Real Estate News Round-Up (July 2023)
Government and Private Entities Look for Solutions on Difficulty of Renting for Over-65s
Despite Japan having many single-person households, many landlords often refuse to rent to them due to the risks involved. However, the government recently conducted a panel intended to help such people to find rental housing more easily. According to an article in the Asahi Shinbun, seventy percent of landlords are reluctant to rent to the elderly and disabled people.’ The number of single-person elderly households age 65 and older was 3.86 million in 2005 but had risen to 6.72 million in 2020. However, the number of single-person young households is decreasing, leading to an expected increase in vacant private housing.
A few real estate agencies have already been started with the express goal of helping to meet the needs of elderly people requiring housing. One such agency is R65, a real estate agency located in Suginami Ward in Tokyo. Its founder, Ryo Yamamoto, started the agency with the goal of helping those above 65 years old to find housing.
Source: Panel begins mission to end anti-elderly bias in housing. The Asahi Shinbun. July 4, 2023
A Casual Conversation on Real Estate Investment Between a Real Estate Broker and a Hostess
Considering the above article, let us look at the following conversation reported on Twitter by the real estate broker himself, who has 26,000 followers due to his interesting insights on real estate, we can get an insight into the reasons for investing in single rooms. Following is a slightly abbreviated translation of the Twitter thread, with commentary below.
Hostess (H): Akunosan, I want to invest in real estate too….What should I buy?
Akuno (A): Buy this…. it’s a 1-room unit in a 40-year old building 3 minutes from Takaido Station. 8 million yen. (Note to readers: Takaido Station is a station in Suginami Ward on the Keio Inokashira Line, about 24 minutes from Shibuya Station.)
H: 40 years old? Too old!
A: Yeah, it’s old.
H: No way! It’s an old, ugly building.
A: Well, yeah, but you’re not the one who’s going to be living there.
H: Who wants to live there?
A: People who don’t mind the condition of the place will live there.
A: There are students in some cases, but mostly older guys. They don’t mind.
H: You don’t mind?
A: I don’t mind…I barely see the place.
H: About how old are these guys?
A: Around 30-60 years old.
H: How old is the guy living there now?
A: About 41 years old.
H: I don’t like that.
H: I don’t know, I just don’t.
A: Well, you have a point, but there is a large number of people like this in Japan.
H: What if he moves out?
A: He’s not going to move out. People like this don’t get married. And he’s been living there since he was 31 years old.
H: Really? How much is the rent?
A: 60,000 yen. So he has paid 7.2 million JPY in the last 10 years. The apartment has not been vacant even once in that time. Each time someone leaves, it will be your responsibility to pay 250,000 yen or more in cleaning fees. If the apartment had been empty 5 times in the last 10 years, you would be paying 1.5 million yen in total.
H: Suddenly, these old guys don’t seem so bad.
A: Guys over 35 years old who are not married usually don’t get married. They are our treasure. It’s not very romantic, but you should buy this property.
Note: While NTI does not recommend properties that are over 30 years old, with a similar budget to the hostess in this conversation, one can find buildings in other cities like Osaka and Fukuoka that are a bit younger. Investing in 1-room apartments is more complicated than the above conversation might entail, and there are various pros and cons to this investing strategy that one needs to keep in mind, but at the very least, older unmarried guys might seem a bit more appealing to those looking to enter real estate investment. Also, sometimes the best place to make investments for those who do not have large budgets are in the unglamorous areas.
Tokyo’s Ultra High-End Housing Market is Booming
According to an article in the Robb Report, a publication geared towards ultra-high-net-worth readers (if not for this news round-up, I would not be reading it). According to the article, March 2022 to March 2023, the average sales price of new apartments doubled, and year-on-year they were up 60 percent in April and 48 percent in May, according to data from the Real Estate Economic Institute.
In the past, wealthier clients often opted for houses in old-money neighborhoods such as Hiroo and Azabu, or perhaps in outer neighborhoods such as Denen-Chofu, but high-rises in central areas such as Roppongi and Toranomon have become more and more popular in recent years. Many of the buyers from other Asian countries, seeking safety and security in addition to luxury, have been paying in cash or obtaining low-interest loans from foreign banks with local branches. This has been helped by the weak yen and the fact there are few restrictions on foreign property ownership in Japan.
Source: Robb Report. July 10, 2023
Sumai Trend: A New Service Allowing User to View Market Prices of Used Condominiums and Residents’ Reviews
For many people, buying real estate is the biggest purchase of their lives, and in the Tokyo Metropolitan area, where prices continue to soar, there is a demand for more transparent information. To meet this need, a new service called ‘Clamor’ has been released by Weave Corporation, itself a part of the Starts Group.
This service provides market price information on condominiums as well as trends in various areas. It also provides word-of-mouth info that only people who live in the area can understand.
It should be noted that other sites also exist which allow people to provide reviews of specific buildings, namely, Mansion Note, which is a paid site, unlike Clamor. NTI readers looking at specific buildings would be advised to look at both sites.
Source: Kenbiya July 7, 2023.
Average Value of Properties in All Categories Up, Yields Slightly Down
0n July 11th, Kenbiya released its quarterly report (April-June 2023) on trends in income-producing property in a survey based on newly registered properties on its site. The average yield for single-unit apartments was 7.02 percent (down 0.19 percent from the previous quarter), with the average value being 17.05 million JPY (an increase of 4.67 percent from the previous quarter). Among whole apartment buildings (wooden buildings), the average yield was 8.06 percent (down by 0.08 from the previous quarter), with the average cost being 79.35 million JPY (up 0.1% from the previous quarter, with this being the 13th consecutive increase in these quarterly surveys. Among whole mansion buildings (concrete buildings), the average yield was 7.6 percent, (down 0.14 percent from the previous quarter, with the average price being 17,045,000 JPY (up 0.38% from the previous quarter).
Source: Re:port News July 11, 2023
How To Rent a UR Apartment (Public Housing)
An article written by Franz Karl, an German-American working as a real estate agent with RE/MAX Japan in Osaka, details the steps he takes when showing a UR Apartment to clients and the procedure for making the contract, including the required documents. For foreigners looking to rent an apartment in Japan, in the case of privately held apartment, the inspection process performed by the landlord, management company or guarantor company may be tough for some people to pass successfully if they don’t tick all the boxes. In these cases, housing run by the country (as is the case with UR, which stands for Urban Renaissance).
In this article, Franz, who has experience in securing both types of housing for many clients, details the process involved for UR housing.
Source: https://www.yourkansaiguide.com/post/a-new-adventure-in-japan July 2, 2023