic and foreign visitors.

While the location of the resort area is a key selling point for companies, there are other appealing factors as well, such as a network environment that allows connectivity even in the event of disasters and office rent being about a fifth of that in the Tokyo metropolitan area. A further selling point is the convenience of traveling between Nanki-Shirahama Airport and Haneda Airport in Tokyo, only an hour apart.

The novel coronavirus outbreak has led to a growing interest in living away from densely populated urban areas and instead moving to rural areas surrounded by nature. The town government said it has been receiving an increasing number of inquiries regarding the opening of offices there.

In fact, there is a long history of attempts to attract IT companies to the town, including a long period with poor results that may be thought of as the town government being far ahead of the times. The Wakayama prefectural government began to attract IT companies to the prefecture in fiscal 2001, recognizing the industry’s potential and aiming to create jobs to keep young people from leaving the prefecture. The prefectural government offered generous support, including subsidies for office rent and flights to Tokyo.

The Shirahama town government bought a recreational center from an insurance company in 2004 for ¥110 million and renovated it into a six-room office building to draw companies. These companies did not stay for long and vacancies continued. However, the 2011 Great East Japan Earthquake caused this situation to change. Concerns over disaster risks drove an increasing number of companies to consider decentralizing their offices.

One company began renting office space in the first building in 2014, and in 2015, the Japanese subsidiary of major U.S. IT company Salesforce.com, which had participated in the planning of the Internal Affairs and Communications Ministry’s verification experiments for telework diffusion, also established an office there. This became a hot topic in Japan. The following year, the building was fully occupied. The second office building with room for four offices was established in 2018 and was filled within four months.

According to a survey by Salesforce.com conducted 1½ years following the opening of its Shirahama office, the number of business negotiations conducted per person was 20% higher on average per month than in Tokyo. “The rich natural environment created a sense of relaxation and increased productivity,” said Takao Yoshino, 46, head of the company’s Shirahama office.

Exchanges between companies in the town are also progressing, which locals expect will lead to new business opportunities. The local community is also moving forward with the adoption of IT in endeavors such as experiments with facial recognition systems being conducted at the airport and hotels. The goal is to create a Japanese version of Silicon Valley, and the Wakayama prefectural government also hopes this will come to fruition.

“The time is now,” said prefectural official Yuji Sakano, “when more and more companies are questioning the way they work in urban areas amid the pandemic.”

(Source – The Japan News, Pic – Shirahama, Wakayama / “Shinya ICHINOHE“)

The Uncertain Dollar and the Increased Attraction to Japanese Properties

Japan Properties

Japan Real Estate

04 Aug, 2020 –

While the Federal Reserve enacts a loose monetary policy, cash does not hold the position of king. Instead investors prefer to park their money anywhere rather than in deposits that provide minimal returns or take a potential hit. For this reason, real estate tends to do well as interest rates drop allowing investors to take advantage of low mortgage rates and buy properties.

Investors ask, “Where do we go from here?”

The Unsettling Situation

First, let’s put this situation into perspective.

In mid-2019, the Fed signaled a readiness to cut interest rates as uncertainty around the impact of the U.S. trade battles clouded its outlook. The rally gathered pace in early 2020 as US-China tensions rose, and China enacted security legislation in Hong Kong followed by a blame war over who is responsible for the corona virus outbreak. Not knowing if the Fed is going to keep its dovish monetary policy for an extended period of time signaled weak economic growth and weak dollar. Furthermore, there is no realistic expectation that a vaccine for the corona virus will be available before 2021, which means local shutdowns globally and limited economic recovery. And just when you think you can catch your breath, the flu season will be ready to kick in, only to worsen the already complex situation.

Japan Properties – Real Estate Safe Haven Asset

As the pandemic upends economies worldwide, heightening investors’ anxiety, many, including those who have not deployed their full capital in the equity markets, are looking for a vehicle to hedge their risk. Some have turned to Gold Exchange Traded Funds (ETF), others to alternative currencies. We see similar trends in the Japanese property market, the second largest real estate market in the world. Here’s why: Properties are affordable allowing investors to deploy funds in multiple investments with no restrictions to foreigners; high yield of 6% to 10% net pre-tax generating a lucrative monthly return from rental income; impact of the exchange value of the yen against the dollar when the timing is right.

