My latest YouTube video clip about the shady realtors in Japan.
Despite the very strong suspect which many industry specialists are pointing out, major brands are exploiting
both buyers and sellers all the time.
Please find out how they make money.
Their murky deals are long over due.Read more
High-rise condominiums sometimes meet fierce resistance from residents who believe their neighborhoods are being overwhelmed by soaring glass towers.
In Japan, a number of rich and famous are living in those high rise condominiums.
But are they really good investment ? What are the potential risks ?
The higher that buildings can stretch into the sky, the more money that developers can command for sweeping views.
Those luxury condominiums are called ‘tower mansion’ in Japan.
I know it sounds very confusing.
In Japan mansions aren’t massive houses and estates for the rich and famous.
They are conventional apartments for regular people
(manshon ~ マンション).
Japanese mansions are the equivalent of condominiums.
People buy them to live in or rent out.
(Machida)
Moving into a new place can be an exciting yet expensive decision.
It is essential that you view the property in person as the photos may (or may not) do the property justice.
You may be able to identify issues that are not present in the photos, which may not be up to date.
Visiting the property gives you a feel for the location and the neighbourhood.
In any cities, there are some neighbourhoods where you don’t walk in the middle of night alone.
In fact, in Tokyo there is almost none.
Maybe you may feel weird if you walk on the street early in the morning in Shinjuku Kabukicho but you won’t feel
extreme insecurity.
I recently read a book written by a guy called ‘Masayoshi Osaka’. The book is called ‘Where are the places you don’t
want to live in greater Tokyo ?’ It is highly controversial and full of prejudice such as race, income and business.
He is a reasonably well-known blogger, originally from Osaka.
He is running a media company “Tokyo Deep Guide” , which is the extreme biased media.
The media shines light not on the positive side of the cities/towns in Tokyo but on the negative side.
Pressure mounts to enact inquiry by FSA on other banks ?
Recently the Financial Services Agency (FSA) ordered Suruga Bank to stop extending fresh loans for real estate investment for six months, over its improper practices related to such financing.
In recent years, the FSA has strengthened its oversight of surveillance over building financing for rental houses that have spread as tax saving measures for inheritance tax. There are an increasing number of examples of building properties in areas with low rental demand and inability to obtain enough rent income assumed by increasing vacancy.
There are cases in which loans can not be repaid and leading to the foreclosures.Those who are affluent with the upscale property have been targeted by the developers of new apartment buildings and the real estate companies.
Since around 2010, these developers and real estate companies have focused not only on loans involved in landowner’s tax saving measures but also on loans to individuals who do not own the land with limited self-funding. Then shared house scandal involving Suruga bank and Smart days (operator of shared house) exposed to the light in early 2018.Read more
We don’t need to tell you about the brilliance of Japan quality: detailed, good service and competitive price etc etc. But for how good Japan quality in general is, it’s equally easy to screw up. Badly.
Japan’s real estate industry and construction industry are full of fraudulent companies.
A number of them are rogue (of course, there are good and trustworthy companies, too.)
You need to be very careful to deal with them.
When you build your brand-new house in Japan, you must be extra mindful because it could be a disaster if it goes wrong.
It is widely known to the industry professionals that the laws are not necessarily protecting the consumers
(customers).
Why is the owner (consumer) in so disadvantageous position ?
There are five main reasons.
1.The industry is not seeking a repeat business so they don’t look after customers well
2. High overhead cost
3. The related laws have many loopholes
4. The owner(customer) trusts the contractor (real estate agents and builders included) too much
5. Victim’s tragic stories are not widely reported in the media.
There are many apartment buildings which are failing in the their management in Japan.If you live in the apartment buildings you have to be cautiously attentive how your building is managed.
What about the property for the investment ?
KENBIYA (major Japanese property web site) recently wrote an interesting story about the management of the residential buildings (both for living and investment)
As an investor, perhaps the management of the building does not seem to be your business but I have to warn you that actually the management of many residential buildings for the investment is more likely to
be failing.
But Why ?
The reason is very simple. Owners (investors) don’t care because they don’t live there.
In some cases monthly management fee (管理費）is not paid by many owners, management fee (fund) is spent improperly. In some cases someone took the money and run away.
Case 1
Serious trouble of the property for investment that were built the bubble period.
One of the relatively common examples is the an apartment in Tokyo, which is close to the city center.
These buildings (usually with units of studios) were built as a tax saving measure for salaried workers in the bubble period.
Cleanup, rescue operations underway in Japan after severe rains kill over 200 people and strand thousands in the recent flooding and landslides in west Japan.
On Mar 11, 2011, a devastating 9.0-magnitude quake struck under the Pacific Ocean, and the resulting tsunami caused widespread damage and claimed tens of thousands of lives.
It also sent three reactors into meltdown at the Fukushima nuclear plant, causing Japan’s worst postwar disaster and the most serious nuclear accident since Chernobyl in 1986.
The devastating tsunami hit sites along the Tohoku coast.
A public beach just opened in Rikuzentakata on July 20, 2018 for the first time in eight years, underscoring the destruction of sites.
In 1703, an 8.2 magnitude earthquake（Genroku earthquake) along the Sagami Trough triggered a tsunami that rippled towards Japan’s then capital, Edo. It is estimated that a couple of thousands lives were lost.
Japan has a lot of natural disasters and many foreign investors are worrying about it.
A major earthquake is expected to strike sometime along the Nankai Trough, a submarine trench running off the Japanese archipelago from around Shizuoka Prefecture in Honshu to the seas east of Kyushu.
How at risk is Tokyo Bay from future tsunami by Nankai Trough earthquake ?
The Nankai Trough is a 700-kilometer-long sea-bottom depression that runs about 100 km off the southern coast from Shizuoka Prefecture to the Shikoku region.
（From NHK)
Over 200 people have died in floods and landslides triggered by the recent torrential rain in western Japan in July 2018.
It is the highest death toll caused by rainfall that Japan has seen in more than four decades.
In Japan, 1300 municipalities released the hazard maps.
They namely pinpoint locations at risk of floods or landslides.
There was a time when the disclosure of hazard information raised many eyebrows as fanning people’s fears and lowering property values.
But after we saw the recent worst flooding disaster in west of Japan in four decades, this is no longer the case.
In the Mabicho district of Kurashiki, Okayama Prefecture, the flooded areas reportedly corresponded exactly to what the hazard map showed. To date, more than 40 bodies have been recovered from severely flooded residential neighborhoods, now blanketed with mud.
In today’s uncertain economy, dynamic growth potential with low risk is tempting.
Real estate companies are constantly manufacturing the opportunities to captivate the naive investors.
Kabocha no Basha was one of them.
Suruga Bank Scandal background
Japan’s Financial Services Agency has launched an emergency inspection into Suruga Bank over investment irregularities involving women-only shared houses.
Suruga Bank extended over 100 billion yen ($915 million) in loans to about 700 people, mainly middle-aged salaried workers, to invest in Kabocha no Basha — or “Pumpkin Carriage” ; women-only shared houses operated by Smart Days.
Tokyo-based Smart Days also worked as a middle man between Suruga and investors and solicited investment from salaried workers, pledging to pay them rents for 30 years.
But Smart Days struggled with low occupancy rates and stopped paying the rents to owners they promised in January 2018.
Smart Days filed for bankruptcy in April 2018.
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.