Archive for the ‘Housing & Real Estate’ Category

Back to business as usual for condominium developers?

Friday, November 11th, 2011

Construction activity in the old North Yards near Osaka Station, December 2010

Last month a model room opened for a new condominium complex in Osaka with the revealing name Owner’s Tower. Part of the new Grand Front development project situated in the huge tract of land near Osaka Station that once was home to the Japan National Railways Umeda North Yard cargo terminal, the new residence is a forthrightly upscale facility that targets high-income buyers, in particular foreigners who are looking for a second home in Japan’s second biggest city. The building is 48 stories comprising 525 units, the smallest of which is 90 sq. meters. Prices start at ¥3 million per tsubo (3.3 sq. meters). In the first sales phase, apartments on floors 40 through 48 will be made available at prices ranging from ¥83.5 million to ¥415 million. The projection is that residents will be able to start moving in in August 2013.

The developer Sekisui House emphasizes that Owners Tower is very different from the “family-type” condos that tend to dominate the urban housing market, but in fact central Osaka will soon see a lot of new family-type tower condos going on sale in the coming months. Several buildings are now going up in Kita Ward offering a total of 400 units, and in Tennoji Ward, which is considered the heart of Osaka’s business district, about 260 units are under construction. The average prices are slightly less than ¥2 million per tsubo, or about 30 percent higher than prices in areas outside the city center.

Why are families moving to the center of the city? The main reason seems to be that while these condos are expensive, they are still much cheaper than they were, say, four years ago. Ever since the so-called Lehman shock of 2008, real estate in all the major cities has dropped in value as large companies unloaded properties to raise cash. Those developers that managed to stay in business cut back on new projects, but now they’re taking advantage of the lower land prices and building again.

Continue to read about the return of high-rise condos →

All in the family: Keeping inheritances is a tricky business

Tuesday, August 23rd, 2011

A recent story reported by all the major media highlights a peculiar aspect of current household economics in Japan. In March, a home in Fukuoka City was broken into and ¥160 million in cash was stolen. One of the people who lived there, a 26-year-old woman, reported the robbery to the police, who have yet to catch the thief.

Wills are almost unheard of in Japan, which may be the problem

During their investigation the police wondered why the woman had such a huge amount of cash in her home. The usual reason is that there is almost no place to park that money these days. With bank interest rates remaining at zero indefinitely, more and more families just sock their money away in the mattress (or, in the Japanese idiom, the wardrobe). Mutual funds and other investment opportunities are available in Japan, but the average Japanese person tends to be averse to anything with risk attached.

In the case of the burgled party, the reasons were a little different. Investigators eventually learned that the ¥160 million was part of a ¥1.45 billion inheritance that the woman and her two older siblings received from their mother, who died in 2008 at the age of 64. The inheritance was made up of both cash and assets, including real estate, and had they properly reported it the three would have been liable for ¥544 million in inheritance taxes. As it stands now they will have to pay more, what with fines and penalties added on. In their case it’s even worse since they may be paying tax on ¥160 million they no longer have.

Continue reading about wills in Japan →

Disaster housing proves cash cow for general contractors

Wednesday, August 10th, 2011

Temporary housing doesn't come cheaply (Kyodo photo)

An article in the Aug. 2 edition of the Asahi Shimbun reported that the average cost of constructing a temporary housing (kasetsu jutaku) unit in Miyagi Prefecture to shelter victims of the March 11 disaster has been ¥3.7 million, which is about 50 percent higher than the price stipulated in the revised Disaster Relief Law. Moreover, that figure does not include associated costs such as plumbing. When those costs are factored in the average price per unit skyrockets to more than ¥5 million. To put matters into perspective, many prefab housing manufacturers offer products, meaning full 3-bedroom homes, that you can have built for as little as ¥8.7 million.