Until a timeline is established for the development of a vaccine is clear, and until geopolitical clashes between the world’s two biggest economies are more or less resolved, the world will continue to be impacted by economic turmoil and the health crisis. How long it will take to restore confidence is uncertain. What we have learnt from 2020 so far, is to expect the unexpected, and more importantly be prepared for the unexpected.

(Source – Priti Donnelly, “Nippon Tradings International” Pic – Tokyo Skyline / “Marc Buehler“)

Japan’s Newest Tokaido-Shinkansen Line Bullet Train Designed for Long-Haul Comfort and Safety

29  Jul, 2020  –

Japan Properties

Japan Real Estate

(CNN) — Japan’s latest record-breaking bullet train doesn’t only run faster and smoother — it’s also able to transport passengers to safety in the event of an earthquake. The N700S — the ‘S’ stands for ‘Supreme’ — entered into service July 1 and serves the Tokaido Shinkansen line, which links Tokyo Station and Shin-Osaka Station in Osaka.

It can run up to 360 kilometers per hour, a new record set during a test run in 2019, making it one of the fastest trains in the world. The operating speed, however, will be capped at 285 kilometers per hour. It’s the first new bullet train model to be added to the Tokaido Shinkansen line by the Central Japan Railway (JR Central) in 13 years, a launch that was originally timed to coincide with the Tokyo Olympics in 2020 — now postponed to 2021.

 Coincidentally, Japan inaugurated the Tokaido Shinkansen line in 1964, connecting Tokyo and Osaka, just in time for the Summer Olympics in Tokyo that same year. It was the world’s first high speed railway line.

Cutting-edge technology

Appearance-wise, the N700S doesn’t look too different from the older N700 or N700A models, apart from its elegant golden logo. But look closer and you’ll see the brand-new train has a more angular nose, chubbier “cheeks” and sleeker headlight design. On the inside, newly designed seats allow passengers to recline further, offering more comfort, especially for long-haul riders. Each seat has an individual power outlet. Interior lighting has been designed to create a softer, more relaxing atmosphere. The overhead baggage racks will be lit up at each stop to remind passengers of their belongings. More reservation-only storage areas for extra-large luggage have been added to this model as well. The actual ride will be a lot quieter and smoother, too, thanks to a new active suspension system that helps absorb train movements.

In addition to a focus on increased comfort, designers behind the new model put great emphasis on safety. The train has an upgraded automatic control and braking system that allows it to halt faster in case of an emergency. It’s also fitted with lithium-ion battery self-propulsion system — the first of its kind in the world. This system allows the train to run for a short distance on its own during a power outage and will make it possible for it to move to a safer location at low speed if stranded in a high-risk area — on a bridge or in a tunnel, for example — during an earthquake. More cameras have also been installed inside car compartments — an increase from two cameras to up to six in each train car.

The upgraded components will take up less space under the train floor compared to the old model, making it possible for a more flexible configuration, from four to 16 cars. This also decreases energy consumption while speeding up production times, making it a more appealing option for operators internationally.

“By making the mechanisms under the floor of the N700S lighter and more compact, we created a new standard,” Masayuki Ueno, deputy head of JR Central’s bullet train business department, told Japanese broadcaster NHK in an interview in 2019. “This new standard will also help when it comes to expanding our business overseas.”

(Source – CNN, Pic – Japan Bullet Train / “foundin_a_attic“)

Mobility Devices to Replace Push Wheelchairs at Tokyo’s Haneda Airport

13 Jul, 2020 –

Japan Business News

Japan Properties

TOKYO (Reuters) – Personal mobility devices to transport passengers with limited mobility are rolling at Tokyo’s Haneda Airport, in an automation play for labour shortage-hit Japan that has taken on new urgency as the coronavirus outbreak compels social distancing.

