(Kamogawa city in Chiba) (Kominka-tradtional Japanese folk house-)
Are you curious about where the most attractive city in Asia to invest is ?
CBRE, renowned global real estate company, recently published a report on Japanese investment market called “CBRE Investors Survey 2018” According to the report while domestic investors’ willingness to invest remains high but the marker can see a somewhat prudent attitude and a move to seek an alternative investment.
Foreign investors targeting the Asia-Pacific region ranks Tokyo as the most attractive city and local cities (7 cities in the region such as Osaka, Fukuoka as one category) in Japan as the seventh place.
In 2018, the interest from overseas investors to Japan is expected to further grow.
Here are key points from the report
While Japanese investors have increased willingness to sell, the intention to acquire is somewhat lower.
According to the report, 63% of investors in Japan said they would acquire the same volume as in 2017, an increase of 5 points from 58% in the previous year.
Meanwhile, 29% of investors responded that they will increase from the 2017 acquisition, a 9 point decrease from 38% in the previous year.
The overall result is that more than 90% of investors are still assuming investment trajectory shall be equal to or higher than the previous year. Nonetheless, the trajectory also decreased by 5 points from 96% in the previous year. The willingness to acquire assets seems to be somewhat declining.
On the other hand, the willingness to sell is somewhat increasing.Investors who said they would sell the similar volume as the previous year, is 62%, decreased by 7 points from the previous year,34% of total said they would increase sales from the previous year, an increase of 14 points from 20% in the previous year.Overall, 96% of the total is projecting plan to sell equal to or greater than last year.
(Historic village in Hida-Takayama)
It is not secret that Japan is a surprising combination of peace and chaos, old and new and has just the right amount of anorak.
Inbound tourism continues to thrive as a record 28.7 million tourists visited Japan in 2017, up 19 percent from the previous year and apparently keeping the nation on track for the government’s target;40 million in 2020.
Challenges remain such as a tight supply of accommodations that cater to overseas guests and a heavy concentration of visitors from East Asia.
According to JNTO (Japan National Tourism Organization), the estimated number of international travelers to Japan in April reached to 2.9 million with an increase of 12.5% compared to the previous year, recording the best April ever. The estimated number of international travelers to Japan in 2018 reached to 10 million (+15.4% from 2017).
(Number of Inbound tourists by year)
(Inbound tourists by country in 2017)
That said, Hida-Takayama (飛騨高山）has become one of major tourist destinations among the foreign tourists
but it is not that popular destination for average Japanese.
I have recently read an interesting article about Israeli tourists in Hida-Takayama and would like to share the Takayama city’s
strategy how they become one of the most popular tourist places among foreigners especially Jews.
According to Takayama city statistics, the number of Israeli visitors has increased from mere 2,833 in 2013 to over 10,000 mark for the first time in 2016. The number has more than triple.
Total number of Israeli visitors to Japan during 2016 was about 30,000 so one-third of them visited Takayama.
In 2017, the total number of Israeli guests to Japan increased to 32,000 from previous year (up 7%)
(Chic Hida-Takayama old town village with historical kominka)
(House) (Living room with ocean view)
I recently visited a beautiful Japanese kominka (traditional Japanese house,古民家) in Atami with
a business parter who actually renovated into the perfect condition.
The house was build only in 2017 but it used the old timbers from a century-old house in Nagano prefecture.
The current owner dismantled an old house in Nagano and transferred to Atami(熱海）and restored it completely.
Here is the traditional Japanese style house and how it is restored.
It sits in Atami in Shizuoka prefecture.
It has a great access; only 2 hours away by car from central Tokyo and about 80 km from Mt.Fuji.
It is the ocean view house where you can enjoy the sea breeze and spectacular Pacific Ocean and the Sagami Bay.
(See the map below)
Located on a high ground in good sun and good ventilation.
Land over 10,000 m2, building over 270 m2.
Front road 7.6 m and 3 parking lots (more space is available for parking lot)
The beautiful unique Japanese old folk house (called kominka ‘古民家’) sits at the foot of the Izu peninsula.
The grand waterfront house originally stayed in a family for more than 90 years in the mountain side of Iiyama city in Nagano prefecture, and it has been well preserved.
(Yokohama city center)
Evaluating Real Estate as an investment
According to an article in USA today, single-family homes in large U.S. cities have generated returns of about 9% annually on average,
according to the study, which examined results from 1986 to 2014. Yes, there are risks in real estate investment.
Becoming a landlord isn’t without its risks — from bad tenants and periodic market slumps to changing tax laws and natural disasters
such as tsunami and earthquake.
The principle and the mechanism of the real estate investment in Japan is exactly the same
as other countries.In theory, you borrow the money at 3% from a bank and buy the real estate that generates 8% yield.
The spread (in this case 5%) is your profit.
You don’t need the rocket science. But really ? Let’s find out how viable it is.
In financial parlance, it is called ‘leveraging’.
Leveraging does not necessarily mean success.
Skeptics about the real estate investment in Japan where the population is
declining and rapidly ageing have lots of ammunition.
Leverage magnifies all of your returns and those returns aren’t always positive!
If you want to make investments where you can expect the appreciation of 20% over next 3 years,
Japan is not your destination.
(kominka in snow)
Do you want to be close to beautiful Japanese mountain with your pet ? Or you love skiing ? Want to spend your weekend in real Zen（禅） surroundings with onsen(hot spring 温泉) within 15 mins drive ? Living in kominka could be a good choice.
