Monthly Archives: March 2018

Is ‘minpaku’ (private lodging) finished in Japan ? : How is the new law affecting the real estate industry ?

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The new law will be effective from June 2018 to crack down on illegal lodging
Local governments across Japan have just begun accepting applications for operating private lodging (aka ‘minpaku’ in Japanese) rental businesses under a new law going into effect in June 2018.
The law is responding to a sharp growing need for affordable accommodation amid a rapid rise in foreign tourists, while cracking down on illegal lodging.

The law is to limit the number of days per year that rooms in private homes and apartments can be rented to maximum 180.
Operators will have first obtain the certificate from the local governments and then display signs indicating the presence of rental units and manage noise and other complaints from neighbors. No-compliant operators can expect to be fined.

In the meantime, Japan’s  condominium management company association recently released the nationwide survey results on the use for private lodging in condominiums in Japan.
It is the interesting development and I quickly share the summary of the report today.

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Is Kyoto still good for investment in a vacation rental ? : Two boutique guest houses

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In light of the surging inbound tourists, Japanese and foreign developers and hotel companies  have stepped up construction, with names like Hyatt, Marriott, Nomura Real Estate Development and Mitsui Fodosan building new accommodations.
We have been increasingly receiving the inquiries from overseas investors about the properties in Kyoto for vacation rentals.
Generally speaking, lots of investments money to build the hotel and private lodging are flooding in Kyoto now from both inside and outside Japan and therefore the good properties with hotel license tend change hands very quickly.
There are very attractive investment opportunities for foreign investors in Kyoto properties.
I am going to discuss the opportunities of vacation rental in Kyoto today.
Let me start with the recap on the inbound tourism market in Japan, in particular, Kyoto.
The number of foreign visitors to Japan rose 19% to a record of nearly 29 million in 2017.
The government set the road to the target of 40 million by 2020 when Tokyo will host the Olympics.
Spending by foreign visitors rose 18% to ¥4.4 trillion ($40 billion).
Tourists have transformed the face of the nation’s cities, crowding into popular destinations such as the Ginza shopping area in Tokyo, temples in the ancient capital of Kyoto and ski
areas during the winter.
For example, the number of American visitors rose 11% in 2017 to 1.24 million which accounts for about 4% of the total.
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Where are the top destinations for people seeking real estate in greater Tokyo？ : Two locations in Saitama stand out

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(Picture: Yokohama)
Recruit Sumai Co., operator of the Suumo residential information website, recently released the ranking of locations
(and train stations) where people in the Kanto region want to reside in 2018.
(Kanto region in this report  covers Tokyo, Kanagawa, Chiba, Saitama and Ibaraki)
They released the same report for Kansai region (including Osaka, Kyoto and Kobe as well.
The survey began in 2010 and has been conducted every year.
7000 people in the Kanto area responded and they are in the
age between 20 and 49. People over 50 years old are not surveyed, which naturally distorts the statistics.
Here is the ranking for 2018 and data in 2017 and 2013 are also illustrated for a comparison purpose.

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Real estate investment : Is Tokyo’s property bubble finally ready to burst ? (if any)

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The RECRUIT company (major Japanese real estate advertisement company)  released its own survey on people from greater Tokyo area (Tokyo, Kanagawa, Saitama and Chiba) who have purchased the newly built condominiums in 2017.
Over 4700 people responded.
Here is the quick summary of the report.
1. Location of condo purchased
Tokyo’s 23 wards increased its share slightly from 2016 to 43% and
20% of  respondents bought condos in “Kanagawa prefecture”. (ranked 2nd next to Tokyo 23 wards)
2. Price
The average purchase price of condos is 54.52 million yen,
(U$500,000), the highest since the survey started in 2001.
3. Trend in each prefecture
The average price in Tokyo 23 wards exceeded 60 million yen (U$545,000) for the first time since the survey began
4. Age
The average age is 38.6 years old and the households with children account for 45%.
5. Income and household
Average households total annual income is 9.44 million yen(U$89,000), Married couples account for 65%
Households with annual income of 10 million yen or more gradually increase, to 36%.  65% of households generate dual income (both husbands and wives working), the highest since the survey began in 2001.
57% of single-person households buy the condominiums within Tokyo 23 wards which is significantly higher than other households.