The initial three devices, which replace push wheelchairs, are from Yokohama-headquartered startup Whill and run between security and passenger gates, equipped with cameras, lidar and other tech to autonomously navigate the environment.

Whill aims to expand the number of devices at Haneda and into other airports, with the pandemic giving a boost to the startup, which also has a consumer-facing business for devices without autonomy. “Due to COVID-19 this business will accelerate,” said Whill co-founder and Chief Executive Satoshi Sugie, a former product designer at automaker Nissan Motor Co Ltd.

Haneda is currently emptied out as the pandemic halts air travel. The startup ran trials at airports last year under normal conditions. Whill, whose other co-founders came from tech groups Sony Corp and Olympus Corp has found a foothold in Japan, where strict regulation has held back the growth of new mobility options like ride-hailing and electric scooters.

As a service for users with mobility problems “there is already regulation,” said Sugie. “It’s not only fun it’s a necessity.” The startup has taken advantage of Japan’s supply chain and the affordable pool of engineers coming from the big firms that have traditionally dominated innovation there, Sugie said. The device’s production is located in Taiwan.

Whill has raised more than $100 million, with investors including Fidelity’s Eight Roads Ventures. The fundraising environment in Japan for startups is improving, Sugie said.

 

(Source – WHTC, Pic – Haneda Airport / “Dennis Amith“)

What to Do if I Can’t Find a Tenant?

06 Jul, 2020 –

The Income Stream Paradigm

Investment properties are, generally, only as good as the rental income they generate.

Sure, there are speculative markets and strategies out there – buying cheap for later resale at a profit, land banking, flipping, wholesaling and so forth – but the traditional, reliable and (hopefully!) stable model of buy-to-hold or build-to-hold stipulates recurring monthly rental income from a constantly occupied property, generating a sort of “paycheck” for the landlord.

If and when a property becomes vacant, the owner would normally aim to have it cleaned up, renovated or repaired if required, then re-leased as soon as humanly possible, to allow the steady income-stream to resume ASAP.

There are, however, certain periods of time, locations and property profiles which make re-populating a property a bit more challenging – and these events can require some creative thinking and solutions, if one is to tackle the vacancy and related expenses as quickly and efficiently as they possibly can.

It’s also important to understand the difference between structure and strata ownership as it relates to vacancies – if one owns the entire structure, whether it’s a house or multi-family/commercial building – a vacancy merely means lost income. If, however, one owns a unit or multiple units in co-owned buildings, which are being managed by a building management company on behalf of the owners’ co-op, monthly building fees are still payable, regardless of whether the unit is vacant or occupied – and in older and other higher maintenance buildings (think serviced apartments, blocks surrounded by gardens, or with gyms, swimming pools and other resort facilities) – these monthly fees can amount to significant expense, with no income to cover it if the unit is vacant – so re-populating it as swiftly as possible, even at potentially lower rent or higher expense, becomes a much higher priority.

How to Handle the Problem?

In Japan, like most other countries, the same generic solutions to the extended vacancy problem exist –

Buy in Popular, Accessible Areas

The best way to minimize vacancy periods is, of course, to purchase central city properties, or properties in high-occupancy, highly desirable areas to begin with. Locations featuring growing or stable population numbers exist on both ends of the affordability scales – even in Japan – and there are particular areas in each and every city which will always be in demand – whether the property in question is a luxurious high-rise penthouse, a mid-income family home, or a low income blue collar studio/1-bedroom condominium unit. Regardless of the purchase and rental price level, there are popular areas where low, medium and high income tenants prefer to live, respectively – and purchasing in these areas specifically will of course all but guarantee relatively short vacancies, and a steady supply of potential tenants at any given point in time.

Accessibility is of course also a major issue, and generally speaking, smaller properties without attached parking, which would mean potential tenants wouldn’t own a car, also need to be within convenient distance to popular public transit options such as train, subway or tram stations. Bus stations, while far more numerous, are a remote second place option, for most potential tenants.