The prefecture made deals with two associations soon after the quake and by June 22 had signed contracts to provide 17,510 units. One association consists of eleven companies that build prefabricated housing, while the other consists of 24 companies that “lease” prefab housing. The former companies would build houses from the ground up using all new materials, while the latter company would provide housing using materials “recycled” from other prefab constructions. The average size of each unit is 29.7 square meters. Obviously, the leasing companies’ units are cheaper, but they still ended up being more expensive than the legally stipulated price, which was ¥2.38 million per unit. In fact, the prefecture knew that when it accepted the bid from the association, which was ¥2.88 million per unit. As of mid-June, that price had risen to ¥3.45 million. But that’s nothing compared to the price of a fully constructed unit, which has climbed to as much as ¥5.1 million.

Continue reading about temporary shelters →

After the death of analog, whither Tokyo Tower?

Wednesday, July 27th, 2011

As everybody by now knows, Sunday, July 24 marked the end of analog TV broadcasts in Japan. However, the capital’s new broadcast tower, Tokyo Sky Tree, won’t begin sending out digital signals until May 12 next year, which means the iconic Tokyo Tower still has a reason to exist until then. The big question is: Will it have a reason afterwards?

Hey, don't forget me!

According to Tokyo Shimbun, the operators of Tokyo Tower lobbied the key broadcast companies to retain some of their business after Tokyo Sky Tree itself becomes operational. However, all six TV networks have decided to move their broadcast functions to TST. In terms of broadcasting, Tokyo Tower will remain a backup facility in the very unlikely event that TST is down. This will be a big blow to Tokyo Tower. Its revenues in 2010 amounted to ¥5.48 billion — ¥2.9 billion for tourism and ¥2.58 for renting out broadcast functions to TV and FM radio stations.

With the broadcast functions gone, Tokyo Tower will have to rely almost completely on tourism for its income; that and cutting expenses. And even there, TST had the advantage of being newer and taller. It opens to the public on May 22, and Tobu, the main investor, projects a whopping 25 million visitors in the first year. Tokyo Tower’s peak tourist year was 1989, when 3.8 million people visited. Afterwards, attendance dropped to a bit over 2 million by the turn of the century, and then the management implemented an image makeover that included live performances and special events. Attendance creeped up to about 3 million by 2006.

That, in fact, seems to be the strategy. Rather than compete with TST for out-of-towners, Tokyo Tower will makes its appeal to Tokyoites, whom the management hopes will look at the iconic structure with both nostalgia and a sense of permanence. Construction of Tokyo Tower started in 1956 from discarded armaments used in the Korean War, and represents to many Japan’s emergence from its darkest period. Another advantage Tokyo Tower will have over the younger upstart is pricing. Total costs of the Tokyo Sky Tree is estimated at ¥65 billion, and the price of a ticket to the main observatory will be ¥3,000 for adults. Tokyo Tower only charges ¥600 just to get to the top, and ¥1,420 to go to both observatory stations. Will that make a difference? Apparently, the insurance company Daiichi Seimei thinks so. According to a study the company carried out, it projects only 3 million visitors a year will come to TST, the same as Tokyo Tower now.

More shopping refugees: Residents of planned community at the mercy of bureaucratic prerogatives

Monday, June 13th, 2011

Build it and pray they will come: Landrome supermarket in Inzai

Nothing represents the bold urban vision of postwar Japan better than the concept of the “New Town.” In line with planned communities in the West, several were designed and constructed during the 1960s and 70s, mostly in the suburbs of Tokyo and Osaka. The most famous is probably Tama New Town in western Tokyo, which was fairly successful in attracting young families to its mix of public apartments and housing developments, though much less successful in attracting businesses. Part of the bold vision was that residents of New Towns wouldn’t have to commute all the way to the central cities, but companies proved reluctant to relocate to the suburbs. Consequently, the new communities didn’t grow. Tama New Town is presently inhabited almost completely by the elderly, meaning the same people who moved in when the project was new.

The plans for Chiba New Town were finished in 1966, and covered parts of three cities in northern Chiba Prefecture: Shiroi, Inzai and Funabashi. The plan presumed a population of 340,000 and a new private train line that would serve these residents. For whatever reason, the people didn’t show, at least not in the numbers the planners envisioned, though the commuter line was built, and as a result of the lack of patronage the Hokuso Railway is the most expensive train line in Japan. From Chiba New Town Chuo to the next station, Inzai Makinohara, a ticket costs ¥280 for a distance that takes about four minutes to cover.

