Hotel bankruptcies on the rise, office conversions to become a trend, and a planned hike in fire insurance premiums for homeowners. Below is a quick weekly summary of some of the recent goings-on in the Japanese real estate market.
Bankrupt hotel to be converted into office
One of the now-defunct WBF hotels in Osaka will be converted into an office building. With no foreseeable tourist demand in the near future, the 96-room hotel, which was acquired by a REIT formed by Mitsui & Co. and Idera Capital in 2018, offers more potential as a tenant office space. The conversion project of the Hotel WBF Yodoyabashi Minami started this month and is expected to be completed by January 2021. Other hotels in Japan may start to follow suit.
Toranomon Office Tower reaches completion
Construction of the 119-meter, 24-story Tokyo Toranomon Global Square was completed in late June. The office tower has a total floor space of 47,200 sqm (508,000 sq.ft), of which floors 2 to 23 (26,400 sqm) are rental office space. Major tenants include IT and financial companies. The building’s basement has direct access to Toranomon Station.
Fire insurance premiums to rise 6 ~ 8%
Japan’s major insurance providers are likely to increase premiums by 6 ~ 8% nationwide starting next January. This is in response to the growing number of national disasters. The increase will vary depending on region and the construction method, with some homeowners likely to see premiums jump by over 10%.
142-year old Fujiya Hotel re-opens
The historic Fujiya Hotel in Hakone re-opened on July 15 after undergoing earthquake retrofitting for the past two years. When it opened in 1878, it was Japan’s first fully-fledged resort hotel. Past guests have included Charlie Chaplin and John Lennon. The 140+ year old structure has been largely preserved in its original condition, with additional supports added between walls and beams. Room rates range from 40,000 ~ 180,000 Yen per night. To reduce crowding, it will be operating at no more than 70% occupancy.
Hotel bankruptcies reach second highest level on record
According to Tokyo Shoko Research, bankruptcies in the hotel sector in the first half of 2020 increased by 140% from last year to 72. This is the second-highest level seen since 2011 (87 bankruptcies). Of those, 32 were attributed to the current pandemic. In June, bankruptcies increased 8-fold from last year to the highest level seen over the past two decades.
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