It IS important, regardless, to make sure the pre-purchase due diligence includes not only the current rent paid by the tenant (if purchasing a tenanted property), but also comparable vacant properties in the same area (and in the case of condo units, in the same building if possible) – to give ourselves a rough idea of what rent we can expect to achieve when the current tenant moves out, and also how many vacant listings are advertised in our area and price bracket at any given time – since more vacancies often mean we’ll be facing tougher competition for the same tenant base, and will have to get more creative when it’s time for us to look for a new tenant to populate the property.

Understand the Reason for the Extended Vacancy

Regardless of area, however, extended vacancies can occur for a variety of reasons – and if a few weeks or months have passed since the property has been advertised for leasing, and there are still no applicants, it’s important to first understand why this is the case – as this will influence the approach and solution we will choose to try and amend the situation.

Different problems call for different solutions, so the first step is to understand whether the extended vacancy is due to –

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* Seasonal reasons – In Japan, high moving season is generally between January and April, once everyone has returned home from visiting their relatives for the new year festivities, students and faculty begin to prepare for the approaching new academic year (starting in April in Japan), which may include them having to move closer to campus – and companies begin to prepare for recruiting fresh university graduates, and re-shuffling existing staffers to new positions in new locations.

(The exception to this rule is Hokkaido and other snow-country Northern locations – in Sapporo, for instance, where it’s very likely to be snowing between October to April, high moving season is normally in the late spring and early summer, between June to September – since no one likes to move and go shopping for new home essentials during the harsh winter).

The lowest moving seasons in Japan are during the three major public holidays, each of which is about a week or ten days long – “Golden Week” at the start of May, “Obon” in August, and the Christmas/New Year period at the end of December – during these times, most Japanese will be travelling home to visit their elderly parents and other relatives, and will not make plans for any major life changes – moving included – in the few weeks leading into and out of these periods.

* Rent is Higher / Competition is Fierce – even during high moving seasons, and even in popular areas, supply and demand issues may still apply – if the property is aimed at medium/high income earners (such as family sized or more luxurious properties), it’s possible that, regardless of season, owners/occupiers have recently moved out or re-sized, families have re-structured due to marriage, divorce or being forced to move in with their elderly parents to support them (common practice in Japan, particularly for women) – or elderly folks have been forced to move into aged care facilities. All of these events can and do occur regardless of season, and create an extra supply of available rental properties in a particular area.

A similar thing happens when a popular area becomes over-developed, and there are now plenty of available brand new or near new properties for rent, at prices that are only slightly higher than older comparable properties in that same area.

In all of these cases, the extra supply creates severe pressure on rents, and you may find that whatever you and your property manager have first assumed would be a reasonable price is now actually too high, compared with other available properties in the area.

* Inferior Interior / Lack of Features – even in cases and periods of time where there are only a few alternatives for potential tenants, the rent amount is on par with other properties of the same profile and size, and demand is higher than supply, your property may still be lacking in comparison with other properties. In Japan specifically, a modern interior design is significant for many potential tenants, particularly of a younger profile, and the following features make a major difference in which property they’ll prefer to go for –

  1. East or South-East facing balcony or corner unit (in case of condos) – ideal for sunlight all through the day
  2. Separate toilet and bathroom – considering the generally small size of these rooms, having the toilet (dirty place) in close proximity to the bath (cleaning place) is a major disadvantage. In larger properties, or those built from 1990 or later, these rooms will normally be separate.
  3. Fresh wallpaper (preferably with modern design – walls in Japan are usually wall-papered rather than painted) and new or renovated flooring (preferably wood, tatami straw mats for bedrooms – linoleum is considered cheap and unpleasant)
  4. Laundry bay area, with dedicated water supply and drainage
  5. Built-in closets/cupboards
  6. Modern kitchens
  7. For condo blocks without elevators, no higher than 3rd floor – for condo blocks WITH elevators, the higher the better.

