Dai-ichi and Generali to invest in residential properties in Tokyo

The Dai-ichi Life Insurance Company and Italian insurance company Generali have joined forces to acquire residential rental buildings in Tokyo. With current government bonds offering low yields (1.2% for 20-year bonds), the insurance giants are looking at diversification their portfolio. This will be Generali’s first real estate investment in the Asia region.

The two companies have formed a joint private placement fund targeting residential buildings in Tokyo that meet the following:

  • Less than 15 years old
  • Occupancy rates over 90%
  • Apartments catering to singles and DINKS
  • Buildings containing studios ~ 2-bedroom apartments
  • In locations with good transport and less than 10 minutes walk from the nearest station
  • Studio apartments that rent for around 100,000 Yen/month, or apartments for DINKS that rent for under 150,000 Yen/month

They are seeking gross yields over 6.6% with depreciated returns in the 3% range.

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by Zoe Ward

Secondhand apartment prices in October 2014 - Tokyo Kantei

Apartment price Japan October 2014

According to Tokyo Kantei, the average asking price of a 70 sqm (753 sqft) second-hand apartment in Tokyo’s 23 wards was 42,560,000 Yen in October, up 0.9% from the previous month and up 4.7% from last year. Asking prices have increased by 8.1% over the past 2 years. The average building age was 22.3 years.

In central Tokyo’s six wards (Chiyoda, Chuo, Minato, Shinjuku, Bunkyo and Shibuya), the average apartment asking price was 60,180,000 Yen, up 1.7% from the previous month and up 10.3% from last year. The average price has increased by 18.0% over the past 2 years. The average building age was 21.7 years.Read more

by Zoe Ward

Office vacancy rates in October 2014 - Miki Shoji

According to Miki Shoji’s office report, the office vacancy rate in Tokyo’s five central business districts (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) was 5.60% in October, down 0.05 points from the previous month and down 1.96 points from last year.

The vacancy rate in brand new office buildings was 14.98%, up 1.08 points from the previous month but down 2.06 points from last year.Read more

by Zoe Ward

High demand for luxury apartments in Tokyo

The market for luxury apartments in Tokyo has seen a rapid improvement and is at a point where some are comparing it to the mini bubble that occurred prior to the Lehman collapse in 2008.

In June 2014, Mori’s latest high-rise project - Toranomon Hills - was completed. The 52-storey building contains office space, the Andaz Hotel and 172 apartments. Approximately 70 of the apartments were offered for sale with an average price of around 3,000,0000 Yen/sqm, making this the most expensive apartment building in Japan. The sales office was inundated with inquiries prior to sale and lucky apartment buyers were selected by a raffle-type system. All apartments sold out.

Although it is difficult to say that the new apartment market is doing well across the board, the number of luxury developments seeing same-day sellouts is increasing. The share of new apartments priced over 60 million Yen is also rising. In 2013, they accounted for 19.8% of the new apartment supply, up 6.7 points from 2000. The contract rate for new apartments in October hit a five year low of 63.3% in greater Tokyo, but the contract rate for new apartments priced over 100 million Yen has remained over 70% for the past five months. For new apartments in the 200 ~ 300 million Yen range, the contract rate has been between 75% ~ 100%.Read more

by Zoe Ward

Redevelopment for west side of Shinbashi Station

Shinbashi Station Redevelopment SL Hiroba

Redevelopment plans are underway for the area on the western side of Shinbashi Station in Tokyo. On November 5, landowners decided in favour of a project to be led by Nomura Real Estate and NTT Urban Development with completion expected in 2023.

The proposed 3 hectare site adjoins Shinbashi Station and includes the SL Square and Sakurada Park. One of the buildings to be redeveloped is the New Shimbashi Building, which contains approximately 300 restaurants and stores. Despite the ‘New’ name, the 11-storey building was built in 1971. Read more

by Zoe Ward

New apartment prices down 10% in Tokyo

According to the Real Estate Economic Institute, 3,125 brand new apartments were released for sale in greater Tokyo in October, down 6.3% from the previous month and down 10.9% from last year. This is the 9th month in a row to see a year-on-year decline in supply.

The drop in supply is due primarily to an expected drop in demand following the increase in consumption tax in April 2014, as well as rising construction costs which are limiting the viability of many projects for developers. Sales for apartments priced under 40 million Yen have become particularly slow in recent months.

With recent data showing the second consecutive quarter of negative GDP growth in Japan, it seems highly probable that the next planned increase in the consumption tax rate will be delayed. A spokesperson from the Institute believes a delay in the next tax rise will provide a very positive benefit for the market.

1,978 apartments were sold, making the contract rate 63.3%, down 8.3 points from the previous month and down 16.3 points from last year. This is the lowest contract rate seen since February 2009 when it reached 61.7%. This is also the second month in a row where the rate has dropped below the 70% level which is considered to be the line between a positive and negative market conditions.Read more

by Zoe Ward

Shibuya City Office redevelopment under review

Shibuya City OfficeThe redevelopment of the Shibuya City Office and Shibuya Public Hall (C.C. Lemon Hall) is under review due to a potential cost blowout. A shortage of skilled construction labour and rising material costs have caused the estimated construction costs to increase by around 30 ~ 50%.Read more

by Zoe Ward