There is a lot of incorrect and misleading English information about the Japanese real estate market. The quotes below from a since-removed article from PropGoLuxury.com (circa 2010) are typical examples of the type of misinformation:
“A recent study by The Economist Group reports that on average Japanese houses last for only 30 years.”
The 30-year lifespan figure is actually the average age of a building when it is demolished. Buildings are demolished for a number of reasons, redevelopment being perhaps the most common cause. Through proper maintenance and repairs, a house or building can last much longer, but with low construction costs and changing lifestyles and family structures, many homeowners or buyers find it easier to rebuild. If you are looking for land to build on, you may not find a lot of vacant lots available. In those situations, buyers will simply tear down the old structure on the land.
“Buildings have little value – the land does” Davis says, “which means there is basically no market for second-hand residences.”
TRUE AND FALSE
“Buildings have little value – the land does”– TRUE.
Land in central Tokyo is expensive and makes up a higher proportion of the total price (approximately 70% for a newer property, and 80-90% for an older property). In the rural areas where land is much cheaper, these figures are reversed – land may make up to 30% and the construction costs may make up to 70% of the price.
“There is basically no market for second-hand residences” – VERY FALSE.
Annual transactions of existing, or ‘second-hand’ apartments have exceeded new construction across greater Tokyo (Tokyo, Kanagawa, Saitama and Chiba Prefectures) year-on-year since 2016.
In 2020, a total of 29,032 brand-new apartments were released for sale across greater Tokyo, according to the Real Estate Economic Institute. Meanwhile, a total of 37,049 second-hand apartment transactions were publicly reported to the REINS database. The true number of transactions is likely to be much higher as not all transactions are reported to this database. In Tokyo’s 23 wards, second-hand apartment transactions exceeded new construction by 39%.
“Roppongi Hills and Tokyo Midtown are available only for lease – catering to a large base of expatriate as well as local families – while Mitsubishi’s upcoming project is available for sale with prices starting at US$8 million.”
- Some apartments in Roppongi Hills Residence A & B units (and sometimes Residence D) are for sale while Residence C is only for rent. Tokyo Midtown is for rent only.
- Prices in Mitsubishi’s project – Azabudai Parkhouse – actually started from 65 million JPY (US$776,000 at the time) with the most expensive unit at the time priced at 840 million JPY (US$10 million at the time).
“Location, in particular proximity to a subway station, is an absolute requisite for luxury residences in Tokyo”
NOT ENTIRELY TRUE
Location is key. Convenience to subway and aboveground stations is important, especially when trying to attract tenants for an investment-grade property, but is not the sole factor in high-end central Tokyo properties where residents are less likely to rely on public transport. In Minato and Shibuya wards you are never too far from a train station. Sometimes the best areas are not too close to noisy stations, for example Shoto/Kamiyamacho is a 10-minute walk from Shibuya station but is much more highly desirable as a residential area compared to the noisy area directly around the station (although the recent station redevelopment is looking to change that).
“Last March, London-based HSBC Group announced it would tie up with two Japanese real estate companies to extend mortgage loans to foreign residents so they can buy property in Japan more easily.”
At the time of the article, HSBC Premier was already offering mortgage products to Premier members living in Japan regardless of the real estate agency they used. The National Australia Bank was also providing financing to foreign residents in Japan.
*Update: In 2011, HSBC Premier Japan stopped offering home loans in Japan. In 2015, the National Australia Bank limited lending to existing clients only, before later ending financing options.
Foreign residents in Japan may be able to obtain property loans from major and minor Japanese banks, provided they meet certain lending criteria. Some banks may require permanent residency or a Japanese spouse, some may require Japanese-language proficiency, while others simply require the borrower to have a work visa and to be employed in Japan.
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