As with most New Towns, Chiba’s was developed by the prefectural government with help from the central government. In 1978, the central government’s housing corporation, Toshi Kiban Seibi Kodan, usually referred to as simply Kodan, became involved in Chiba New Town, developing whole neighborhoods and constructing residences to rent and sell. Kodan would become semi-private in 2004 during the rush to privatize government organs promoted by the administration of Junichiro Koizumi. It changed its name to the more colorful, commercial-sounding Urban Renaissance Agency (though, more accurately, it is a corporation). The change was cosmetically important since Kodan had been bleeding money for decades, but because the agency and its dependent organs had grown so big, it was difficult to make it completely private. Kodan’s whole existence was based on momentum, which is why, despite the fiscal difficulties that perpetually surrounded Chiba New Town, UR was instrumental in opening a new station in 2000 on the Hokuso Line called Inba Nihon Idai, which was centered around the Nippon Medical School Chiba Hokuso Hospital, established in 1994. The hospital is three minutes from the station by shuttle bus, 10 minutes on foot.

Continue reading about "new towns" in Japan →

LEDs make it cheaper to blind family and friends

Tuesday, May 31st, 2011

Freedom of choice: Lots of LEDs at Yamada Denki

The government wants you to save energy this summer because of the mess they’ve made up in Fukushima. The request is for you to reduce your consumption of electricity by 15 percent. Just in time for this setsuden (electricity reduction) season, the price of LED lamps is coming down. When LEDs first appeared on the market in 2009 the average price of a bulb was ¥3,827, according to the Light Bulb Manufacturers Association. The average price as of March was ¥2,274. Moreover, discount stores like Aeon and Don Quijote sell the 60-watt types for about ¥1,650.

Of course, when you say “60-watt type” you have to qualify the designation, since a 60-watt type LED does not, in fact, use 60 watts. Neither does a fluorescent bulb with that designation, which is still used because consumers are conditioned to think of a bulb’s brightness in terms of wattage, since that’s how you measured relative brightness with incandescent bulbs: the more power, the brighter the illumination. The same goes for fluorescents and LEDs but the proportions are much different, making comparisons almost pointless. For instance, a 60-watt type LED uses about one-eighth the power that a 60-watt incandescent bulb uses, but the brightness in terms of lumens is about half. The light bulb industry would prefer that you choose a bulb based on lumens, since the “XX-watt-type” designation is basically meaningless in the LED age.

Continue reading about LED light bulbs →

Reality check: Condo repair funds not enough

Tuesday, May 3rd, 2011

Repair work on the exterior of a condominium in Urayasu, Chiba Prefecture

In mid-April, the land ministry announced the results of a study it had carried out with regards to condominium shuzenhi tsumitate-kin (reserve funds for repair costs). The ministry had never researched the matter before and found that throughout Japan money collected from condo owners by housing management companies for repairs is grossly insufficient, and called on developers to be more honest with potential buyers of new condos by outlining the true cost of potential repairs and setting fees accordingly.

When you buy a condo in Japan you take on the burden of certain running costs related to maintaining the building as a whole. This fee, called kanrihi, goes toward things like elevator maintenance and custodial staff. It can run anywhere from several thousand yen a month to almost ¥40,000 a month, depending on the building’s size, location, and amenities. However, there is another burden that owners must assume. Shuzenhi is money that goes into a savings account for future work on the building as a whole, such as exterior painting, structural repairs and replacing superannuated equipment. The land ministry found that in the majority of the 84 cases it studied the reserve fund was not enough to cover this anticipated work. The reason for this insufficiency is that developers set the monthly contribution way too low in order to sell units more easily. Because kanrihi is basically set by management companies contracted to take care of the building, the developers have little control over it. First-time homeowners may be discouraged to find that, in addition to their monthly mortgage payments, they have to cover these non-negotiable charges. Consequently, developers and realtors try to keep the shuzenhi low — ¥10,000 a month seems to be the psychological upper limit. The land ministry, however, is recommending that shuzenhi be doubled in most cases, a suggestion that, if carried out, could put a damper on the already beleaguered new condominium market.

Continue reading about condo repair funds →

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