The term kominka （古民家）refers to traditional Japanese houses, especially ones built a long time ago.
Kominka are not defined by the period they were built or how old they are, but usually the term is used when referring to houses built before the World War II, and especially to those built before the Taisho Period.
We have recently made the strategic collaboration agreement with a renowned kominka renovation specialist(工務店) in Nagano prefecture.We will find an appropriate kominka for the investors or conventional home buyers and renovate outside and inside the house into the pristine condition. We have a list of 100+ kominka properties for sale.
If you want to buy kominka, it is essential to pay attention to what you are doing as you purchase a very unique Japanese traditional house. You want to get this right.
(Flipped house in Chiba city, east of Tokyo. Before and After)
Who can put a price on akiya (abandoned houses,空き家) in Japan ? You can.
There are more than 8 million distressed or abandoned houses in Japan.If you want to flip these akiya (abandoned house) into a rental property, there are quite a few opportunities out there. Akiya in Japan is a big social issue as akiya can generate serious security issues like fire, weeds, pests and burglars. Investing in akiya in a sense solves social these issues.You can find the possibilities of getting a great deal very quickly at relatively small risk exposure. But you have to find a right property in a right location.
Here is how it works
In real estate business, you probably make your money when you buy a property not when you sell it. If you don’t buy the property at the right price and/or terms, then there won’t be any good profit when you sell it.The same phrase can be applied to your home.Even if your initial plan was to live in a property (your home that is) for a long time, life is full of unexpected ventures and you may have to sell it in the future.The real estate is contained in the relatively low liquidity dimensions compared with other financial assets such as stocks, bonds and the transaction costs are high.Thus you want to be very careful when you buy a property.This is true for investors to flip a property.
Usually house flipping in the US is referred as a short-term strategy i.e. buying and renovating a house and sell it at higher value in the short term. A flipper usually needs to get out in less than six months.However, in Japan, it is not a very common style.Today I am illustrating a Japanese style house flipping; flipping akiya (abandoned house, 空き家）into a rental property.You don’t have to stick to akiya for flipping but they are naturally very affordable to come by.One of our business partners is actively investing in akiya (abandoned house).Here’s a simple strategy we usually recommend for flipping akiya into a rental property.
We usually locate a property in suburban areas of Tokyo where you can find a decent one for flipping.
You should be able to find an appropriate property in Kansai (western Japan) areas but we don’t cover those areas simply because it is too far to visit the sites.Read more
While inspecting any property is important, it becomes even more uppermost to check for defects found in second-hand property especially akiya (空き家abandoned houses)
In Japan’s real estate industry, it is generally assumed that there are four types of risks of ‘defects’ （瑕疵）the industry professionals usually recognize.
They are physical defects, psychological defects, environmental defects
and legal defect (issues).
1. What is a physical defect?
Physical flaws are situations where the building leaks, termites occur, and the earthquake resistant strength is insufficient.
Some common physical issues
For example, with 8 million akiya (Abandoned house, 空き家),
old houses are usually very affordable in Japan these days. However, those old houses could also come with a lot of issues that you may not be prepared for.
What seems like a great deal at first may ultimately cost much more than you originally thought.
It is always recommended to do your research before investing in real estate, particularly when the property in question is old property.
The following checklist will give you an idea of what issues to watch out for when buying a second-hand property especially an older home.
Due diligence always pays off.
You want to avoid common physical defects, problems with the construction structure.
(UR X IKEYA collaboration : IKEYA kitchen)
(UR X MUJI collaboration apartment in Kobe, Hyogo)
History and corporate structure of UR
It is worth knowing the background and character to deal with UR as they have started the operation as the government agency for housing.
Let me start with explaining the corporate structure and history of UR.
Their official name is ‘Urban Renaissance Agency’ (都市再生機構）and they are ’incorporated administrative agency’. （独立行政法人）
Officially speaking, they are not a part of the government organizations any more but still under the jurisdiction of
the Minister of Land, Infrastructure, Transport and Tourism (MLIT, 国土交通省）
All senior executives are amakudari from either cabinet office or MLIT.
Its capital is 107 billion yen and its number of employee is 3200.
Here is the brief history of UR.
Between 1975 and 1981
The organization provided housing and land through large-scale
development of new residential areas around major cities, which
were suffering from housing shortages due to high population and
Representative projects include Chiba New
Town (Chiba Prefecture), Atsugi New Town (Kanagawa Prefecture)
and Izumi New Town (Osaka Prefecture).
I have a friend who has enjoyed hosting international visitors in Tokyo in her
She has been hosting international visitors in her spare two-bedroom apartment
but will have to stop it because her building association (管理組合）has decided to
ban the minpaku business ahead of the law’s
enactment in June 2018.
She was able to meet many different people she would have not met otherwise.
A lot of foreign friends have been asking me a question about minpaku (民泊、private lodging) in Japan.
Today I am going to discuss the basic knowledge about minpaku and minpaku law
set by the government in 2016.
How does the new minpaku law work ?
What is the implication on the real estate industry ?
As the book ‘Freakonomics’ (2005 by Steven Levitt and Stephen J. Dubner.) describes
“information is a beacon, a cudgel, an olive branch, a deterrent―all depending on who wields it and how.
It is common for one party to a transaction to have better information than another party.
In the parlance of economists, such a case is known as an information asymmetry.
If you were to assume that many experts use their information to your detriment, you’d be right.
Experts depend on the fact that you don’t have the information they do.”
A real-estate agent may see you not so much as an ally but as a mark.”
Too fazing ?Read more