New apartment prices in Sendai City fall 5% in the first half of 2017.

According to DG Communications, the average price of a new apartment in Sendai City in the first half of 2017 was 42,940,000 Yen, down 4.8% from last year.  The average price for the year of 2017 is also expected to decrease from last year, marking the first decline since 2011.

Following the 2011 earthquake, a sudden jump the construction costs and a drop in supply saw the price of new apartments soar to record highs. In 2016, the average price increased by 5.1% from 2015 to 44,427,000 Yen — the highest price seen since record-keeping began in 1988.

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Developer gives up on redevelopment plans near Sendai Station

Sakurano Department Store SendaiTokyu Land have abandoned redevelopment plans for the West Exit of Sendai Station due to low profitability forecasts. The land was acquired during the market peak in 2006~2007.

Tokyu sold their 80% share of the land under the Sakurano Department Store to a fund in December 2014. At the end of August 2015, they sold 1,095 sqm of land, which included the land under the Sendai Toyo Building and the site of the former Asahiya Building, to a separate fund for an undisclosed price. Earlier this year Tokyu had considered redeveloping the smaller site, but made a final decision to sell.

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New apartment prices in Sendai 20% higher than bubble era


New condominium prices in the Sendai area continue to surge, with the average price in the first half of 2015 increasing by 10% from the previous year to 42,620,000 Yen (343,000 USD). This price is now around 40% higher than pre-Tohoku earthquake prices and 20% higher than prices during Japan’s asset price bubble in the late 1980s.

Construction costs have increased following the disaster due, but the increase in prices has been met with an increase in demand and a relative shortage in supply of new construction.

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Miyagi Prefecture’s vacancy rate set to rise

Local governments in Miyagi Prefecture are paying close attention to vacancy rate trends as demand for temporary housing following the Tohoku disaster is expected to be short-lived.

The prefecture has a vacancy rate of 9.4%, making it the lowest in Japan and the only prefecture with a single digit vacancy rate. The low number of vacant houses, however, can be largely attributed to a steep rise demand for temporary housing from residents displaced by the 2011 Tohoku disaster.

There are concerns that the vacancy rate will start to climb again as the public housing projects built for these residents are gradually completed.

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Accommodation shortages creating headaches for businesses in Miyagi and Iwate

The disaster-hit Tohoku region is experiencing a severe shortage in rental accommodation and local real estate companies are hurting.

“Despite inquiries increasing day by day, we have no properties on our books. We have clients in our office but no properties to show them. Our revenues are plummeting.” – President of a property management company in Sendai City.

The months of February and March are typically the busiest and provide the largest revenues for the company, however they currently have no vacant studio apartments and accommodation is severely limited.

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