* Unattractive Building Features (for condos) – while the building features and services are normally out of our control in cases of co-owned blocks, it’s important to recognize that any building which has the following features, will also be far more attractive for potential tenants –

  1. Secure keypad/auto-lock entry to building lobby
  2. Video intercom system
  3. Onsite management personnel (part or full time)
  4. Laundry room (particularly if the unit doesn’t have a laundry bay)
  5. Walled/fenced – no street access, and preferably no direct view to first floor windows/balconies
  6. Well-maintained exterior and public areas (greenery around the building is always attractive as well)
  7. Delivery lockers
  8. Security cameras and automatic floodlights

Choose the Right Solution

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There are multiple possible solutions to extended vacancies, which differ mainly in their immediate out of pocket costs VS their longer potential effect on income. Different approaches would also yield different results, depending on the reason or combination of reasons leading to the extended vacancy.

For instance – if there are already plenty of cheap properties available for rent in your area, reducing the rent will only take you so far – it may be better to offer a furnished apartment, to stand out from the competition. Another example – if there are already plenty of nicely renovated properties in your area, adding additional renovation features will not differentiate it significantly from other comparable potentials – in this case, offering some bonuses to potential tenants may be the way to go. Be sure to work with a proactive, savvy PM or portfolio manager who can conduct the appropriate research, and tailor the best solution for your unique scenario, out of the following options or combination of them –

* Rent Reduction is the easiest solution to implement, and doesn’t cost the owner anything in the immediate term – however, since rents are normally not raised when a lease is renewed in Japan (commercial rents are more flexible, but residential rents normally remain the same for the entire tenancy period, barring periods of exceptional economic growth, which are rare), one must take into account the total loss of income over an average lease period – which, for studios/1 bedroom units is usually 4.5 years, and for family sized properties is usually 7.5 years. Calculate the total amount of income reduction over this typical lease period to find out the real cost, then compare to the other potential solutions (listed below).

It is also important to try and avoid a “race to the bottom” scenario – if comparable supply in the area is very high, it’s possible that other landlords are similarly constantly reducing their asking rents, resulting in yields that can become too compressed for comfort, particularly for co-owned strata type condo units with high monthly building fees. In these cases, other solutions should be considered instead.

* Increased Advertising – this is the solution most property managers will tend to lean towards, as it means more money in their pockets – and what this means is that the standard 1-2 months gross rent commission, payable to the property manager upon sourcing a tenant, is expanded to anywhere from 3-5 months instead – this gives them more leeway to cooperate with other property managers who may have access to more tenants, put up bigger and more prominent ads online or in local publications, and promise a higher commission to anyone who can source a tenant on their behalf – thereby increasing your property’s exposure to a wider tenant-base.

Note – When considering this option, as well as the other options which translate into an immediate expense or loss of income – it’s important to ensure that the new tenancy lease will include a penalty for early vacating by the new tenant – to avoid a situation where a tenant moves in, then leaves several months afterwards, mid-lease, without paying any compensation (tenancy laws in Japan are highly tenant-oriented, and it can be quite difficult to obtain any compensation for lease terminations if not enshrined in the lease itself). If this clause is not included, you may face a situation where you’ve paid 4 months’ worth of rent in tenanting/placement related fees, only to have a wayward tenant abscond or leave 2-3 months later – those early vacating fees will cover you for all or some of that period at least.

* Free Rent or Discounted Move-In Fees – this option can also cost an additional 1-3 months of rental income, and is used to offer a financial “bonus” to tenants who choose your property over others. It can be anything – usually the first 1-2 months rent-free, or owner participation in move-in fees, reducing the significant bulk expense that tenants need to fork out in cash – things such as a guarantee company’s sign-up fee, the fee for replacing the lock and keys, the initial cleaning deposit, or all of the above. Savvy, pro-active property managers will often suggest to advertise these bonus options as a “pack plan” on all of their rental listings, giving tenants an option to choose between a standard rental plan, and one with a slightly increased monthly rent amount, which includes these discount bonuses – the idea being that giving tenants the choice to reduce their move-in fees is always an attractive feature.

