Foreign investment in Japan reaches 19-year high but still low by international standards
Investment by foreign-based funds and corporations in Japanese real estate has reached the highest level since 1996. Between January and September 2015, foreign funds acquired 706.5 billion Yen (5.91 billion USD) of property, an increase of 41% from the same period in 2014.
Meanwhile, some last minute transactions at the end of 2014 put the annual acquisition volume for 2014 at 981.8 billion Yen.
Some of the funds have been seeking capital gains, while others, including government-related funds, have been seeking high yields with a long-term view for holding their assets. In September, average office rents in central Tokyo increased for the 21st month in a row. The average spread between the office yield in central Tokyo and the long-term interest rate is around 3%, versus 1% in Singapore and Hong Kong.Read more
Japan’s Zero Energy Houses
In April 2014, the Japanese Government approved plans to encourage Zero Net Energy Houses (ZEH) with the goal of making them standard for new house construction by 2020. Zero energy houses are designed to use as much energy as they can create using renewable energy on-site.
The Ministry of Economy, Trade and Industry (METI) has also established an investigative commission to create guidelines and standards for construction.
However, there are some potential challenges. Solar power, for example, is not the most efficient option for all houses across Japan due to weather and environmental differences. Also, for houses on very small blocks of land, installing high capacity solar panels to offset energy consumption may not be physically possible due to the limited size of the site.Read more
New apartment sales slow in September
Rising prices have caused some buyers to retreat from the new apartment market, causing developers to postpone sales of some projects. According to the Real Estate Economic Institute, 2,430 new apartments were released for sale in September, down 6.9% from the previous month and down 27.2% from last year. 1,604 apartments were sold, making the contract rate 66.0%, down 8.3 points from the previous month and down 5.6 points from last year. This is also below the 70.0% level said to indicate the line between good and poor market conditions.
262 apartments in high-rise buildings (over 20 storeys) were offered for sale, down 36.3% from last year. The contract rate was 66.8%.
The average price of a brand new apartment released for sale in greater Tokyo was 53,930,000 Yen, down 8.2% from the previous month but up 13.2% from last year. The average price per square meter was 761,000 Yen, down 7.6% from the previous month but up 14.4% from last year.
Read more
Karakami Kankoh to close two 1960s hotels in Wakayama
Karakami Kankoh, a Sapporo-based hotel and onsen operator, will close two ageing hotels in Wakayama Prefecture next year.
Hotel Coganoi (103 rooms) and the Shirahama Seaside Hotel (91 rooms) were both built in 1961. Despite having operating ratios of around 70% between April and August this year, the continued operation of the hotels has proven difficult due to their age and the fact that they were built to the old and out-dated earthquake codes. The company had considered retrofitting the buildings, but the 1 billion Yen (8.4 million USD) cost was considered too high. Both hotels will close at the end of March 2016.Read more
Second building in Yokohama found to be tilting
On October 14, the Nikkei Shimbun reported that an 8-year old, 12-storey condominium in Yokohama’s Tsuzuki Ward was starting to lean due to insufficient foundations. The construction company, Sumitomo Mitsui Construction Co., saw share prices slide by 30% yesterday morning after the news was announced.
The residential complex has four buildings and 700 apartments. In late 2014, residents noticed that the handrails in one of the building’s corridors was 2cm higher than the corresponding ones from the connecting building, while there was a 1.5cm gap between the floors. Read more
Central Tokyo apartment sale prices reach new 7 year high
According to REINS, 2,772 second-hand apartments were sold across greater Tokyo in September, up 14.8% from the previous month but down 5.7% from last year. This is the first time in six months that transactions have fallen below last year’s level.
The average apartment sale price was 29,580,000 Yen, up 4.5% from the previous month and up 7.6% from last year. The average price per square meter was 462,700 Yen, up 3.2% from the previous month and up 9.0% from last year. The average building age was 20.00 years.
1,389 second-hand apartments were sold in the Tokyo metropolitan area, up 17.2% from the previous month but down 2.5% from last year. The average sale price was 36,070,000 Yen, up 3.0% from the previous month and up 6.8% from last year. The average price per square meter was 612,500 Yen, up 1.7% from the previous month and up 7.8% from last year. The average building age was 18.99 years.
Central Tokyo’s 3 wards
In central Tokyo’s 3 wards (Chiyoda, Chuo and Minato), 156 second-hand apartments were sold, up 9.9% from the previous month and up 3.3% from last year.
The average sale price was 53,100,000 Yen, up 2.8% from the previous month and up 8.6% from last year. The average sale price per square meter was 1,024,500 Yen/sqm, up 0.6% from the previous month and up 13.7% from last year. This is now the fourth month in a row to see prices exceed the 1,000,000 Yen/sqm level. The average building age was 16.58 years.Read more
Idle ocean-front land in Miura sold to Chiba buyer
An idle parcel of ocean-front land in Miura, Kanagawa, will be sold to a Chiba-based company later this year. The 13.5 hectare (1.45 million sq.ft) site is currently owned by Properst, a Tokyo-based developer. The sale price has not been disclosed and it is unclear what the new buyer plans to do with the site.
The site was developed by Seibu Railway between 1955 and 1965. It was originally an inlet, but the land was reclaimed to create a potential tourist destination. Properst acquired the site in early 2007 for 8.1 billion Yen (approx. 67.5 million USD at the time) and planned to construct several apartment buildings containing 1,400 units, a 140-room hotel, marina, retail, 152 residential building lots, and parkland. The project would have housed around 3,000 residents. This was exciting news for Miura City, which had been battling a declining and ageing population.Read more