Residential yields in Minato-ku - April 2015

According to real estate listing site Homes, the average gross yield on an apartment in Minato-ku in April was 4.8%, down 0.2 points from the previous month and down 0.6 points from last year. The average gross yield across Tokyo was 6.6%, showing no change from the previous month but down 0.6 points from last year.

The average asking price of a second-hand apartment in Minato-ku was 878,943 Yen/sqm as of April 1, down 1.3% from the previous month but up 12.5% from last year. The average asking price for land was 1,206,363 Yen/sqm, down 3.2% from the previous month but up 6.4% from last year.Read more

Home loan interest rates rise in April

This month, the Bank of Tokyo-Mitsubishi UFJ and and Sumitomo Mitsui Banking Corporation will increase the prime interest rate on their 10-year fixed-rate home loans by 0.05 points to 1.25%. Mizuho will also increase their prime rate by 0.05 points to 1.20%. This is the second month in a row to see an increase in interest rates.

Resona will leave their prime rate at 1.20%

The minimum interest rate under the Japan Housing Finance Agency’s ‘Flat 35’ loan has increased for the second month in a row to 1.54% for loans with a term of less than 35 years. For loans less than 20 years, the minimum rate is 1.31%.

The Nikkei Shimbun, April 1, 2015.
The Sankei Shimbun, March 31, 2015.

Original Kanaya Hotel re-opened to public viewing

Kanaya Cottage Inn 1

After a careful restoration, the historic Kanaya Samurai House in Nikko was re-opened to the public from March 29th. The property forms a very significant part of Japan’s hotel industry as it was the very first western-style hotel in Japan.

The 2-storey wooden house was built in the 1640s as a samurai residence. In the late 1800s it was the residence of Zenichiro Kanaya. Mr. Kanaya was inspired to open up his home to foreign guests after hosting a foreign friend, James Curtis Hepburn, a Christian missionary who created the Hepburn romanisation system for Japanese. Mr. Hepburn saw the appeal of the Nikko area and the potential for foreign visitors, and suggested that Mr. Kanaya create accommodation catering to foreign tourists.

Mr. Kanaya made some alterations to the home and opened it up to guests as the Kanaya Cottage Inn in 1873. British traveler, writer and historian, Isabella Bird, wrote about her stay at the inn in 1878 in her book ‘Unbeaten Tracks in Japan’, which further helped to promote the area and the hotel.Read more

Fast moving market in central Tokyo means some buyers are missing out

As we previously wrote about in May last year the property market in central Tokyo has indeed switched to a seller’s market.

In December 2014, the supply of secondhand apartments in Chiyoda, Chuo and Minato reached a record low. Compared to 2011, there are currently less than half the number of apartments on the market. Meanwhile, sales activity has increased with the number of transactions in 2014 up 47% from 2011. Transactions in February 2015 were up 50.8% from the previous month and up 8.1% from February 2014. This was the busiest February seen in the past five years.

The supply of new apartments is also shrinking, while prices in February reached a five year high. Future supply is also looking to be limited with growing construction costs, increasing land prices and a shortage of suitable development sites causing great stress for developers.

We are noticing that even the old stock is starting to be snapped up as buyers get desperate. January, February and March are typically the busiest months in the real estate industry, as companies scramble to make last minute sales or purchases by the end of the financial year, and people get settled in their new homes before the start of the school year.

Naturally the higher demand and lower supply is pushing prices upwards. We noticed an especially steep increase in prices from July ~ August 2014 onwards, with some sellers increasing their asking price while the property was still on the market.

What does this mean for you as a buyer?

First of all, your options have already halved from a few years ago. Depending on your requirements, you may not have a lot to choose from.

Secondly, you are now competing with more buyers thanks to recent changes to the inheritance tax system which has spurred investment from wealthy Japanese, and a weaker Yen which has added to the number of foreign buyers. These kind of buyers are typically cash buyers who are prepared to move fast to secure a property.Read more

Tokyo apartment sales in March 2015

Tokyo apartment sales march

The following is a selection of apartments that were sold in central Tokyo during the month of March 2015:Read more

Why rental yields in Tokyo are falling

The average price of a brand new apartment in Tokyo’s 23 wards was approximately 908,000 Yen/sqm at the end of 2014, up 19.7% from early 2012. Meanwhile, the average rent of an apartment had only increased by 5.4% over the same period.

Home loan tax deductions, historically low interest rates and an anticipation of continued price growth have helped to boost the property market on the sale side. Renters, however, have had far fewer incentives. In 2014, real wages shrunk 2.5% from the previous year. Unless incomes start to rise, it is difficult to forecast sustainable growth in residential rents.

There have been a small number of exceptions, including the most prime locations in central Tokyo as well as the bayside area in Tokyo Bay. Rents in Toyosu, an area which is near the future Athlete’s Village for the 2020 Summer Olympics, are showing signs of upward movement. The rental market in central Tokyo, which caters to high-wealth tenants and expats, is also more likely to see an increase in rents.Read more

Tokyo Star Bank offering Japan home loans to Taiwanese residents

Tokyo Star Bank is now offering financing for the purchase of real estate in Japan. The loans are available for qualified Taiwanese residents only.

The bank can provide financing for up to 60% of the value of the property and up to a maximum amount of 500 million Yen. Interest rates are around 2%. Loans can only be made to private borrowers using their own name and not companies.Read more