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(Breaking news) New mortgage loan for the rental investment by a Japanese bank for foreign nationals

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Just a quick breakthrough note :
Last week,  we have managed to establish the strategic alliance with one of the prominent Japanese banks who can offer foreign nationals loan for the investment property in Japan.
There are three categories.
1. Foreign nationals who reside in Japan with the permanent  residence
(Individuals who live in Japan without PR could be also eligible)

2. Foreign individuals who reside in Hong Hong (Hong Konger)

3. Foreign nationals who do not live in Japan

Category 2 and 3 are the breakthrough products.
No Japanese banks have been willing to offer the loan for foreign nationals who do not live in Japan but the window has just opened.
Obviously there are certain conditions such as down payment and taking out the mortgage.
And the approval is subject to the valuation of the property by the bank and financial status of each investor.
In addition, you need to carefully select a property which the bank is likely to offer the loan by meeting their criteria.

My bank is very picky about the location.

The property must be in the metropolitan cities where reasonable rental demand can be expected.

These cities are specifically Tokyo 23 wards, Yokohama, Kawasaki, Chiba, Nagoya, Osaka, Kyoto, Kobe and Fukuoka.

The property must be within 10 min walk distance from the nearest train station.

Airbnbs and hotels are excluded (meaning it must be a property to rent or your own house)

Interest rate is attractive enough to create the good cap rate.
Japan’s interest rate is historically low due to the quantitive easing by the central bank.
Anyone who is in interested in such loan, please send us a direct message via
contact us.

 

Toshihiko Yamamoto
Real estate investing consultant and author.
Founder of Yamamoto Property Advisory in Tokyo.
International property Investment consultant and licensed
real estate broker (Japan).
He serves the foreign companies and individuals to buy and sell
the real estates in Japan as well as own homes.
He holds a Bachelor’s degree in Economics from
Osaka Prefecture University in Japan
and an MBA from Bond University in Australia

Toshihiko’s book, “The Savvy Foreign Investor’s Guide to Japanese Properties: How to Expertly Buy, Manage and Sell Real Estate in Japan”is now out on Amazon, iBooks (iTunes, Apple) and Google Play.
About the book 
Amazon.com Link

Our YouTube channel

 

 

Real estate investment Japan : Liquefaction risk caused by earthquake in Tokyo

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(Nebuta, Aomori)
Japan is subject to many wind and water related disasters due to the fact that much of the land is steeply inclined and experiences a lot of rain. In addition, typhoons also hit Japan from summer to fall.
Located in an area where many continental plates meet, Japan also experience earthquakes and volcanic eruptions.
Although Japan is a disaster-prone country, there is no need to be overly concerned.
We have some preparation measures. For example, here In Japan, every resident with a mobile phone receives a text message warning of imminent quakes.
Many disasters are small in scale, and Japan has accumulated knowledge on how to deal with disasters through past experience.
Secondary disasters that occur after the quake also characterize major earthquakes. If you and your property are near the coast, there may be a risk of tsunami.
According to an article in Economist in February 2018, in US,
“there is a 10% chance that in the next 30 years an earthquake between 8.0 and 9.0 in magnitude will rupture the Cascadia subduction zone that runs along the coast of Washington, Oregon and Northern California.
US has no early-warning system.
Mexico, Turkey, Romania, China, Italy, and Taiwan all have systems to warn residents of imminent earthquakes.”
My point is that natural disasters could happen anywhere in the world and thus preparation is very critical.
Many foreign investors ask us about the liquefaction risk in Tokyo area.
Today I am going to discuss the risk of liquefaction caused by the earthquake in Tokyo citing the information released by the local governments.

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2020 Tokyo Olympics revamping central Tokyo

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(Current JR East ‘Harajuku’ station)

Tokyo will host the Rugby World Cup in 2019 and Olympics and Paralympics in 2020.
In view of the two big events and rapid growth of the inbound tourism, In Tokyo, there are a number of revamp projects in the pipe line now.
Today I pick up one of the projects by EAST Japan Railway Company (JR East)
involving Sendagaya station which is the closest station to the new National Stadium and Harajuku Ekimae project by NTT group.
Tokyo and neighbouring cities have been developed sufficiently and in a sense have been seeing the matured status
over the years,however, when the new development plans are revealed by the developers and the railway companies,
the real estate price in the redevelopment area picks up and price hike is likely to continue for over several years.

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