Severe shortage in Tokyo apartment supply not necessarily due to high demand

August 27, 2014Tokyo property marketNew Construction,Real Estate News,Market Information,All,Tokyo

Rising construction costs and project delays are causing the supply of new apartments in the greater Tokyo area to plummet. In 2013, the total number of brand new apartments to hit the market dropped 23.8% from the previous year to 56,478 apartments.

From August 1, MUFJ, SMBC and Mizuho Bank lowered the prime rate on their 10-year fixed rate home loans to a record low 1.3%. While long-term interest rates are showing signs of falling, the recent rise in the consumption tax rate has led a drop in housing starts as well as a drop in sales of new apartments. Banks are now competing to attract borrowers.

While new apartment sales have slowed, they still remain at healthy levels. The contract rate on new apartments in June was 76.6%. Although this was a decline of 5 points from June 2013 and 2.3 points lower than the previous month, it is still above the level of 70% which is considered the threshold for healthy sales.

What is worrying, however, is the drop in supply. According to the Real Estate Economic Institute, 3,503 brand new apartments were offered for sale in the greater Tokyo area in June 2014, down 28.3% from June 2013 and down 18.5% from the previous month. This level is very close to the last low of 3,441 apartments offered for sale in June 2011 (a few months after the 2011 Tohoku disaster). Read more

by Zoe Ward

No market for homes 20km+ outside of Tokyo

August 26, 2014Buyer Beware!,Real Estate News,All,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

by Zoe Ward

Seiko to sell historical residence in Shirokane for an estimated 30 billion Yen

August 25, 2014Shirokane,Historic properties in JapanHistoric Properties,Real Estate News,Sold Properties,All,Tokyo

Seiko Residence Shirokane 3

On August 12, Seiko Holdings announced that they will be selling the 81-year old residence of company founder Kintaro Hattori in Shirokane 2 Chome and are expected to post a gain of 8.5 billion Yen (82 million USD) from its sale. Managing Director Akio Naito said the property was of historical importance to the company and they will announce further details after the property is transferred at the end of September.

The residence was designed by architect Teitaro Takahashi (1892 - 1970) and built by Obayashi Corporation in 1933. Takahashi designed a number of residences, hotels and buildings including the Former Maeda Residence in Komaba Park (1928) and the Takashimaya Department Store in Nihonbashi (1933).

Hattori founded the Wako watch and jewellery shop in Ginza in 1881. The current Wako department store building in Ginza was built in 1932 as the K. Hattori Building and replaced Hattori's original store which had been demolished in 1921. Naturally, the clock atop the building is a Seiko.Read more

by Zoe Ward

Secondhand apartment prices in July 2014 - Tokyo Kantei

August 22, 2014Real Estate News,Market Information,All,Osaka,Nagoya,Tokyo

According to Tokyo Kantei, the average asking price of a 70 sqm (753 sqft) second-hand apartment in Tokyo’s 23 wards was 41,740,000 Yen in July, up 0.3% from the previous month and up 4.7% from last year. The average apartment age was 22.3 years.

In central Tokyo’s six wards (Chiyoda, Chuo, Minato, Shinjuku, Bunkyo and Shibuya), the average apartment asking price was 58,040,000 Yen, up 0.8% from the previous month and up 8.9% from last year. The average apartment age was 22.2 years.

The average price across greater Tokyo was 28,250,000 Yen, down 0.2% from the previous month but up 2.2% from last year. The average building age was 21.6 years.Read more

by Zoe Ward

Profiting from investment apartments in Tokyo not so simple

August 21, 2014Investment properties in TokyoBuyer Beware!,Property Purchasing Guide,Rental Market,All,Tokyo

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

by Zoe Ward

Proposed revision to taxes to encourage removal of abandoned homes

August 20, 2014Demolition,Real Estate News,All,Taxes

Collapse houseThe Japanese government is considering a revision to the fixed asset tax code in order to encourage the removal of dilapidated and abandoned homes.

Currently, the annual fixed asset tax on land is reduced to a sixth of its original level if there is an existing house on the land. This reduction was introduced in 1973 when Japan was going through a period of rapid growth as a means to encourage the conversion of agricultural land into housing. The reduction also applies to empty houses, so demolishing a house would mean a higher tax bill. Read more

by Zoe Ward

Toranomon 2 Chome Redevelopment Project

August 19, 2014New Construction,Office/Retail News & Information,Real Estate News,Redevelopment & Reconstruction,All,Tokyo

Toranomon 2 Chome Project 1On July 15, the Tokyo Metropolitan Government approved the re-development plans for the Toranomon Hospital and National Printing Bureau site in Minato-ku.

The 145.6 billion Yen project will include a 19-storey hospital building and a 179m tall, 36-storey commercial building. The hospital building will be rebuilt from 2015 ~ 2018, with the office tower to be built between 2019 ~ 2022. The entire project is expected to be completed by 2024.

There are a number of major redevelopment projects in the Toranomon area, including the recently completed Toranomon Hills, the future redevelopment of Hotel Okura, the redevelopment of the Toranomon Pastoral Building (Toranomon 4 Chome Project) and the Akasaka 1 Chome Redevelopment.Read more

by Zoe Ward