* Fancy Renovation / Furnishing – this last option obviously costs the most in immediate out-of-pocket expenses for the landlord – anywhere from a few hundred dollars in electric appliances, through a few thousands for full furnishing, and all the way up to tens of thousands in attractive feature installations and upgrades (things like decorative/accented wallpaper, floating/sound-proof ceilings and flooring, laundry bay installations in case none exist, and even completely new bathrooms, and separation of the bathroom from the toilet) – the advantage of choosing this path, if one is willing to pay for it and can afford it, is that is raises the attractivity factor of the property far above the average properties “competing” for tenants in the area – and, in the case of renovations or complete furnishing operations, can also raise its potential rent income (ask your PM to run a quick check on average rent amounts for units with and without these features, if any exist in the area, to verify this last assumption though – as it won’t always be the case).

Renovations, as opposed to simple furnishing, can also raise the value of the property for resale purposes – although the fancier feature installation usually won’t raise the value far beyond the cost of the renovation itself, unless you’ve got the connections or DIY skills to significantly reduce the cost of labor and/or materials involved.

An added advantage of furnishing is that it also gives you the option to lease the property on a monthly basis, as opposed to standard long term leases – which, in attractive locations and depending on occupancy, can also significantly increase rental income – in the best case scenarios perhaps even double it. If you do choose to go this route, though, you’ll need to make sure your PM can provide monthly lease advertising and placement services – most companies will specialize in either long OR short term rentals, not both – and if you work with a PM who only handles short term leasing, you won’t be able to try and advertise for both lease options.

When All Else Fails

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Of course, in some severe cases, there’s simply not much that can be done – a particular area or property, previously popular with a wide variety of tenants, may have simply gone “downhill” for reasons out of our control, usually socio-economic or city-planning related – in which case it may be best to simply let the property go, and put it back on market – cut our losses and re-invest our funds in something which yields better and easier income. Hopefully you would have made back at least some of the potential gap between your original purchase and subsequent sale prices while it was still tenanted – so consult with your realtor or buyers’ agent as to what would be the best and most cost-efficient strategy to selling the property (tenanted at a huge discount VS vacant, renovated VS “as is”), and let it go – there’s always the next deal!

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Are you interested in Japan’s real-estate property market? Maybe you have been watching developments in this arena for some time, but aren’t sure how to make your first move? Perhaps you’re concerned about language and cultural barriers? We here at Nippon Tradings International are always happy to talk shop, and will gladly answer all questions, free of any charge or commitment. We can also provide you with

(Source – Ziv Nakajima-Magen, Nippon Tradings International”, Pic – NipponTradingsInternational)

Japan’s Millions of Unwanted Properties Could be Renovated into Profitable Apartments

Japan Properties

Japan Real Estate

TOKYO – Thanks in part to its aging population and the general preference for new houses, Japan has literally millions of empty, old properties. Ten million of the 60.6 million homes in Japan are considered to be vacant or abandoned and the problem is only getting worse. It’s estimated that by 2033, 30 percent of all homes will be empty.

Empty houses, or akiya, dot the landscape all over Japan. They are most common in isolated mountain villages in rural prefectures like Okayama on the Inland Sea and Kumamoto in Kyushu, at the southern end of the Japanese archipelago. But even Tokyo is not immune to the blight. In the apartment-dominated capital, one in 10 homes has been abandoned to the elements.

Putting akiya to good use is no easy task. In many cases, the heirs to the properties have moved to big cities like Tokyo, Osaka and Fukuoka to find work. Particularly in rural areas where demand for homes is already weak, empty houses are worth so little that local estate agents don’t want to take them on. They can’t make money from fees, which are calculated as a percentage of the property value.

Another factor in explaining the number of akiya in Japan is that the heirs to these properties often abandon them because they don’t want to pay the property tax. Many heirs don’t even want to admit ownership of akiya, and this creates problems for local municipalities, which eventually have to pay to have them demolished.

One municipality trying to address the problem is Fukuroi in Shizuoka Prefecture. On the face of it, Fukuroi is a prosperous town. It has grown over the last 50 years, going from 48,000 inhabitants in 1960 to 88,000 today. Yet in spite of population growth, signs of the town’s eventual decline can be seen in the abandoned houses dotted around its suburbs.

