Residents seek urgent reconstruction of faulty building in Fukuoka

Kurume Fukuoka apartment buildingThe residents of a condominium in Kurume City, Fukuoka, that was found to have a considerably low level of earthquake-resistance, have filed a lawsuit against Fukuoka City seeking reconstruction of the building within the next 12 months.

According to the lawsuit, the 15 storey condominium was constructed by a subcontracting company of Kajima Corporation in 1996. Issues began shortly after completion, with exterior tiles from upper floors coming loose and cracks appearing in the building’s hallways. Since 1997, residents have repeatedly requested that the developer and construction company investigate and repair the building.Read more


Why building repair fees are so important

Apartment buildings require maintenance and repairs to ensure a safe and comfortable environment for residents. To cover these costs, apartment owners pay a monthly fee that is saved up in the building’s repair fund. According to the Ministry of Land, Infrastructure, Transport and Tourism, the average monthly repair fee should be approximately 200 Yen per square meter (based on the interior floor area of an apartment). For a typical family sized apartment of 70 sqm, this would amount to around 14,000 Yen a month.

The amount to be collected as repair fees is decided by the building’s owners association (although they are initially decided by the developer). Ideally the fees should be set at a level that ensures enough money is accumulated for the scheduled repairs.

For example, if exterior repainting needs to be done every 12 years and water pipes replaced every 30 years, enough money needs to be put aside each month for these essential repairs.

Unfortunately there are a number of cases where the amount in the reserve fund is insufficient. This can happen when the repairs required have exceeded initial estimates, or when costs have risen to unexpected levels (which is currently evident with a steep rise in material and labour costs). Developers may also be to blame by intentionally setting repair fees at low levels in order to attract buyers.Read more


Earthquake-retrofitting an unpopular choice despite government assistance

Earthquake RetrofittingNot far from Shin Osaka Station is a 11-storey, 40 year old apartment building that was built to the older earthquake codes (called kyu-taishin). A member of the building owners’ association said that the building has been carefully maintained over the years with new flooring in the common areas and re-painting of the exterior walls. However, no efforts have been made to retrofit the building for earthquakes. They are also yet to conduct any official earthquake-resistant building diagnosis, although they did consult with an architect several years ago. The architect’s opinion was that retrofitting was absolutely necessary and could cost around 100 million Yen.

The building, with 100 apartments, has 90 million Yen in the repair fund. If they were to carry out retrofitting, the building management and repair fees charged to each apartment owner would have to double. The issue about retrofitting is brought up each year at the owners’ association annual meeting, but those in favour are in the minority.Read more


Shibuya mistakenly buys ryokan with X-rated past

Kikusuikan Kawazu ShizuokaShibuya’s local government has found itself in hot water after it was discovered that a building purchased as a retreat  had previously been used as a studio for filming adult movies.

The ‘Kikusuikan’ hotel is located in the hot spring town of Kawazu in Shizuoka Prefecture. The building and land was purchased by the Shibuya local government in April 2014 for 110,000,000 Yen and is scheduled to open in October. Total acquisition and renovation costs are expected to reach 228,000,000 Yen.

According to a Shibuya ward assemblyman, Kikusuikan was used as a location for 11 adult films between 2006 and 2013. City office officials, however, deny having any knowledge of this fact and were only made aware after it was reported in a weekly publication.

Taking into account the building’s ‘history’ an independent real estate appraiser valued the property at 40,000,000 Yen.

Sources:
The Asahi Shimbun, September 25, 2014.
The Mainichi Shimbun, September 24, 2014.


Know the basics before investing in real estate

Lately there has been a surge in the number of real estate-related books and seminars encouraging ‘salarymen’ to invest in one-room apartments as a way of securing an extra source of income. These promotional seminars were also very popular during the bubble in the late 1980s.

As a result, real estate listing site Rakumachi, which specialises in investment-type properties, has seen the number of registered users increase by 60% to 36,672 users over the 12 months to July 2014.

Low interest rates, a reduction in inheritance tax deductions from 2015, and concerns about a stable income after retirement are causing people to turn their attention to the property market.

But before parting with several million Yen, first-time investors must make sure they are fully aware of the potential risks involved. Rather than expecting quick and easy returns,  investors also need to have a long-term outlook.Read more


No market for homes 20km+ outside of Tokyo

Kumagaya Saitama House
A house in Kumagaya City, Saitama Prefecture, that has been listed for sale since 2007. The most recent asking price was 7 million Yen.

Takashi Ishizawa, chief real estate analyst at Mizuho Securities, says a clear divide has formed between properties that can be re-sold and those that have no chance of selling. As properties in Tokyo's outer suburban areas continue to fall in value, they become more and more difficult to sell.

Properties with a chance of selling are located within a 20 km radius of Chiyoda-ku. Properties located east of Funabashi in Chiba and north of Omiya in Saitama are almost impossible to sell, even though asking prices of a house and land start from as little as 2 million Yen (19,000 USD). Developers are also careful not to venture past these zones.

The two main causes are the shrinking population and the shift in demand towards more central locations. In addition, the home buyers of today are seeking a better work-life balance and are avoiding areas that are over an hour from their office. Read more


Profiting from investment apartments in Tokyo not so simple

Private investors with smaller budgets need to be aware that they face a much higher risk level when investing in Tokyo's real estate market.

While a budget of several hundred million Yen will afford you a variety of options, anyone looking to spend under 100 million Yen or even under 10 million Yen on real estate in Tokyo will either be looking at older blocks of flats (‘apaato’) in outer areas or single apartments in more central areas. These type of properties can be very risky for investors, simply due to the high supply and risk of relying on a sole tenant.  Read more