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
(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.
In Japan’s condominium industry, there are some serious issues.
In 2015, there was a huge scandal involving the condo complex called
“Park city La La Yokohama” developed by Mitsui Fudosan.
Mitsui Fudosan is the top developer in Japan.
Construction based on false data was carried out in October 2015, and a scandal where the building was inclined was discovered because the plurality of piles did not reach the appropriate depth in the ground. Safety for earthquake resistance was suspected.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.
Are you bullish or bearish ?
Two surveys by the major institutions revealed that both institutional investors and individual investors are bullish about the real estate market in Japan.
In the survey released by the Japanese real estate research institute in May, real estate price has been rising steadily due to the recovery of corporate performance and the expectations for the Tokyo Olympic Games and Abenomics.
The survey was conducted mainly for institutional investors.
However, 72 % of respondents say the real estate investment market is seeing the peak for the time being.
83.2% of respondents say many deals with remarkably low yields are appearing, compared to 68% in the previous survey in October 2017.
As for the view on investment in the next coming year, 90% of respondents say they will actively continue to make investments, up one point from the previous survey.
It indicates that the general consensus is still bullish.
Only 8% of respondents say they will be stopping the making new investment. Regarding the real estate market, attention is paid to interest rate trends in the United States and the monetary policy of the Bank of Japan.
As a whole investors’ willingness to invest is very positive
Regarding market expectation, the majority of institutional investors say that the market will expand in the next 6 months in both Tokyo and Osaka.Read more
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.