But the situation is far from hopeless. Determined to stop the blight of akiya, the authorities in Fukuroi have established a “counselling center” for homeowners worried about what to do with their unwanted property. As of April 2nd, owners of unoccupied houses can get free advice and guidance from a dedicated team of experts from Fukuroi’s Vacant House Countermeasures Council, a body made up of , builders and legal experts.

The authorities in Fukuroi are hoping that owners of akiya will either renovate and refurbish their properties or have them demolished. Homeowners who would like to keep their properties can get advice on how to renovate them with a view to selling or renting. The authorities say that with appropriate renovation, many of the town’s empty properties could be rented out to young couples or converted into studio apartments.

Homeowners can also find out how to check their properties for structural damage caused by earthquakes and how to carry out the remedial works needed to minimize earthquake damage in the future. If all else fails, the team at the Fukuoi-Sumai consultation centre can also give advice on how to have the property pulled down.

(Source – JapanToday, Pic – Home/ “Shawn Harquail“)

High Number of Tokyo Residents Keen on Moving to Regional Areas

Japan Properties

Japan Real Estate

22 Jun, 2020 –

Around half of residents of Tokyo and its neighboring prefectures expressed interest in moving out of the capital, according to a recent survey. A Cabinet Office survey has found that around half of Tokyo area residents show some interest in living in regional areas. It targeted 10,000 people aged from 20 to 59 living in Tokyo and its neighboring prefectures of Kanagawa, Saitama, and Chiba.

Overall, those who had some degree of interest accounted for 49.8%, but this rose to 61.7% for those who were born outside the Tokyo area. Of those who responded that they were definitely interested in living in regional areas, the most popular reason, with 54.8%, was due to the rich natural environment. Notably, 61.1% of people born in the Tokyo area gave that as their response. On the other hand, among the most popular responses from those originally from outside Tokyo, 38.4% said they were interested because they wanted to live in the place they had grown up in and 19.9% expected it would be so they could take care of family members.

When asked what positive views people had of living in the countryside, the most popular response with 40.1% was of relaxing surrounded by nature after retirement, followed by a good work-life balance with 23.6%. The most popular negative impression was of inconvenient public transport (55.5%) and lower incomes compared with the capital (50.2%).

 

 

(Source – Nippon.com, Pic – World Trade Centre at Minato City / “Guilhem Vellut“)

Japan Provides Vacation Incentives through Discounts at Shops and Restaurants

09 Jun, 2020 –

Japan Properties

Japan Real Estate

TOKYO – The Japanese government is looking to revive the tourism industry, a key driver of the economy that has been battered by the novel coronavirus pandemic, by paying for people to go on vacation in the country.

Under its Go To Travel initiative, the government will provide subsidies worth up to 20,000 yen ($185) per day for people going on leisure trips.

The subsidies will cover half the cost of trips, distributed through a combination of steep discounts and vouchers to be used at nearby restaurants and shops. The initiative is expected to begin as early as late July, applying to bookings made through Japanese travel agencies or directly with hotels or “ryokan” traditional Japanese inns, though the cost of traveling to Japan will not be covered in any part.

The government is eager to jump-start the world’s third-largest economy, which was already flagging following a consumption tax hike last year before the coronavirus and emergency brought business activity to a halt.

The tourism industry has been among the hardest hit as many Japanese have stopped going to the office, much less on vacation. Hopes for an influx of foreign visitors this summer were dashed as the Tokyo Olympics were postponed and Japan imposed an entry ban on more than 100 countries and regions.

According to a survey by Tokyo Shoko Research, 31 companies in the accommodation business either declared or were preparing to file for bankruptcy in April because of the pandemic.

Prime Minister Shinzo Abe on Monday lifted the state of emergency in Tokyo and the surrounding area as well as Hokkaido, having done so for the rest of the country earlier this month, signaling the start of the return to normal life.

Some 1.35 trillion yen has been earmarked for the Go To Travel initiative, part of an emergency package that Abe has said will exceed 200 trillion yen.
(Source – Kyodo News, Pic – Tokyo/ “Luca Sartoni“)