Q&A – Levels of Protection from Natural Disasters on Japan’s Buildings

29 Oct, 2015 –

This Week – our APAC Executive Manager, Mr. Ziv Nakajima-Magen, addresses the question of levels of protection on Japan’s buildings in his regular Q&A column on “Asian Property Review” magazine.

Q : Japan was the hottest property market in Asia last year and in all likelihood this year. I am wondering why it is so from the standpoint of the nation being susceptible to natural disasters such as earthquakes, tsunamis and volcanoes. Are all buildings in Japan earthquake-resistant and are all buildings covered by natural disaster insurance?

ZM : The short answer is yes, all structures in Japan are earthquake-resistant and all buildings are covered by natural disaster insurance policies. The levels of protection, however, vary as follows:-

Japan Real Estate

Japan Investment Property

1) Generally speaking, reinforced concrete buildings are of course far more resistant than wooden structures. Japan generally does not use bricks and mortar as building materials, and so most houses (as opposed to apartment blocks) are wooden-based structures. And while said wooden structures have also gone through some earthquake resistance standards re-vamps, such as ensuring reinforced concrete foundations and pre-built ground/foundation compatibility tests, to name but a few — they are still far more susceptible to earthquake damages. The property investment market, however, is primarily focused on apartment blocks, and so the vulnerability of wooden structures is more of an issue for owner-occupiers than investors.

2) Reinforced concrete buildings have gone through several cycles of earthquake resistant building standards renovations, the latest of which have been introduced in 1981. Stricter testing methodologies for reinforced concrete buildings have been introduced in 2006 as well.

3) Natural disasters are included in the vast majority of insurance policies (which are ridiculously cheap in Japan, incidentally) — tsunamis are not covered specifically, but since they are always caused by deep sea earthquakes, therefore are covered indirectly. The level of coverage varies however, and is normally about 50-60% of the value of the property at most.

4) Individual unit owners in reinforced concrete blocks are also partially covered by the building’s accumulated funds pool (known in other countries as the sink fund pool) which is always used to repair natural disaster damages as well.

5) Last but not least, in cases where all of the above don’t apply for any reason, government compensation will be provided—although this may take a far longer time than any of the compensation methods listed above.

 (Source – “First Published in ‘Asian Property Review’”, Pic – “Nippon Tradings“)

 

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