Ken Corp plans to demolish Yokohama’s oldest warehouse
A local outcry has erupted after it was discovered that Minato-ku based real estate and expat leasing company, Ken Corporation, is considering demolishing the 104-year old Former Mitsui Bussan Yokohama Warehouse in Nihonodori, Yokohama.
The warehouse is one of the earliest structures in Japan to incorporate reinforced concrete in the construction. Built in 1910, the building has three floors as well as a basement and a total floor area of 2,194 sqm. It was designed by Oto Endo (1866-1943), a pioneer in designing RC buildings. He also designed the neighbouring Mitsui Bussan Yokohama Office Building (c1911), the Yokohama No. 2 Joint Government Office Building (c1926) and the Yokohama Teisan Office Building (c1926). The Mitsui Bussan Yokohama Office Building was the first building in Japan to be completely built out of reinforced concrete.Read more
Residential yields and vacancy rates in Minato-ku - August 2014
According to real estate listing site Homes, the average gross yield on an apartment in Minato-ku in August was 5.3%, up 0.1 points from last month but down 0.4 points from August 2013. The average gross yield across Tokyo was 7.0%, down 0.1 points from last month and down 1.1 points from last year.
The vacancy rate remains unchanged at 9.9% in Minato-ku and 11.0% across Tokyo.
The average asking price of a secondhand apartment in Minato-ku was 792,143 Yen/sqm as of August 1, up 0.79% from last month. The average asking price for land was 1,276,970 Yen/sqm, up 2.1% from last month.Read more
Suginami-ku may soon have powers to forcibly widen roads
The local government in Suginami-ku, Tokyo, is considering amending local regulations which would give them the powers to carry out the road widening and street levelling on privately owned setback land. If the plans are approved, this would be the first local government in Japan to have these legal powers.
Approximately 30% of the roads in Suginami are less than 4 meters wide and pose a hazard to the local community in the event of a disaster, such as an earthquake, as emergency vehicles cannot navigate the narrow roads and lane ways.
Under the Building Standards Act, owners of buildings that front onto a road less than 4m wide are required to shorten their block land in order to widen the road when the building is redeveloped.
Suginami’s local government currently provide financial assistance to help owners with the cost of removing any obstacles such as walls and gates in order to complete the required setback. Although landowners are required to make the setback portion of land level with the road, many owners leave the raised curbing as is with garden beds and other objects still blocking vehicle access.
Inheritance tax changes, not Abenomics, behind recent rise in apartment rent?
According to the Real Estate Economic Institute, the average price of a brand new apartment in greater Tokyo was 49,290,000 Yen in 2013, up 8.6% from the year before and higher than the average of 47,750,000 Yen seen during the ‘mini bubble’ in 2008. Sales of apartments priced over 100 million Yen have also increased, as has investment from domestic and foreign funds.
Apartment rent, however, has not shown the same trajectory. According to Tokyo Kantei, the average monthly rent of a family-sized apartment less than 5 years old in Tokyo’s 23 wards was 4,007 Yen/sqm in June 2014, up 9.2% from the previous year. For apartments between 6 ~ 10 years old, the average monthly rent was 3,461 Yen/sqm, showing almost no change from 12 months prior. For apartments aged between 21 ~ 30 years old, average rents dropped by 2.6% to 2,496 Yen/sqm, while rents for apartments over 30 years old had fallen by 0.5% to 2,616 Yen/sqm. Masayuki Takabashi, a researcher from Tokyo Kantei, said that the recent increase in the consumption tax rate has reduced the real income of consumers, which has made conditions difficult for landlords who want to achieve strong rental returns.Read more
Apartment price to income ratio worsens nationwide, but improves in Tokyo and Osaka
According to Tokyo Kantei, the average price of a brand new apartment in Japan in 2013 was 6.59 times the average annual income (up 0.06 points fro 2012), while a second-hand apartment (10 years old) was 4.58 times times the average income (up 0.02 points from 2012).
The rise in apartment prices has outpaced the increase in average income. The average annual income across Japan increased by 3.85% from the previous year to 4,320,000 Yen in 2013.
Meanwile, the average price of a 70 sqm second-hand apartment in Japan was 19,800,000 Yen in 2013, up 4.38%. The average price of a brand-new apartment nationwide was 28,620,000 Yen, up 5.07% from the year before.
In greater Tokyo (Tokyo, Kanagawa, Saitama and Chiba Prefectures), the price-to-income ratio of brand new apartments was 8.80 times (+0.06 points). The ratio for second-hand apartments actually fell 0.05 points to 6.07 times. Read more
Japan’s nationwide residential vacancy rate hits record high of 13.5%
According to the latest data from the Ministry of Internal Affairs and Communications’ Statistics Bureau, the total housing stock across Japan increased by 3,050,000 units to 60,630,000 units in 2013, up 5.3% from the previous survey in 2008.
Vacancy rates
The number of unoccupied residential properties increased by 630,000 units to 8,200,000 units, up 8.3% from 2008. The nationwide vacancy rate increased by 0.4 points to 13.5% - the highest level seen since record-keeping began in 1963. It is important to realise that these figures include homes that are vacant for a number of reasons. For example, 5.0% of the vacant properties are vacation homes, 3.8% are empty because they are currently for sale, and 38.8% of homes were vacant for other reasons (eg. due to the residents transferring for work, being hospitalised, or because the homes are in the process of being demolished). 52.4% of the vacant homes were rental properties that were sitting empty.
Risk of over-supply
From 2015, inheritance tax deductions will be reduced. As a result, investors have been actively purchasing or building rental apartments as a way to reduce their future inheritance taxes (inheritance tax on real estate is calculated on the tax value of the building and land, which is usually lower than its true market value, while the tax on assets such as cash or stocks is based on its face value. There are also deductions for real estate that is currently rented to a tenant). There is a risk that this trend could lead to an over-supply of rental properties in central areas. Read more